Larger cash withdrawals receive scrutiny from HSBC

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HSBC have faced a backlash from some customers who were denied the ability to withdraw large sums of their own money from their bank account without valid explanation and evidence on why they wanted to do this. HSBC stated that this was because of a change in policy but failed to tell this to their customers.

One customer going by the name of Peter went to withdraw £10,000 in cash from HSBC for travelling and to give some to his sons; he called HSBC a day prior to his withdrawal with everything seeming to go ahead as normal. However the following day he was called by his local branch which asked him for booking receipts for the trips he wanted to go on, which Peter did not have; they also asked him to make a bank payment to his sons rather than withdraw cash to pay them. The day after this Peter again called HSBC who then agreed that he could withdraw the full £10,000 following an examination of his account.

Another customer, Stephen Cotton also faced difficulty in withdrawing larger sums of cash, in this case from an instant access savings account. He tried to withdraw £7,000 to pay back his mother on a loan. Stephen Cotton told Money Box: “When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved.”

After receiving customer opinions on the matter, HSBC declared that they were going to change the policy: “We are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal.”

Clacton’s Conservative MP, Douglas Carswell stated that “All these regulations which have been imposed on banks allow enormous interpretation. It basically infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent.”

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The Arrival of Plastic banknotes to the UK in 2016

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The Bank of England has announced that plastic banknotes will start circulating in the UK from 2016. Beginning with the £5 note, which will have Sir Winston Churchill on the front of it, followed by the author Jane Austen who will feature on the £10 note, which will be brought out a year later.

The notes will be created from polypropylene, which is slim, clear and can bend easily. The notes have been tested and remain intact even after having been placed in a washing machine. The notes are also considered to be more hygienic and are created with security in mind. It is harder to produce replicas as within the layer of ink, there are also clear sections in the display, which forms part of the design. They can also have other secure images embedded into the note.

The plastic bank notes are smaller in size, which means that the bank ATM machines will need to be adapted to make way for these new notes. The Bank of England believes that despite the initial cost to make the notes, in the long run the notes will prove to be cost effective because the notes will last longer.

A survey was carried out amongst a mixture of shopping centres, where approximately 13,000 took part and were asked their opinion of the new notes. 87% were for the notes, 7% remained impartial and only 6% were against the change.

Attempts have been made in the UK before to introduce plastic notes. To mark the Year 2000 the Northern bank in Northern Ireland brought out a polymer £5 note. Also, in 1983 the Isle of Man brought out a plastic note but then had to take it out of circulation due to issues with the ink.

Over 20 countries have already started using polymer notes. Australia were the first, then followed by other countries, including New Zealand, Mexico, Canada and Fiji and more recently since August, Mauritius joined the other countries.

Following the challenging view that there are not enough ladies displayed on Bank of England bank notes, it has been confirmed that Jane Austen will be appearing on the new £10 note. The Bank of England has made it clear that only historical characters will be portrayed on all the notes. They also stated that the only living person who will be displayed on the notes will be a member of the Monarchy.

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£50m profit made off struggling businesses by RBS

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RBS’s global restructuring group, which operates West Register, has seen £276 million in revenue with over £50 million in profit from 2008.  Two reports released recently have condemned the bank’s lending actions and the amount they have been profiting from struggling businesses.

Wealthy adviser to the Department of Business, Innovation and Skills, Lawrence Tomlinson, blamed RBS for deliberately extracting profit and “killing off” small firms. He also believes that RBS had changed their valuations of properties without checking the property in person and then, after acquisition, selling the property for more than their appraisal. The information by Mr Tomlinson was submitted by Business Secretary, Vince Cable to the City regulators; in response to this RBS have said they have employed the services of Clifford Chance, a legal organisation, to look into the accusations made.

RBS had originally been accused of taking advantage of the unfortunate situations of firms through their Global Restructuring Group.

West Register Property Investments saw an increase in assets to £579 million in 2012 from below £19 million in 2008. However exact financial records are inaccessible for the GRG branch of RBS as it is operated as a profit centre.

