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Britain’s biggest mortgage lender is scrapping mortgage exit fees after bowing to pressure from the City regulator, it emerged.

The HBOS group, which includes Halifax, said it would no longer be charging new customers fees ranging from £150 to £250 when they repaid their mortgage or switched to another provider.

The move comes after the Financial Services Authority (FSA) gave lenders until midnight on Tuesday to set out their position on fees for new customers.

It has already called on lenders to give refunds to former customers who had to pay a higher exit fee than was originally stated in their contract.

Some people have seen the fees double since when they took their mortgage out and when they repaid it.

The regulator said lenders could either abolish the fees or agree that they will not be increased during the term of a mortgage. If they continue to charge variable fees they will have to justify any increases.

But financial information group Moneyfacts said only a handful of lenders had responded to the call with just hours to go before the FSA’s deadline.Along with HBOS, the only groups which have so far announced they will scrap the fees are Cheltenham & Gloucester, Northern Rock, Standard Life, and the Royal Bank of Scotland Group, which includes NatWest. Coventry Building Society has reduced its exit charge.

A flurry of lenders are expected to announce changes later on Tuesday, just hours before the deadline.

Lisa Taylor, of Moneyfacts, questioned whether the lenders were taking the issue seriously or whether they thought they would be able to justify their fees.

She said: “They will not take this revenue loss lying down. They will look to recoup it.” She added they were likely to do this either by raising arrangement fees or even by renaming mortgage exit charges.

Policyholders at Standard Life benefited from surplus assets held in the group’s with-profits fund for the first time.

The insurer said people with policies maturing from Tuesday, or those who cashed in their investment or had a with-profits pension annuity, would receive a proportion of the groups so-called inherited estate.

The payouts apply to people who have held a with-profits policy since before the society demutualised on July 10 last year and who still hold their investment. The group would not disclose how it was dividing the money between policyholders.

But it said someone with a 25-year endowment policy into which they had paid £50 a month could expect to receive around £183 if their policy was maturing today, while someone with a pension into which they had paid £200 a month for 20 years would get £315.

The term inherited estate refers to surplus assets accumulated above those needed to meet the liabilities in the with-profits fund. When Standard Life demutualised its inherited estate was worth around £800 million, and by the end of last year this had risen to £1.3 billion.

The group also said that most policy payouts and values had risen since last year, although it declined to put a percentage on the increase. It also refused to reveal what level of bonuses it was paying, saying it was not company policy to disclose these.

Instead the group said someone who had paid £50 a month into an endowment policy for 20 years would receive a final payout of £23,041 if it matured today, compared with £21,917 if a 20-year policy had matured last year.

A pension into which £200 a month had been paid for 20 years would now be worth £91,097, well down on the £96,343 a 20-year policy would have been worth if it had matured in 2006.

The group also said it had increased its exposure to equities, which it believed would improve the long-term prospects for future with-profits returns.

With-profits are long-term savings policies that aim to smooth out investment volatility by holding back returns in good years to pay out in bad ones. They are often taken out as a pension or an endowment to pay off a mortgage.

Lloyds TSB cheered shareholders with its first dividend hike for five years, as the bank posted a £2 billion profits haul for the first half of 2007.

The UK’s fifth-largest bank, which saw underlying pre-tax profits rise 15% to £2.01 billion, said it was “increasingly confident” about prospects for the year after a strong performance across the group. The bank’s 5% increase in the dividend for the first time since 2002 came as it announced the sale of its Abbey Life business to Deutsche Bank for £977 million.

Analysts praised Lloyds TSB’s “robust” performance and improving cost controls as the firm’s share price jumped by more than 4%. Collins Stewart analyst Alex Potter said: “These interims are some of the most positive Lloyds have posted in years.”

Lloyds TSB’s retail banking operation posted a 13% rise in profits to £803 million, helped by higher income from current accounts, savings and personal lending. The bank also reported a smaller than expected £36 million charge to refund overdraft fees disputed by customers.

The figure contrasts with the £116 million in charges fellow bank HSBC said it had paid out.

The group’s bad debt provisions in retail banking fell by 1% to £627 million after lower levels of customer insolvencies and tougher lending standards.

Mortgage arrears fell in the first half of the year, despite homeowners coming under pressure from higher borrowing costs.

The bank added that it expected overall impairment charges for the full year to be no higher than 2006, although “customer insolvency and interest rate trends remain key factors in the outlook”.

The group’s insurance division posted a 7% boost in profits at its insurance and investments business to £499 million, despite June’s flood chaos in northern England hitting the company’s general insurance operation. The business saw its profits almost halved to £59 million after an extra £57 million in weather-related claims - of which £45 million stemmed from June’s severe flooding.

