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Banks have been accused of presiding over a current account “jungle” that disadvantaged vulnerable customers.

The National Consumer Council (NCC) said unfair banking charges “crippled” Britain’s most vulnerable current account holders and called for better, clearer and more upfront information from providers.

It follows concern that people on low incomes and with limited financial knowledge are being hit with fees as high as £39 for going beyond their overdraft limit, pushing them further into debt.

In response to the Office of Fair Trading’s (OFT) consultation on personal current accounts, the NCC is pushing for similar safeguards to those already brought in to the Northern Ireland market.

As such it is calling on the OFT to force banks to provide more information on bank statements, including explanations of how and when interest rates and charges are applied.

In addition, it wants the watchdog to investigate how the costs of “free banking” arise and how the burden of often hidden costs are split between different groups of customers.

And in a bid to get a better deal for the least well-off in society, the consumer watchdog called on the OFT to include basic bank accounts in the remit of its current investigation.

Ed Mayo, chief executive at the NCC, said: “Navigating through the current account jungle can be a real challenge. People are reluctant to switch because they are either worried about standing orders and direct debits not being paid, or feel that the process is too complicated.

“Those on low incomes or with limited banking experience are most likely to be adversely affected. For them a default charge of £39 is enough to push them into debt.

“It is about time banks stopped pulling the wool over people’s eyes and started behaving more responsibly.”

Stocks slid as investors, securing positions before the second half of the year begins, sold off due to rising oil prices and lingering worries about subprime mortgage lending troubles.

The erratic day capped off a strong second quarter for Wall Street, which pushed the Dow Jones industrial average up more than 1,000 points over the last three months.

The stock market initially rose on Friday, encouraged by Commerce Department data that fits well with the Federal Reserve’s assessment that the economy appears to be growing moderately and that inflation, while still a concern, seems to be easing.

The reports said May construction spending rose by the largest amount in nearly one and a half years, and consumer spending increased for the second month in a row. The data also indicated that “core” prices, which strip out food and energy, moderated to 1.9% over the last 12 months - the lowest year-over-year rate since 2004.

But the stock market could not hold on to gains, as oil prices surged above 70 dollars a barrel and jitters about subprime lending escalated. Last week, Bear Stearns & Cos. had to bail out a hedge fund with investments tied to subprime loans. The stock fell nearly 3% Friday, and other financial companies followed.

The Dow Jones industrial average fell 13.66, or 0.10%, to 13,408.62, after swinging dramatically higher and lower over the course of the day. The index rose 1,054.27 points, or 8.53%, during the second quarter, and hit its most recent record high on June 4.

Broader stock indicators also dipped today. The Standard & Poor’s 500 index fell 2.36, or 0.16%, to 1,503.35, and the Nasdaq composite index fell 5.14, or 0.20%, to 2,603.23.

The S&P rose 82.49 points, or 5.81%, in the second quarter, during which it reached record closing levels for the first time since March 2000. The Nasdaq rose 181.59 points, or 7.50%.

Bonds rose on heightened fears of terrorist activity in Great Britain. The yield on the benchmark 10-year Treasury note fell to 5.04% from 5.11% late on Thursday. The dollar slipped against most other major currencies, while gold prices edged higher.

The Russell 2000 index of smaller companies fell 5.33, or 0.64%, to 833.70. It rose 4.12% in the second quarter. Declining issues outpaced advancers by about 9 to 7 on the New York Stock Exchange, where volume came to 1.66 billion shares, up from 1.49 billion shares on Thursday.

Mortgage demand bounced back in May with the highest number of approved home loans of the year so far.

Figures from the British Bankers’ Association show that 77,443 homebuyers took out a mortgage during the month, up from 64,815 in April. It represented the largest monthly total since November 2006, but was down slightly on the same period last year.

Remortgaging also spiked during May, up from 60,476 in April to 77,584. In total there were 204,800 mortgages approved for all purposes last month with strong remortgage data leading to an overall annual increase of 2%.

The average size of mortgages being taken out jumped by more than £4,000 in May and now represents a 13% year-on-year increase.

Robust approval figures and a hike in the size of loans being agreed meant that gross mortgage lending in May was 8% higher than for the same month in 2006.

The BBA said the data followed the usual seasonal pattern of stronger lending going into the summer months.

David Dooks, director of statistics at the BBA, said: “Contrary to the recent stable trend, the banks’ gross and net mortgage lending strengthened in May, reflecting an improved competitive position rather than a rise in mortgage demand across the market.

“And because of strong approvals in May, the banks’ higher market share is likely to continue over the next couple of months.

