Earlier payday cap?

Labour wants the cap on the cost of credit from payday lenders to be implemented 3 months earlier than the government is planning.

Ministers have promised that the financial watchdog, the FCA, will have a duty to impose a cap and that the launch date should be not later 2nd January, 2015.

Today Labour has proposed an amendment to the Banking Reform Bill, which would require the FCA to apply the cap from 1st October, 2014.

It wants the upper limit on interest and other charges to come in before shoppers go on a borrowing spree before Christmas next year.

There is expected to be a vote on the amendment in the Lords tonight.

Here's the amendment, followed by the original government amendment bringing in the cap.

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22*

Line 19, leave out “2 January 2015” and insert “1 October 2014”

After Clause 123

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20

Insert the following new Clause—

“Duty of FCA to make rules restricting charges for high-cost short-term credit

(1)   In section 137C of FSMA 2000 (FCA general rules: cost of credit and
duration of credit agreements), after subsection (1) insert—

“(1A)    The FCA must make rules by virtue of subsection (1)(a)(ii) and (b)
in relation to one or more specified descriptions of regulated credit
agreement appearing to the FCA to involve the provision of high-
cost short-term credit, with a view to securing an appropriate
9degree of protection for borrowers against excessive charges.

(1B)   Before the FCA publishes a draft of any rules to be made by virtue
of subsection (1)(a)(ii) or (b), it must consult the Treasury.”

(2)   In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA’s annual report), in
sub-paragraph (1), after paragraph (h) insert—

“(ha)   any rules that it has made as a result of section 137C during
the period to which the report relates and the kinds of
regulated credit agreement (within the meaning of that
section) to which the rules apply,”.

(3)   The FCA must ensure any rules that it is required to make as a result of the
19amendment made by subsection (1) are made not later than 2 January 2015
and apply (at least) to agreements entered into on or after that date.”

Savings rates plummet

It's true: banks and building societies really have been cutting the rates they are prepared to offer to savers, as a result of the government's much-trumpeted Funding for Lending Scheme.

Funding for Lending is supposed to give a boost to lending to homebuyers and businesses, by channelling billions of pounds in cheap money to lenders.

But what that means is that the lenders, in other words banks and building societies, don't have to raise so much from people like you and me trying to build up savings.

Competition has been extinguished.

This has been acknowledged by a senior Bank of England figure, Andrew Bailey (the one who used to sign our banknotes) in evidence to MPs today.

He said "What the introduction of the Funding for Lending Scheme has already shown us is that competition for deposits has eased off quite a bit actually, and that has been reflected in a change in the rate paid on deposits."

He said rates had been going up before the summer as banks competed hard to win our custom, but since then they had eased off.

Of course plenty of you have seen this effect on our High Streets and on internet websites already, and Moneyfacts has highlighted it - here as well.

How to shield savings from inflation

After today's news that the Consumer Price Index rose to 4.4% from 4.2%, ways to save and get protection from inflation - courtesy of Moneyfacts.

Provider	Account	Rate	Term	Minimum Investment
Cambridge BS	Inflation Linked Bond	1.00% plus RPI	16.9.16	£5,000
NS&I	Index Linked Savings Certificates	0.50% plus RPI*	5 Years	£100
Post Office	Inflation Linked Bond Issue 2	0.50% plus RPI	10.10.14	£500
Post Office	Inflation Linked Bond Issue 2	1.50% plus RPI	11.10.16	£500
Santander	Inflation Linked Bond Issue 4	110% of the growth in the Retail Prices Index (RPI), or a guaranteed minimum return of 12%, plus original investment returned	1.4.17	£1
Yorkshire BS	Protected Capital Account – Inflation Linked 8	100% of the growth in the Retail Prices Index (RPI), or a guaranteed minimum return of 16%, plus original investment returned	15.9.17	£3,000
Yorkshire BS	Protected Capital Account – Inflation Linked 7	100% of any annual growth in the Retail Prices Index (RPI), or a guaranteed minimum of 1.5%, plus original investment returned on maturity	17.10.17	£3,000
* Interest earned tax-free Source: Moneyfacts.co.uk 15.8.11

Savers desperate for rate rise

A group of campaigners working on behalf of savers has called on the Bank of England's Monetary Policy Committee to raise interest rates to help pensioners and encourage saving.

Save Our Savers says a country without savings is a country without a future.

And it warns that those on fixed incomes, such as pensioners, are suffering terribly from the combination of extremely low interest rates and above target inflation.

The group has written to all nine members of the Monetary Policy Committee, who are expected to leave the Bank's base rate at its historic low of 0.5% after meeting today and tomorrow.

The letter complains that the real value of the nation's cash savings has fallen by £50 billion over the last 12 months as a result of high inflation and low rates.