The group’s wholesale and international banking business also posted a 12% profits hike to £863 million as the company avoided the recent problems in the US which have affected other major banks, including HSBC.

Nearly a third of UK pension schemes remain in the black despite recent stock market falls, research shows.

Around 30% of the UK’s 200 largest defined benefit pension schemes have surplus assets, including 40% of firms in the Ftse 100, according to consultancy firm Aon Consulting.

But overall the group said the pension schemes collectively faced a deficit of £13 billion at the end of July, after spending most of the past two months in surplus.

Once firms that have more assets than liabilities are stripped out, the total deficit among firms that are in the red rises to £24 billion. Firms that are in the black collectively have a surplus of £9 billion.

The group blamed the volatile stock market for the worsening funding position, claiming that £9 billion of the deficit was caused by the steep fall in share prices on July 26 alone - the second largest increase in one day since records began in June 2001.

Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “It is increasingly apparent that UK plc is divided between those with pension schemes in surplus and those with schemes in deficit.

“Many companies and trustees are seeking to protect their surpluses with innovative solutions such as liability driven investment, whereas others are seeking to eliminate deficits by a combination of investment strategy and company contributions.

“High levels of volatility, such as that demonstrated by market falls on July 26, is likely to increase the trend of many companies and pension schemes locking into surpluses when they appear.”

House prices in the UK are overvalued by more than 20% compared with the long-term average, a credit rating agency has warned.

Fitch Ratings said the UK had enjoyed booming house prices in recent years, while households had also taken on high levels of debt.

It warned that this combination of high house prices and debt made the UK economy one of the most vulnerable in the world to rising interest rates.

The group, which looked at house prices and debt in 16 industrialised countries, said the UK was the third most vulnerable to a combination of weakening house prices and rising interest rates, after Denmark and New Zealand.

Brian Coulton, head of global economics and Europe in Fitch’s Sovereign team, said: “Given record levels of household debt, rising interest rates and after several years of strong house price inflation in many countries, Fitch has assessed a range of indicators of household balance sheet vulnerabilities and house price valuation measures. For overall vulnerability, New Zealand ranks first, Denmark second and the UK third as the most exposed countries.”

The group found that property prices were most overvalued in France, with the UK having the second highest house prices in relation to incomes and Denmark having the third highest level.

It said the Norwegian economy was the most vulnerable in terms of the high levels of debt consumers had taken on, followed by New Zealand, Australia and Denmark.

The UK fared slightly better on this measure, ranked seventh out of 16 countries, because of the lower cost of servicing debt due to low interest rates and UK household’s overall net worth.

But when the two measures of overvalued house prices and high debt were put together, the UK was considered to be the third most vulnerable economy.

At the other end of the scale, Fitch said Japan, Germany and Italy were the least vulnerable.

Campaigners against penalty overdraft charges remained undeterred even though a barrister lost his legal bid to gain compensation from a high street bank.

Tom Brennan was told he could not continue with his battle for damages from NatWest in relation to money taken from his account in unauthorised overdraft charges.

His application to appeal the decision was also denied by City of London County Court.

Mr Brennan, a recently qualified barrister, had claimed at an earlier hearing that the bank acted unlawfully in taking around £2,500 in fees.

Alongside full reimbursement of the charges, Mr Brennan was seeking aggravated damages in recognition of the stress he encountered and the difficulty he had paying rent and purchasing necessary items.

In addition, he was asking for exemplary damages, which are awarded against the defendant when a wrong is deemed to be deliberate, malicious or negligent.

NatWest, which had called for the claim for aggravated and exemplary damages to be struck out and maintained that its fees were lawful, had offered Mr Brennan around £3,000, which he refused.

He claimed the money he was offered did not diminish the damage caused to his credit rating, which could have adverse effects on future applications for credit cards and mortgages.

The Office of Fair Trading (OFT) announced on Thursday that it was launching a test case against the major banks in the High Court to establish whether their unauthorised overdraft charges were unfair.

Consumer groups campaigning for people to be refunded penalty overdraft charges remained upbeat despite the judgment.

The amount of money people paid into investment funds fell during June.

Individuals invested a total of £5.33 billion in unit trusts and OEICs (open-ended investment companies) that are registered in the UK during the month, down from £5.71 billion the previous month, according to the Investment Management Association.

Once people cashing in their investments or moving them elsewhere was taken into account, net sales rose by only £766.7 million, well down on the previous month’s £1.14 billion and a figure of £1.1 billion reached in June last year.

The group said there was no obvious reason for the drop, adding that not too much could be read into one month’s figures.

On a quarterly basis sale of investment funds continued to remain buoyant, with the amount invested rising by £3.68 billion during the three months to the end of June, up from £3.03 billion during the first quarter of the year.

