Savings safety net grows for some...
The compensation limit on UK deposits has risen to £85,000 from 1 January. The rise, from £50,000, brings it into line with EU levels.

The UK Financial Services Compensation Scheme (FSCS ) will launch a publicity campaign to raise awareness of the new limit. The FSCS will cover all deposits with UK banks and subsidiaries of foreign banks operating in the UK. Deposits in branches of banks that are based in the European Economic Area will often be covered by the national scheme in the country where the bank has its headquarters.

International banking groups with headquarters outside of Europe, but which have authorisation to operate in the UK, will be covered by the FSCS .

... but not for all
Savers who have deposits with separate building societies which have since merged, could lose out in the new scheme.

Under the previous system, building society customers were covered to the tune of £50,000 for each institution in which they had deposits. If they had accounts with two societies which subsequently merged, they would be compensated for £50,000 for each account in the event of a crisis.

However, the new FSCS is operated on a per-institution basis, so deposits will only be protected up to the £85,000 limit. Given the recent spate of consolidation in the building society sector, many savers are sure to find themselves enjoying less protection.

Euro woes could hit UK, warns Bank of England
The Bank of England has once again raised the spectre of a Eurozone-based threat to the UK banking system. In its latest Financial Stability Report the bank says that the UK is only “partially insulated” from failures in European systems.

The troubles of the economies in Ireland and Greece, coupled with concerns about the viability of other sovereign states, triggered the latest warning.

The bank’s report says that it is in the sector’s “collective interest to build resilience gradually through retention of earnings, which would be boosted if banks restrain distribution of profits to equity holders and staff”.

Plastic debt becomes easier to manage
Credit card owners can enjoy a number of new benefits thanks to card operators. The measures, which were introduced voluntarily, will give consumers a better chance to manage debt.

A new minimum repayment calculation will mean that the overall balance will always be reduced, even if only the minimum repayment is made.

In addition, the most expensive debt on a credit card will always be paid off first. Customers will also be given more time to object to an increased credit limit, the opportunity to opt-out of credit limits entirely and have easier ways to reduce their current limit.

UK Cards Association chair Melanie Johnson said the changes would “deliver a number of positive benefits to the nation’s 30 million credit card holders, giving them both increased control over their credit cards and added confidence in the way that they are managed by credit card companies”.

Sustainable Finance Awards
The Financial Times and the International Finance Corporation have launched the FT/IFC Sustainable Finance Awards in recognition of those financial institutions that have demonstrated leadership and innovation in integrating environmental, social and governance considerations into their business.

“IFC see huge potential for innovation and better corporate governance,” says Lars Thunell, IFC Executive Vice President and CEO , “as the industry develops products and services that deliver finance in a way that lifts people out of poverty, helps create sustainable jobs and fights climate change.”

Further details on the awards, for which applications will be accepted until 14 March, and the 2011 FT/IFC Sustainable Finance Conference on June 16, 2011 can be obtained at www.ftconferences.com/sustainablefinance

A fine year for FSA
The UK financial regulator imposed a record number of fines in 2010, it has been revealed. Penalties of £89m were laid down on unscrupulous firms, up from £35m the year before.

Investment banks JP Morgan and Goldman Sachs were the biggest culprits with fines of £33.3m and £17.5m respectively. The FSA also banned 60 people from working in the sector.

Despite this flexing of regulatory muscle, the UK body is still far behind its US counterpart whose total annual fines usually tops the $500m mark.

Banks’ ‘vital contribution’ to UK economy
The financial services industry contributed over £53bn to the UK tax system during the banking crisis, according to a new report. In the 12 months to March 2010, the sector was also the largest payer of corporation tax, overtaking the oil and gas industry.

Stuart Fraser, policy chairman at The City of London Corporation, which commissioned the survey, says the figures highlight the “vital contribution made by the financial services industry to the Exchequer even as the effects of the crisis weighed on institutions across the City”.

As well as contributing 11.2% of the total UK tax take, the industry also employs more than one million people.