But it was not all good news for the banks, as consumer attitudes to unsecured debt continues to wane. Credit card borrowing fell by £0.4 billion in May, while borrowing on personal loans and overdrafts dropped by around £100 million.

Mr Dooks added: “Although retail sales have grown recently, credit card borrowing continues to slow down as consumers prefer to pay up front rather than borrowing to spend.”

Mecca Bingo firm Rank has surprised the City by revealing sales declined by less than expected in the first weeks of the smoking ban in Wales.

The group’s three clubs in Wales reported a like-for-like sales drop of 5% in the period since April 2, compared with a 14% deterioration experienced when the ban was first introduced in Scotland more than a year ago.

In Scotland, revenues were down by 10% at the company’s 14 clubs during the first 25 weeks of the year, but the firm said it had begun to see signs of recovery in recent weeks.

Since the anniversary of the Scottish ban in March, revenues were down by just 1% with a return to revenue growth during the last nine weeks.

Investec analyst Matthew Gerard said the results were “encouraging” and suggested that the smoking ban “forces a temporary adjustment only and that longer term, post the ban, bingo can be a growth industry”. Shares rose 3% today.

Rank, which has 86 Mecca clubs in England, has introduced measures to mitigate the impact of the UK-wide ban, such as smoking shelters where customers can continue to play while they smoke.

Chief executive Ian Burke said: “Our approach to the smoking ban is to focus on the changing needs of our customers and to adapt our product offer accordingly.

“The initiatives we are introducing are designed to make sure that our customers’ experience of bingo is enhanced rather than impaired by the smoking ban, with consistently attractive prize boards, the development of electronic bingo products and the creation of outside enclosures where customers can continue to play bingo.”

The news came as the firm reported a 5% rise in like-for-like group revenues during the first 25 weeks of the year, ahead of analysts’ expectations of 3%.

Rank’s Grosvenor Casino chain grew revenues by 4% following a pick up in admissions during the second quarter, while revenues at its gaming website Blue Square soared 37%.

Two thirds of Brits have received a ‘red reminder’ for payment of their bills with 63% blaming forgetfulness, new research from Lloyds TSB Internet banking reveals. But, the red reminder could soon be a thing of the past due to the bank’s online bill manager service.

The bill manager service gives customers the ability to view all of their household bills in one place allowing them to pay, view and store paperless bills online. Customers also receive email alerts when bills are due, removing the need for the dreaded red reminder.

The organisations which have so far agreed to allow bills to be viewed and paid through lloydstsb.com are: Anglian Water, Bournemouth and West Hampshire Water, Bristol Water, Colchester Borough Council, EDF Energy Gas, EDF Energy Electricity Essex and Suffolk Water, Lloyds TSB Cards, Nectar, Northumbrian Water, Sainsbury’s Energy Gas, Sainsbury’s Energy Electricity, South East Water, Southern Water, Sutton and East Surrey Water, Thames Water, TV Licensing, Wessex Water and Virgin Media.

Of those surveyed, nearly 45% say they receive red reminders occasionally, 15% have received one just once, but 6% receive them frequently. A quarter of people who’ve had a red reminder drop on their doormat say it makes them feel anxious, while 21% say it stresses them out.

The main reason most people end up with red reminders is simply because they forget about the bill (63%). Meanwhile, 22% say that their late payment is due to the bill arriving while they were on holiday, while 13% claim they never received the bill in the first place.

While more than 55% say they pay their bill as soon as the red reminder comes through their letterbox, some 27% wait for up to a week while 13% drag out payment for up to a month.

Half of those surveyed said that they thought email reminders about their bills would help them to avoid late payment while 40% said they’d like to be able to view and pay all of their bills via their Internet banking service.

© Moneyextra.com

Capital One Bank (Europe), owned by US-based financial services group Capital One, has confirmed it is closing its UK homeowner loans operation. As a result some 230 jobs are to go.

Sanjiv Yajnik, principal managing director of Capital One Bank (Europe), said that while the decision to shut the Macclesfield, Cheshire-based unit - which specialises in selling remortgage products and homeowner secured loans to customers with impaired credit histories - had been a difficult one, it is no longer seen as a strategic fit for the Capital One business, going forward.

Yajnik added that despite the closure Capital One remains committed to building its business UK and will continue to offer ‘innovative and market leading’ products to customers.

© Moneyextra.com

Bradford & Bingley has announced the launch of eSavings4 - the online savings account giving an annual bonus rate of 6.01% p.a. gross/AER for the first 12 months.

eSavings4 - available to savers with a minimum deposit of £1,000 - pays a bonus rate for the first 12 months from the anniversary of the account opening - the annual gross interest rate thereafter guaranteed to at least match Bank of England base rate until June 30th 2009.