ISA sales also fell during June, with net sales of the tax-free accounts falling to £108.8 million, from £135.5 million in May and nearly half the £190.7 million seen in June last year.

But on a quarterly basis sales remained strong, with a total of £1.09 billion invested in the products during the three months to the end of June, well up on the £652.7 million reached during the previous three months.

Last week the Government paved the way for a range of reforms to make ISAs simpler and easier to understand, including abolishing the current distinction between mini and maxi ISAs.

Richard Saunders, chief executive of the IMA, said: “June was a slightly slower month for retail investment, but sales in the second quarter of 2007 overall held up well.

“Investment in ISAs continued to be at a modest level, which is puzzling given the buoyancy of industry sales in the last two years. It is to be hoped that the recently published reforms to ISAs from next April will help to revitalise the product.”

High street bank Halifax has announced it is stepping up its efforts to reunite people with the £44 million that it holds in dormant accounts.

The group said it would be writing to around 20,000 customers who had not used their accounts for 15 or more years to remind them about the money.

It is also running a further round of local and national press advertisements in a bid to jog people’s memories about accounts they may have lost track of over time.

The group has so far reunited people with more than £6 million since it first launched the campaign four months ago.

Mike Regnier, head of savings at Halifax, said: “The response to our campaign to reunite customers with their funds has been very encouraging, and we believe these next steps in the process will help more customers track down their money.”

The financial services industry has launched a major drive to reunite people with so-called dormant accounts ahead of Government plans to release the estimated £350 million to £500 million that has been untouched for 15 years and use it to finance community projects.

Halifax is the only UK bank to have its own reunification scheme, although National Savings and Investments, the British Bankers’ Association and the Building Societies Association are all running campaigns.

Halifax has set up a dormant accounts website which can be found at www.halifaxlocateaccounts.co.uk.

Consumer credit confidence fell sharply in Q2 2007, according to the Personal Credit Index from CreditExpert.co.uk. The Index, which measures financial confidence as a simple, single figure, slumped by four points (from 100 to 96) - the largest quarterly fall so far recorded. The combination of five interest rate rises and flooding in the Midlands in June are likely contributors to the drop.

Londoners have felt the pinch most as the capital’s confidence has plummeted to a record low of 89 from last quarter’s 97. If interest rates continue to rise as predicted, then London’s credit confidence may continue to tumble.

Possibly the most significant drop is among those living in Wales and the Midlands, where many are feeling the effects of one of the wettest summers on record and where confidence fell nine points to 100 - the largest single drop this quarter.

Flooding in mid-June seems a likely cause of negativity as homeowners had to deal with the prospect of replacing damaged possessions. With more floods currently hitting the Midlands, and with many people being hit for a second time in a month, credit confidence in the next quarter seems likely to drop even further.

The research also reveals that the South continues a steady decline, dropping six points to 92. Indeed, it is the only region never to have exceeded the January 2006 benchmark of 100. Only Scotland and the North of England are bucking the trend. There, financial confidence has risen two points - but at 99 is still below the Index starting level.

Higher house prices and larger mortgages in London and South East England mean interest rate rises have had a greater impact on residents there than those in Scotland and the North. Higher confidence in Scotland, in particular, and the North may be caused by higher government spending per head in those areas than other parts of the UK.

Confidence in paying bills has also taken a knock. The number of adults who feel ‘not very confident’ of paying their bills on time has risen by half to 9%, which corresponds to nearly three million adults. Almost half (48%) of adult bill payers remain ‘very confident’ about paying on time.

Meanwhile, financial strain is being felt by many Brits, with 4% of borrowers now ‘very uncomfortable’ with the level of their debts. A further 8% are ‘fairly uncomfortable’ about their outstanding loans, equating to a total of four million adults.

© Moneyextra.com

The OFT (Office of Fair Trading) has advised all estate agents in England and Wales that a failure to comply with the new Home Information Packs (HIPs) regulations could result in a ban from estate agency work.

From August 1st 2007, all homes for sale with four or more bedrooms in England and Wales will need a HIP, with details of the property title, energy performance, planning permissions and searches for prospective buyers. Under the Estate Agents Act and HIPs regulations, the OFT has the power to assess whether an estate agent is fit to practise.

The OFT can impose a ban on an estate agent found to be in breach of the Act and can also issue a Warning Order. Once a Warning Order has been issued, if the agent continues to breach the Act, the OFT can make a Prohibition Order banning the agent from practising as an estate agent in the future.

Mike Haley, OFT Head of Consumer Protection said: “The new HIPs come into force tomorrow and it is important that agents are aware of their obligations and the possible consequences if they fail to comply.

“If an agent fails to comply, this could trigger an investigation into an agent’s fitness to continue estate agency work.”

© Moneyextra.com