Did Barclays scandal hit homeowners?

There have been a few suggestions that homeowners with mortgages may have lost out because of the attempted manipulation by Barclays dealers of the LIBOR rate between 2005 and 2010.

I think you have to be careful with this because:

*Only a small proportion of mortgages are directly linked to LIBOR, perhaps 250,000 loans to buy-to-let borrowers and some to sub-prime customers.

*As for other variable rate mortgages, LIBOR could influence a lender's cost of funds but the impact is less direct.

*It appears that before the credit crunch banks may have been over-quoting and under-quoting LIBOR in order to make dealing profits. In theory this could have pushed some people's mortgage costs slightly higher or slightly lower.

*However the more significant attempts at manipulation may have come after the credit-crunch, from 2007, when under-quoting appears to have been the main problem. If that had any impact at all it would have been to reduce the cost of variable-rate mortgages.

*From that point, in any case, lenders were having to depend much more heavily on savers' deposits to fund mortgages, because they couldn't raise money in the financial markets where LIBOR is a key reference rate - so LIBOR became less important for mortgage rates.

Mortgage experts suggest the net effect of the shenanigans could well have been to lower people's mortgage costs - though that might not be true for all customers throughout the period.

If that's true, the real victims would be the institutions who deposit money with banks for short periods at rates which are linked to LIBOR - pension funds, local authorities, hedge funds and private equity firms.

If LIBOR was manipulated down, they would have have lost out directly.

For details on what LIBOR is and how it's calculated, look here.

Lloyds closer to Co-op sale

Lloyds Banking Group says it now has an "understanding" with the Co-op to sell it 632 Lloyds TSB and Cheltenham & Gloucester branches.

The sale was demanded by the European Commission after mergers and government support during the financial crisis gave Lloyd's excessive power in its market.

The Co-op had lost exclusive negotiating rights after doubts emerged about its ability to absorb the branches as part of Co-operative Bank.

Now the talks will resume on an exclusive basis as the two parties draw up a sale agreement and seek approval from regulators.

The sale, codenamed Project Verde, would hand the Co-op 5 million customers and a 7% share of UK current accounts.

Meanwhile, a rival bidder, NBNK, confirmed that it had made a revised offer for the Lloyds branches.

Look here to see how you'll be affected and here to see if your branch is to be transferred.

Thinkbanking accounts rescued

100,000 customers of a specialist current account provider which depends on RBS are being told that their accounts will back to normal at 3pm this afternoon.

Thinkbanking offers a tailored account for people who need to budget carefully, so its customers were particularly vulnerable to having their funds cut off.

Like RBS customers, most of them were unable to see credits to their accounts or gain access to their money.

The company has paid out hundreds of thousands of pounds to customers desperate for cash to keep going.

Some have complained that while most RBS and NatWest accounts were sorted out on Monday, theirs have been left on one side.

Thinkbanking, based near Manchester, relies on RBS's banking licence and account administration to provide its service.

Lloyds branches being cut loose

There's speculation of an update soon on the sale of 630 Lloyds TSB branches. Lloyds has promised more news before the end of the month.

So it might be a good moment to check whether your bank branch is among those to be transferred to the Co-op, or whoever else takes the branches on.

Here's the list.

What can you do about it? As I understand it, if customers don't wish to be hived off but they have been earmarked to be cut loose, they'll be able to request to stay with Lloyds.


It's just that Lloyds isn't supposed to encourage them.


There will be time to react - the deal doesn't have to be finalised until November 2013.
 

Clampdown on costly extended warranties

Dixons, Comet and Argos have promised to inform customers in stores that they can buy extended warranties elsewhere if they want to.

The Office of Fair Trading has obtained legal undertakings from the retailers after it found that customers weren't getting value for money in this £1bn market.

Stores will have to offer leaflets showing that warranties are available elsewhere, maintain a price comparison site so buyers can shop around and provide clearer information about annual costs.

They'll also have to conduct regular independent mystery shopping exercises to help ensure shoppers get accurate information from sales staff.

The OFT proposed these tighter measures in February.

Tax penalties apply despite NatWest problems

Revenue & Customs says it will be sympathetic to firms which submit PAYE tax money late because of the RBS debacle - yet they'll still have to pay any penalties due.


Is that being sympathetic?


Here's what the tax people at HMRC say:
"We are sympathetic to any customer experiencing genuine difficulties in not being able to pay their tax bill, but for customers affected by the specific NatWest/Royal Bank of Scotland Group issue they need, in the first instance, to seek compensation or help from the bank."


Apparently, being "sympathetic" means understanding what the reason is and not pestering or pressuring businesses to pay up.


What happens is that firms can be late with one monthly or quarterly payment, then penalties start at 1% of the amount due, rising if they are late again.

VAT hurts poorer families more

The hike in VAT had the sharpest impact on poorer families, according to the Office for National Statistics.

A temporary cut in the VAT rate to 15% was followed by a rise to 20%, resulting in a significant jump in the cost of shopping, save for items such as food which are VAT-free.

Between 2010 and 2011 the poorest fifth of households saw the biggest increase in the proportion of their disposable income paid in indirect taxes such as VAT, up from 28 per cent to 31 per cent.

The richest fifth saw the amount paid rise from 12 per cent to 13 per cent.

The figures also show that average disposable income, after adjusting for taxes and benefits, fell by £200 in real terms.