Bankrupt Banker

NHS 'paid £17 for gluten-free pizza base'

Two prescription gluten-free pizza bases can cost the NHS as much as £34, BBC Newsnight has learned. The NHS spent £27m on gluten-free prescriptions in 2011, but handling and delivery charges, which can quadruple the cost, are not recorded. Without prescriptions, health campaigners argue, sufferers can go on to develop serious illnesses. Health Secretary Andrew Lansley said the prescription area was "under ongoing review". "The aim of providing gluten-free food products on NHS prescription is to encourage patients with coeliac disease to stick to a gluten-free, nutritious diet so they do not go on to develop more serious illnesses, which can affect their quality of life as well as being much more costly for the NHS," he said in a statement. "However, we keep this area of prescribing under ongoing review and are currently considering how we might get better value from the prescribing of gluten-free products whilst ensuring patients continue to get the products they need." Gluten-free bread, cake mixes and bourbon biscuits are also available to people with coeliac disease, triggered by gluten intolerance. In an example from Rotherham, it was discovered that the NHS had been paying four times the original price for pizza bases. Continue reading the main story “ Start Quote This is a lifetime complaint. When you've got it there is no cure for it” Geoff Martin, who has coeliac disease The two pizza bases originally cost £8.95. But by the time manufacturing, handling and delivery fees were added on, the bill for the NHS had been driven up to nearly £34.00. Another example comes from Dr Fayyaz Choudri, a GP who was responsible for overhauling gluten-free prescriptions in Allerdale, Cumbria. "We saw there were occasions where there was a bread loaf costing £2.50 and there was a handling fee of £32.00," he says. Dr Choudri has coeliac disease himself and knows the importance of a gluten-free diet. Without it, symptoms can range from digestive disorders to very serious illnesses including osteoporosis and bowel cancer. Geoff Martin is one of a growing number of people in the UK diagnosed with the disease. "This is a lifetime complaint. When you've got it there is no cure for it," he says. The condition is triggered by an intolerance to gluten, a protein found in wheat, barley and rye - and therefore a common ingredient in many processed foods. Gluten-free biscuits and cakes are currently available on NHS prescription "The only solution to it," Geoff continues, "is eating food that is gluten free." Living as he does in rural Oxfordshire, this is a problem. In order to guarantee a varied and balanced diet, Geoff relies on his prescriptions for gluten-free food. Geoff's NHS trust is one of many now reviewing its policy on gluten-free food. With an estimated one in 100 people affected by gluten intolerance, campaigners want the NHS to continue providing staple foods like bread and pasta. These are increasingly available in shops, along with a wide range of gluten-free products. But they are often much more expensive than regular foods. Coeliac UK, which represents sufferers, worries that the hidden costs of prescriptions is giving the whole system a bad name. Coeliac disease leads to tiredness, anaemia, weight loss, diarrhoea and constipation Newsnight contacted one of the leading manufacturers of gluten-free food, Juvela. They blamed wholesalers for adding "extra charges, sometimes adding a £20 handling charge to a £3 loaf". This is questioned by the British Association of Pharmaceutical Wholesalers, which represents some of the biggest companies. They told us they would be "keen to investigate any relevant cases of alleged poor standards or distribution practice." To try to safeguard prescriptions, Coeliac UK has drawn up guidelines for NHS trusts on what sort of items should be prescribed - recommending that biscuits and cake mixes should only be given in "exceptional circumstances." But Newsnight has contacted five trusts which say they have not passed on the guidelines, and that cakes and biscuits are still available on prescription. With NHS budgets under relentless pressure, these are increasingly being seen as rations the NHS cannot afford.

NHS 'paid £17 for gluten-free pizza base'

Two prescription gluten-free pizza bases can cost the NHS as much as £34, BBC Newsnight has learned. The NHS spent £27m on gluten-free pres...