For customers who want their interest to be credited on a monthly basis, a special bonus interest rate of 5.85% p.a. gross is available. Again, this rate will apply for the first 12 months from the anniversary of the account opening - after which it will change to 5.37% p.a. gross.

No notice is required for withdrawals, which can be made on a penalty-free basis via BACS transfer to the customer’s nominated bank account.

© Moneyextra.com

City watchdog, the Financial Services Authority (FSA), has published a consultation paper proposing to radically reform the rules firms need to follow in carrying out general insurance business with their customers.

A differentiated approach to insurance conduct of business (ICOB) regulation is at the heart of the proposals, which marks a significant step forward in the FSA’s move to more ‘principles-based’ regulation.

For general insurance business, such as household, motor or pet policies, this means moving to principles and high-level rules, except where detailed provisions are required by European Union Directives or in a small number of cases where they are the only practicable way to protect consumers. While this will mean more flexibility for firms, the FSA will require the same standards of conduct and essential consumer safeguards to remain.

For protection products (Payment Protection Insurance (PPI), critical illness cover, income protection and term assurance), the FSA is proposing a small number of additional rules targeted to improve selling practices in areas where consumers are losing out.

Some of these new measures will apply to all protection products, for example, a new standard to ensure balanced oral disclosure to help consumers make informed purchasing decisions.

One of these - a requirement for firms to provide information on price orally to the customer where a discussion takes place - will have particular impact on PPI markets. And some measures will apply only to PPI, such as extending the cancellation period from 14 days to 30 days.

Following the consultation, the new general insurance regime is likely to come into effect in January 2008 with firms being allowed a transitional period for implementation.

© Moneyextra.com

Bank of England Governor Mervyn King said there have been “tentative signals” of a slowdown in consumer spending after four rises in the interest rate in less than a year.

Mr King’s comments to the Treasury Select Committee at Westminster held out hope that interest rates may peak at 5.75% to meet the Bank’s inflation target following an expected rise from the current 5.5% next month.

They follow a survey from business lobby group CBI on Wednesday which showed the weakest levels of high street spending since November and a host of updates from several companies warning that recent hikes in rates were hitting their businesses.

But Mr King said that risks to inflation “were still for the upside”, with particular uncertainty over high levels of business pricing confidence, the rapid expansion of money, and the “buoyant” state of the world economy.

The Governor called last month for a rise in rates to 5.75% but was out-voted by his colleagues on the Bank’s Monetary Policy Committee (MPC) in a knife-edge 5-4 decision.

The MPC predicted in May’s inflation report that rates will need to rise to 5.75% to bring Consumer Price Index (CPI) inflation back to the Bank’s 2% target by the end of next year.

Mr King said the “bigger picture” of May’s inflation prediction was still intact but he added that it was a “genuine challenge” to predict the medium-term outlook for inflation because of volatility over energy prices.

He said: “That is why it should not be surprising that there have been differences of view among the MPC over the level of bank rate required to bring inflation back to the target and keep it there.”

A High Court judge has failed in his bid to find a bank-charge “test case” after dozens of claims were settled at the 11th hour.

Judge Grenfell concluded that there was “no mood” among banks for a definitive ruling after scores of claims over “unfair” unauthorised overdraft fees were paid off during the day.

The lack of a suitable test case deprived the court of a trial in which banks would have had to defend charges that campaigners say are disproportionate, unfair and unlawful.

More than 200 bank customers had originally been listed to appear at Leeds Mercantile Court for a case-management hearing in relation to their claims. However nearly 100 settled overnight reducing the number to 75.

Despite only 24 individuals turning up or being represented at the hearing, Judge Grenfell said he was hopeful of finding one or two that could go to trial.

Such a move could have led to an “authoritative ruling” being made by the courts over the legal status of charges that can go as high as £39, but, campaigners claim, cost banks as little as £2.50.

At the hearing, Judge Grenfell indicated that finding one or two people to go forward to trial would be the best way to cope with the matter, amid thousands of similar cases being heard in courts across the UK.

He told the claimants and bank representative present that dealing with all cases one by one would be cumbersome while group litigation would be expensive.

The judge said: “What we want to achieve is to pick a few cases that are likely to bring the issue before court so that there is an authoritative ruling.” Such a verdict would not be binding on all other cases but it would be “persuasive”, Judge Grenfell said.

However, during Thursday afternoon it emerged that the majority of the remaining claimants had settled with their banks, with a handful having their cases held over while an agreement was sought. Confronted with no suitable claims to move forward with, Judge Grenfell said: “I think it would be fair to say that the message is that there doesn’t appear to be any particular mood to make a definitive ruling on matters of fact and law in this case.”