The shadow business secretary, Chuka Umunna stated his worries that RBS being an 81% state held bank were seeking profit amongst troubled clients.  She states if RBS’ business turnaround division, the Global Restructuring Group, “is being used principally as a profit centre as opposed to an operation to help businesses and prevent loss, that rings alarm bells and sends the wrong message… It would paint a picture of otherwise viable businesses being fleeced for fees and profit, instead of being given the support they need.”

Penalty fees totalling over a hundred thousand pounds have been reported by business clients of RBS who have used their GRG. In addition to this many have been required to pay for external specialists.

In RBS’ defence Ross McEwan said that steps have been made to help companies with lending strategies to stem “reckless lending practices that broke this bank five years ago”. It seems to us like another attempt to cover up bad banking practices like the payment protection insurance mis-selling, and the fixing of rates. Let’s hope the FCA take note…

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Lloyds Admits ‘Shortcomings’ in Handling PPI Claims

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The damaging effects of the PPI insurance claims scandal continue to dog the UK banking industry, with the worst hit being the massive Lloyds Group. Having been forced to set aside billions of pounds in order to pay back mis-sold PPI fees, Lloyds recently found itself at the centre of another embarrassing scandal.  The bank, like many others, has had to employ third party operators to handle claims, and an undercover reporter at a site run by Deloitte for Lloyds uncovered serious problems with the way claims were being handled.

Told to ‘Play the System’

The reporter, working for The Times newspaper, claims that staff at the centre were told to ‘play the system’ as most first-time claimants would not bother returning if they experienced delays or were rejected first time around; they were also, he alleges, told to ignore possible fraud by Lloyds staff. Deloitte insists its staff were operating within the given guidelines, while Lloyds has confirmed that its contract with the company has been terminated.

Fined for Delays

Earlier this year (2013) Lloyds was fined £4.3million for delays in processing PPI claims. In the second half of last year the Financial Ombudsman, which deals with claims remaining in dispute, dealt with over 42,000 complaints relating to Lloyds alone; this is by far the biggest figure for any of the banks or lenders involved in the PPI scandal. Indeed, more people than ever before are turning to a PPI claims company to have their claim processed, an indication that the banks are perhaps not able to handle claims efficiently. For help or advice, go to

More to Come

Despite the hope that claims would begin to tail off during 2013 the saga shows no signs of going away; although numbers are down slightly on 2012 the Ombudsman still receives 2000 complaints every day, a figure that has made it necessary to employ 2000 further staff to handle the problem. Likewise, the banks are turning to third party providers such as Deloitte out of necessity, and this simply adds to the problems in making sure the regulations and rules are strictly adhered to.

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Uncertainty at Cooperative Bank following surprise downgrade

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Credit ratings agency Moody’s has downgraded the credit status of the Cooperative bank by a surprising six notches in a move which even surprised the City.

Such a downgrade, from A3 to Ba3, effectively makes the Cooperative’s debt junk status, and will raise the price at which the bank can borrow from the financial markets. The bank itself, whilst expressing its disappointment at the downgrade, is reassuring its customers that it will not need a bailout following the downgrade and a rapid deterioration in the bank’s financial position.

The Cooperative, having 6.5 million customers, a 1.5% share in the current account market, and an enviable reputation for ethical banking and customer service, posted losses of £600m in March. Admitting that it needed to raise fresh capital, in reassuring statements it insisted that current shortfalls could be plugged via selling off its insurance arm or by scaling back its banking interests. Additionally, money could be sought from its parent group which owns a chain of groceries, pharmacists and funeral homes. The bank is careful to stress that it does not need a government bailout, and that it is still liquid.

It is the latest in a rapid series of events to overtake the Manchester based bank. On top of the slow integration of Britannia Building Society – bought out three years ago by the Cooperative- recent months have seen the collapse of a deal to buy 632 branches from Lloyds Banking Group, and the sudden departure of chief executive Barry Tootell. Having replaced former Britannia boss Neville Richardson in 2011 (who left with a pay out of £4.6m), he will himself be replaced temporarily by Rod Bulmer until a permanent successor is found following Mr Tootell’s resignation.

It will be challenging times for Mr Bulmer.  The downgrade comes when Britain’s biggest trade unions are attending the AGM of union- backed Unity Trust Bank- which is 26.7% owned by the Cooperative. Union leaders are very worried at the situation facing the Cooperative, despite reassurances from the Unity Trust Bank. Managing director Richard Wilcox stated that, whilst the Cooperative had been discussed in scheduled meetings as a major investor, “the relationship with Co-op continues to be managed as normal. We work as an independent entity and are not impacted by changes to the credit rating of the Co-operative Bank.”

