Our manifesto to bring a halt to dirty tricks

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http://www.timesonline.co.uk/tol/mon...cle4967851.ece

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[Amethyst]

Re: Our manifesto to bring a halt to dirty tricks

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Customers have been warned that nationalised banking does not mean the end of dirty tricks after recent tactics by government-backed institutions Northern Rock and National Savings & Investments provoked criticism from experts.
NS&I cut savings rates for the second time in as many weeks, with the premium bond prize rate going down from 3.25% to 2.85% from November 1. It had already been cut from 3.4% the previous week as the government’s savings agency sought to stem a flood of cash from nervous savers.
Analysts and consumer groups last week called for the government to use the partial nationalisation of Lloyds TSB, HBOS and Royal Bank of Scotland to clean up the industry.
The Sunday Times’s Diana Wright, who deals with reader complaints in her Question of Money column, said: “Now that the government is responsible for nearly half the mortgage market and the largest provider of current accounts in Lloyds TSB, we urge it to take on the sneaky charges and hidden catches that have plagued consumers for years.”
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We outline Money’s manifesto for fairer consumer finance.
1 Decent savings rates with no catches
Luring savers with eye-catching rates that drop after an introductory bonus period is a practice beloved of banks and building societies — and it’s getting worse.
An e-Savings account at NatWest, owned by taxpayer-backed Royal Bank of Scotland (RBS), has the sharpest sting in the tail for savers — after 12 months at a top rate of 6.5% the rate falls to 4.41%.
Kevin Mountford of Moneysupermarket, a comparison site, said: “This time last year there were no ‘bonuses’ over 1 percentage point, now there are six — and NatWest’s is chief among them.”
ING Direct, the Dutch bank which inherited £2.5 billion of accounts from failed Icelandic provider Kaupthing Edge, also has a hefty 1.67 point bonus — its rate falls from 6% to 4.33%.

2 Christmas credit card and overdraft charges


RBS and NatWest raised card rates by one point at the end of last month for new and existing customers — a common tactic near Christmas. However, Halifax cut its credit-card rate by the same amount.
Nationwide, meanwhile, increased its balance-transfer fee from 2.5% to 3% and hiked the rate on cash advances by five points from 22.9% to 27.9%.

3 Ban insurance mis-selling
Related Links

• Banks shun calls to end the rip-offs

• How the bailout affects bank shares

Payment-protection insurance for employees who have suffered an accident or become ill or unemployed is becoming increasingly important and can be obtained relatively cheaply.
However, banks such as NatWest sell the insurance at inflated prices alongside loans.
A £7,500 loan from NatWest over five years, for example, would cost £161 a month in repayments or £9,652 over the term. With insurance, repayments would balloon by nearly a third to £208 or £12,458 over the term — an extra £2,806.
However, stand-alone provider Paymentcare offers the same cover for £465.
The Competition Commission has flagged the possibility of banning lenders from selling PPI alongside loans, or instituting a cap on the cost of cover.
4 Clean up overdraft charges on current accounts
HBOS, Lloyds TSB, and RBS last year joined Barclays, HSBC, Abbey and Nationwide in fighting a High Court petition by the Office of Fair Trading to ban unfair bank fees.
Banks make some £3.5 billion a year by charging customers up to £39 a time for exceeding authorised overdraft limits — even by a few pence. The OFT says that the fees should cover only the administration costs — roughly £4.
5 Mortgage profit margins
Lenders are now charging 1.63 points above Bank rate for trackers — more than five times as much as a year ago when the margin was only 0.3 points above Bank rate, then at 5.75%. The average tracker rate has shot up from 6.05% to 6.136%, even though Bank rate has fallen by 1.25 points.
Fees have also risen — from £239 a year ago to £750, according to figures from Mform, the online mortgage broker.
Francis Ghiloni, of Mform, said: “For confidence to return to the market lenders have got to more closely reflect Bank rate. Otherwise they are improving their margins and not helping customers.”
Analysts would not want to see a return to the irresponsible actions of a year or two ago, when lenders were offering deals below the cost of funding to get people through the door, but they fear lenders will use the crisis to take margins too far in the opposite direction.
Les Jacobs of Mortgage Monitor, a mortgage comparison site, said: “Lenders have been given a rate cut by the Bank of England, but there is a real concern the majority will swallow it up to increase their own profit margins.”
Building societies are no safe haven. It emerged last week that only two of Britain’s 59 building societies — Britannia and Melton Mowbray — have so far announced they will pass on the full Bank rate cut to those on standard variable rate (SVR) mortgages.
Kent Reliance and Darlington have some of the highest SVRs on the market, 7.37% and 7.59% respectively.