Free banking a dangerous myth, says Bank official

Free banking is "a dangerous myth", according to Andrew Bailey, who is due to become the chief regulator of the financial services industry. He says customers may think their account is free, but the true costs are actually hidden. Those hidden costs would include the extremely low interest rate that many banks offer on current accounts. Mr Bailey - currently an executive director at the Bank of England - will take up his new role in July. "In short, I think that the reform of retail banking in this country cannot move ahead unless we tackle the issue of free in-credit banking, and have a much better sense of what we are paying for and how we are paying," Mr Bailey said in a speech. Continue reading the main story “ Start Quote He's saying you can't leave it to the banks to clean-up their act in this way” Robert Peston Business editor Read more from Robert He said the situation also made it difficult for banks to understand the cost of the services they provide, which may have contributed to the mis-selling of financial products. Between them, Barclays, Lloyds, Royal Bank of Scotland and HSBC are currently paying about £9bn in compensation for mis-selling loan insurance. "I worry also that this unclear picture may have encouraged the mis-selling of products that is now causing so much trouble," Mr Bailey said. However, Mr Bailey says it is a difficult situation for banks because the first one to start charging for accounts could lose significant amounts of business. Speaking on the BBC's Today programme, BBC Business Editor Robert Peston said: "He's saying you can't leave it to the banks to clean-up their act in this way." "That's why he is saying - which I think is really pretty significant because this chap is replacing Hector Sands as the senior regulator in the City of London - that either the regulators or the government actually have to intervene to end the myth of free banking."

Free banking a dangerous myth, says Bank official

Free banking is "a dangerous myth", according to Andrew Bailey, who is due to become the chief regulator of the financial services...

Tax avoiders and cheats cost the public purse £35billion last year

The taxman is failing to collect more than £35billion a year from cheats who refuse to pay their taxes and others who find ways of avoiding them, a report from MPs will warn today. It also found that job cuts at HM Revenue and Customs has resulted in £1billion of tax revenue not being tracked down. The size of the country’s so-called ‘tax gap’ will infuriate millions of honest taxpayers. Hole: The country's 'tax gap' was £35billion last year after thousands avoided or simply refused paying taxes The tax gap is the difference between the amount of money collected by the tax authorities and the amount they should get if everybody paid the correct amount of tax. The report from the Public Accounts Committee said an extra £35billion should have been collected in 2009/10 – equal to eight per cent of the total tax bill – if everybody had paid the correct amount.   More... Can't save? won't save? Don't worry, the thrifty will pay your pension for you Single rate 30% income tax 'would boost economy' In a further blow, it said the amount which is going missing as a result of ‘error, avoidance and evasion’ could be ‘much greater’. The report warns: ‘It is clear that there is significant potential for additional tax revenue, which could help with the Government’s deficit reduction programme.’  It also raises doubts about the wisdom of slashing staff numbers. Between 2006 and 2011, it says the department’s compliance and enforcement division reduced staff numbers by 3,387 to 26,000. Big difference: The report also found that job cuts at HM Revenue and Customs has resulted in £1billion of tax revenue not being tracked down The report states: ‘It has estimated that around £1.1billion of additional revenue could have been generated had these staff reductions not been made.’ For every £1 which has been saved, it has lost around £10 in tax revenue, it added. An HMRC spokesman said: ‘We will bring in an additional £7billion by 2014 through tackling abuse of the tax rules.’ Last year, the tax system was described as ‘inefficient, overly complex and frequently unfair’, following a study by the Institute for Fiscal Studies.

Tax avoiders and cheats cost the public purse £35billion last year

The taxman is failing to collect more than £35billion a year from cheats who refuse to pay their taxes and others who find ways of avoiding ...