Quotas for women bankers unlikely
Lord Davies of Abersoch, the man charged with developing a strategy to increase female representation in the UK’s boardrooms, has revealed he is not in favour of introducing quotas.

Women currently make up little more than 12% of FTSE 100 directors and there are calls for this to be redressed. EU justice commissioner Viviane Reding has already set out a five year gender equality strategy to help achieve her goal of seeing 30% of women directors on boards by 2015, and 40% by 2020.

Many commentators believe that having more women in the upper echelons of UK banks would have curbed the worst excesses of risk-taking of recent times and lessened the extent of the banking crisis.

In February, Lord Davies will present a review considering options for promoting gender equality within the boards of listed companies and, although not in favour of quotas, which have been successfully implemented in countries such as Norway and Spain, he has not ruled them out as a recommendation. The former Standard Chartered chief executive was “not convinced that they are the right method to encourage progress” and said that the majority of women he had spoken to were against setting quotas. He is expected to recommend broadening recruitment and selection processes instead.

APS fails to meet business loan goal
The Treasury’s Asset Protection Scheme (APS) has not achieved its stated targets for lending to business. A shortfall of £30bn has been identified in the agreed obligations on Lloyds Banking Group and The Royal Bank of Scotland, although both banks did meet their goals for mortgage lending.

The findings were revealed by the National Audit Office, which has been monitoring the scheme. Lloyds has since opted out of the APS after a successful fundraising exercise.

Mortgage and remortgage approvals up
New Bank of England figures detail a rise in mortgage approvals at the end of 2010. The slight growth in November was tempered by a larger increase in remortgage approvals.

“The sharp increase in the number of remortgages shows that consumers are becoming far more wary of potential interest rate rises given the growing inflation threat. Increasingly, the belief is that the Bank rate will rise this year and not next,” said Brian Murphy, head of lending at mortgage broker, the Mortgage Advice Bureau.

The British Bankers’ Association recently revealed that home loan approvals for house purchases by the major UK banks had fallen to a 20-month low in November.

Dutch ethical bank steps into lending breach
A leading European ethical lender is aiming to increase its UK commitments to plug the gap left by traditional lenders. Triodos Bank hopes to swell its presence to £500m this year.

The Dutch outfit, which employs nearly 80 people in the UK, finances organisations that deliver social, environmental or cultural benefits. The group has investment management and corporate finance advisory arms, but no wholesale or investment banking operations.

Triodos grew its UK net lending in 2010 by £60m to £300m, with a further £160m of lending commitments. Customers include Glastonbury supremo Michael Eavis, who borrowed £500,000 to fund the installation of the UK’s largest solar roof, on top of a barn.

As a pioneer of the ethical, transparent and sustainable banking model, about half of Triodos’ lending is in the environmental, renewable energy and organic farming sectors. The remainder is split between charities and social enterprises. It believes that, with traditional lenders cutting back on their operations, this is the perfect time to grow its presence within ethical business in the UK.

Not going to cheque-out yet
The banking industry is still seeking an adequate alternative to cheques. The UK Payments Council has voted to phase out cheques in 2018 but is still unable to agree on an “accessible and acceptable” alternative payment system.

Cheque usage is in decline among customers and new figures indicate that it costs four times more to process a cheque compared to an electronic payment.

Despite this, consumers groups and charities have suggested that elderly people will hoard cash at home if cheques are abolished too quickly. The Payments Council has therefore committed to extend the lifetime of cheques until a viable, possibly ‘paper-based’, option is found.

RBS and NatWest fined £2.8m
RBS and NatWest, both part of the Royal Bank of Scotland Group, have been fined a total of £2.8m by the FSA for their failure to deal properly with routine customer complaints.

The FSA highlighted the banks’ delays, poor quality investigations and inadequate explanations of complaint conclusions as being behind the fine and stated that there was a “high risk” that customers of both banks may not have been treated fairly.

Margaret Cole, the FSA ’s managing director of enforcement and financial crime, explained: “We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly.”

The RBS Group has acknowledged its complaints handling has been poor and, following its full co-operation with the FSA investigation, has agreed to focus on addressing the root causes.