The situation at the Cooperative comes at a time when the new Prudential Regulation Authority has identified a £25bn shortfall in capital amongst UK banks, in an effort to strengthen the capital position of the UK’s financial institutions. City analysts believe that the Cooperative Bank accounts for between £80m to £1bn of this national shortfall; a shortfall which the same analysts state the Cooperative could fill by selling its insurance business, selling its life insurance interests to Royal London, and simplifying the bank itself.

Moody’s is not so certain that such measures or similar would be able to improve the bank’s closely watched capital ratio. This is low (at 8.8%) compared to other banks, and Moody’s was uncertain that the bank would be able to generate the extra capital needed.

Whatever happens next at the Cooperative, it will happen under great external scrutiny and amidst great uncertainty indicative of the banking sector currently.

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A Fine of £390 Million to RBS for LIBOR Scandal

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Bank customers or clients often choose a trusted bank where their money can be safe and their investments protected. Moreover, a bank should always be transparent with their valued customers. Mistakes can occur or even mis-calculations in the bank for it handles huge amount of money and also assets for its customers. However, it is a big problem when the money you earned from working hard would vanish just easily or worse- get corrupted by many.

There are certain departments and authorized groups  in and out of the government such as the Financial Standards Authority (FSA) who are watchful on how the banks treat their customers or in general how they run the banks according to set standards. There are already cases of mis-selling that occurred in well known banks and the customers themselves have the right to be refunded and assisted in the said matter – Payment Protection Insurance Claims. More recently the scandal of mis-sold interest rate swaps for small to medium sized businesses has leaked.

The Royal Bank of Scotland(RBS) have today been given a fine amounting to £390 Million from regulators for their misconducts.  This fine was specifically for having rigged the London Interbank Offered Rate aka LIBOR (average rate of interest when borrowing from other banks).  They had furthermore assisted others in the riggings and thousands of pounds went into the pockets of the corrupt bankers involved. RBS had continued to manipulate the LIBOR rate two years on from being bailed out by the taxpayers of the UK and nationalised, and even once investigations into the LIBOR scandal had begun, all the way into late 2010.  The effects of the manipulations affected billions of pounds worth of transactions across the world.

“What happened at RBS and other banks is totally unacceptable,” commented Chancellor George Osborne regarding this, though noting that RBS is now owned by the taxpayers of this country therefore “the bankers, not the taxpayers, will pick up the bill. Those people who did wrong will face the full force of the law.”

Among rising banking scandals, Osborne added that in 2013, “our reforms are turning people’s anger into a positive force for change.”

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Barclays : Most Complained About Bank

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If you have your credit or debit card with you, you already know the convenience of using it. Often times most of the average consumers nowadays own a card that would allow them to make purchases online and probably enjoy the rebates and rewards the card is offering. It would always depend on a particular card holder on how he or she handles the numerous available purchases that merchants provide.

Many of us would resort to having a credit or debit card instead of the usual cash on hand when we need to buy or make transactions online. Online buying has already been a trend. Online bidding sites like Ebay allow anyone to buy and sell their stuffs and when you’ve got a credit card, you could easily buy an item.Different credit cards have this certain feature that it could be universally accepted anywhere you are in the world. Making certain transaction from other countries is possible.

On a negative note, if the online business is growing, there is a tendency that online fraud would also take place. To date, there are already many victims of fraud, cardholders from the bank Barclays who owned a Barclaycard were some of the few victims of fraud. Most of the consumers could have overlooked the legality of a particular merchant. To add up to the problem, the victims of fraud would have to wait for a longer time for their money to be back.

According to a finance article published on Yahoo, the figures have shown that the customers of the bank Barclays are in their quest to wait for the charges that are found to be fraudulent to be back in their accounts. Customers would wait for a month long so that they can get their money back even if in the very beginning it is the obligation of Barclays to refund the charges promptly. A survey has already labeled Barclays as the most complained about and worst bank in terms of refunding fraud charges to their clients.

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