NEWS and VIEWS

A round-up of news and developments in banking and financial services

Metro licensed to “ban every stupid rule”
Metro Bank has finally won its long-awaited licence from the Financial Services Authority – and is the latest entrant to UK high street banking. It plans to open branches in Earl’s Court and Holborn shortly, expanding to more than 200 in Greater London within ten years.

Metro’s vice-chairman and largest shareholder, Vernon Hill, has pledged to put an end to “every stupid bank rule we can find”. Chairman Anthony Thomson speaks of a return to a “more traditional banking model ….by providing unparalleled service and convenience”.

The bank says it will attract customers by offering an old-fashioned service with plenty of tellers, toilets and extended opening hours, including weekends and late evenings. And – in deference to Hill’s chairmanship of the US pet insurer Pet Plan America – there’s “a friendly welcome to dogs and their owners”, say the bank, “with water bowls and dog biscuits on hand for man’s best friend – dogs rule at Metro Bank!”

Rock savers’ 100% guarantee ends
The 100% guarantee on Northern Rock deposits – which many rival banks denounced as unfair competition – is to end next month. After 24 May, any customers of the bank will have their savings of up to £50,000 protected by the Financial Services Compensation Scheme (FSCS). And that applies to anyone opening an account between now and then.  

“Too many changes at a rush”
“Banks support the need for change – but we’re concerned that, in all the emotion around the international financial crisis, we are in danger of over-engineering stability, and making too many changes at a rush – at the expense of recovery and future growth in the wider economy.”

So says Angela Knight, Chief Executive of the British Bankers’ Association (BBA). She was hosting a meeting of high level bankers with new EU Internal Market Commissioner, Michel Barnier, to stress the importance of the UK as an international finance centre.  

Holyrood calls for competition in Scottish banking
A report from the Scottish Parliament’s Economy Committee has stated that banks should not be allowed to “hold a gun to the collective heads of the taxpayer” ever again.

The report follows the committee’s recent inquiry on banking and financial services in Scotland and the 2008 crisis which saw taxpayers’ money bailing out major banks.

Its published recommendations include an improvement in corporate governance, the stopping of aggressive marketing, an investigation into the sector’s competitiveness – and a return to “Scottish principles of financial rectitude”. The report also called for a sustainable financial services industry which would support the country’s economic growth though lending.

We’re saving less
Savings have fallen to their lowest level in almost two years, according to a new survey by National Savings and Investments (NS&I). It finds that average monthly savings have decreased from just over £90 to £81.94 in the last year, reflecting a drop in average income.

The report says Britons are putting aside an average of 6.25% of their monthly income. The number of people who say they’re regularly saving has also fallen.

Tim Mack, NS&I senior savings spokesman, comments: “With the new financial year approaching, now’s a good time for people to take a closer look at their finances and set themselves savings goals for the year ahead.”

Maths, magic and money
Is finance based on smoke and mirrors, or does science have a role in financial innovation? Gillian Tett, assistant editor of the Financial Times chairs an expert panel on the issue.

Participants include Riccardo Rebonato from RBS, sociologist Donald MacKenzie and market professional, Terri Duhon. The event is part of this year’s Edinburgh Science Festival:
Time: Wednesday April 14, 8pm
Cost: £7
Venue: Informatics Forum, University of Edinburgh, 10 Crichton Street, Edinburgh, EH8 9AB.
Details: www.sciencefestival.co.uk

Social media transfers
Buxter, a new P2P payment application for Facebook developed by ClickandBuy, was launched in March enabling users to send or receive money up to a value of €50. The application will initially be available in Euros and US Dollars.

Sending funds is free but transaction fees for users withdrawing the money are proportionately high on small transactions, at 1.9 per cent, or a minimum of €2 or $3).

Charles Fraenkl, CEO, ClickandBuy says: “Buxter is the application that will see Facebook members use the platform not just as a way to stay in touch but also as a fast, easy  and secure way to exchange money or buy and sell products and services.”

However, it appears early user feedback is highlighting some issues with the service, including customer care and potential privacy issues.

What recession?
Bridford Financial Solutions, which specialises in providing finance for luxury cars, reports its best ever year with finance in excess of £25m passing through its books.

Ignorance is still bliss
Older people are widely ignorant of ISA thresholds, claims the Co-operative Financial Services (CFS) – but they still invest in them more than younger savers.

A CFS survey finds that three-quarters of over 50s don’t know what their cash allowance is and that older people are less knowledgeable about ISA details than younger savers. All the same, over-50s are still more likely to use ISAs and to invest lump sums.

Victory for victims
In a rare success, the Financial Services Authority has recovered some £270,000 in an operation against a share fraud network. Investors who were duped by the cold-calling scam will be fully reimbursed.

The FSA has also fined an IFA director £49,000 for putting customers at risk of receiving poor pension switching advice. Management failings by Charles Palmer, director of Gloucestershire-based network, Financial Ltd, resulted in poor compliance monitoring on pension switching advice during a period of rapid expansion to 2008.  “Alarming” credit card nation

Around 14 million people in the UK are using their credit card for day-to-day living, according to new research by moneysupermarket.com, the online price comparison agency.

One in five people carries at least three credit cards, says the agency’s report. Some 17% use their card every day and nearly 30% use theirs at least once a week.

This shows the “important role” of credit cards in our lives, says Peter Harrison, credit cards expert at moneysupermarket.com, but adds: “It’s alarming to see that so many people are using credit to pay for day-to-day expenses.”

The research reveals that women are less likely to expose themselves to credit card debt. Fewer women than men have a credit card to begin with, and those that do use theirs less than their male counterparts.

Barclays: increase in charges – and profits
Around two million Barclays current account holders are to pay higher overdraft interest rates. Hardest hit will be Graduate Account holders, who face a 5% rise in charges to 14.9%.

Additions Active and First Additions customers will pay 18.3% (up from 14.9%), while Premier Life and Current Account Plus authorised overdraft charges also rise.

The news comes just after the bank reported a 92% rise in 2009 full-year profits to £11.6bn. 

RBS: a £3bn ‘gap’ stalls branch sale
The sale of 320 Royal Bank of Scotland branches is in trouble after a £3bn funding gap was revealed.

Documents sent to prospective bidders show the network is dependent on emergency funding from the Bank of England. The loans, part of the package of aid extended to RBS under the Special Liquidity Scheme, will have to be replaced by the new owner within weeks of taking control.

It’s also claimed that any buyer would have to put up around £2bn of capital to support the loan book, nearly double what was originally estimated.

The branch sale has been ordered by the European Commission. Lloyds Banking Group, under similar orders to sell off part of its business, has yet to begin. 

Annual General Meeting 2010
Our Annual General Meeting will take place on Friday 25 June 2010, at 4.15pm. The AGM will be held at the Institute’s offices, 38b Drumsheugh Gardens, Edinburgh EH3 7SW. We look forward to seeing you there.

CPD recording: Log your hours
Members participating in the Continuing Professional Development scheme are reminded that they should now be recording their CPD for 2010. Participation in the scheme is a requirement to retain any CPD-related designations (Chartered Banker and PMA) you may have. A monitoring process is now in place and you may be requested to submit evidence at the end of the year.

We would encourage all members to make use of the online recording facility which can be accessed by logging onto the members’ area of the website at www.charteredbanker.com. Please note that any mortgage-related CPD can now be updated online into the Technical Skills (Mortgage Adviser) category, which will make it easier to demonstrate that you have met the requirements for PMA status. If you have any queries relating to CPD, please email cpd@charteredbanker.com

Online learning from Nelson Croom
E-learning courses from Nelson Croom are available free of charge within the members’ area of the website and can all be used for CPD purposes. The courses in Networking Skills, Leadership Skills and Business Performance Management are interactive and designed to suit different learning styles, with activities that help consolidate the learning.

The courses contain 4-5 modules and most learners complete each module in about an hour, which enables them to fit their learning around other commitments. Learners are also able to revisit areas of the course when they want to.

We will be introducing two additional Nelson Croom courses in the near future. We will be announcing the details soon. WEBINARS WILL BE RUN ON PROFESSIONALISM AND ETHICS 

Banking Insights event: 11 May 2010
Our Banking Insights events, run in association with PricewaterhouseCoopers, begin again this Spring. The first session will take place at the PwC offices, Erskine House, Queen Street, Edinburgh on Tuesday 11 May. Save the date and watch our website for more details soon.

Since 2003, this series of events has provided a unique environment for representatives from financial services organisations to meet and discuss the key issues affecting the industry. Banking Insights continues to take a thought leadership approach in hearing from and sharing insights and practical experiences with PricewaterhouseCoopers experts.

If you have any queries regarding this series, please contact Ashleigh Edmiston at the Institute: ashleigh@charteredbanker.com, 0131 473 7797.

Member feedback
At CIOBS we are committed to providing a flexible, responsive and high quality service to all our Members and finding out your views is an important part of the process.

If you would like to give feedback on any aspect of the Institute’s services or suggest how they could be improved, why not email your comments to our new email address feedback@charteredbanker.com. We will be reminding you of the address in future editions of the magazine.

You can, of course, continue to give us your views by phone or in writing.

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