Homeowners vent anger at PTSB's 'moral bankruptcy'

State-owned Permanent TSB was charging a 'standard variable rate' of 5.19pc to about 75,000 customers until very recently, when it cut the rate to 4.69pc. Some mortgage holders at AIB, which is also state-owned, pay 3pc; while some at Bank of Ireland pay 3.84pc. "Can you explain to us where you expect us to get this money?" asked Conor McNally, who said he had fallen €6,500 behind on his mortgage. "The Government has already milked us for additional tax, the income of most people in the population has been butchered. "I have a family and a greatly reduced income and a greatly increased mortgage thanks to your extortionate rates." Reckless Mr McNally went on to proclaim he was "committed to telling every person" he knew to pull their money out of Permanent TSB and that he would, along with thousands like him, "drop you like a hot coal if we could". "I'm so tired of paying for other people's reckless decisions," he said, drawing a cheer as he slammed the "disastrous foresight and risk management" that triggered massive losses at the bank and prompted the rise in interest rates. Fellow mortgage holder Karen O'Donohue told the meeting she was encouraging "all customers to close their accounts with the bank" and said the way they had treated homeowners meant it was "too late for an apology". Ms O'Donohue and her husband bought their home in 2005, when they were paying interest of about 3pc. "We're lucky because we have steady jobs so we're not in arrears," she told the Irish Independent last night. "But we're paying about €400 a month more in interest than we would with another lender. "We have a small child and another one on the way, that money would make a big difference," she added. Ms O'Donohue and her husband can't move their mortgage of "about €300,000" because they're in negative equity and "no other bank would have us". Mr Cook said hearing the stories of homeowners had "stiffened his resolve" to make Permanent TSB's mortgages competitive. But despite persistent shareholder questioning, he could not say when the next step might be taken, but said the bank's restructuring plan would go to the EU in June. "I'd be hopeful, but maybe I'm being naive," said Ms O'Donohue.

Homeowners vent anger at PTSB's 'moral bankruptcy'

State-owned Permanent TSB was charging a 'standard variable rate' of 5.19pc to about 75,000 customers until very recently, when it c...

Individual bankruptcy fee to double

Labour has failed to block a plan to double bankruptcy fees after MSPs heard the hike would save taxpayers £1.5 million. People will soon have to pay £200 to enter bankruptcy after the agency that administers the applications found that the present £100 fee was not covering its costs. The hike was "insensitive" in the current economic slump and could push debtors "over the edge", forcing them to turn to loan sharks, Labour said. Finance Secretary John Swinney said debtors can pay in instalments and that the fee will still be over a third cheaper than similar fees elsewhere in the UK. Some people going through the relatively new Lila (low income low assets) bankruptcy route, which allows people to clear their debts without waiting for creditors to take costly legal action, have tried to hide assets that could be used to pay creditors, Mr Swinney said. "The cost of delivering an application for bankruptcy through the Lila route has increased from £138 in 2008 to over £200, based on projected volumes for 2013," he told Holyrood's Justice Committee. Labour MSP Jenny Marra, committee vice-convener, said: "Loan sharks and payday lenders are being approached for the £100 so people can declare themselves bankrupt. An increase to £200 puts these people in a much more vulnerable position to these loan sharks." She said: "Your Government delivers many services that are not operated at full-cost recovery and I feel that in this time, when the economy is particularly vulnerable and a lot of people are struggling, it seems a very insensitive time to double the charge." Labour MSP Graeme Pearson said Citizens Advice Scotland has been lobbying for the fee to be removed completely. "Even the fact that you can pay by instalments, for some of these applicants it may well just push them over the edge," he said. Miss Marra and Mr Pearson moved to quash the fee hike but they were outvoted 6-2 by the committee's SNP and Liberal Democrat MSPs.

Individual bankruptcy fee to double

Labour has failed to block a plan to double bankruptcy fees after MSPs heard the hike would save taxpayers £1.5 million. People will soon h...

Greece’s banking industry secretly gets €100 billion

Greece's struggling banking industry has been secretly injected with around €100 billion in emergency liquidity from the country’s central bank which was approved by the European Central Bank in Frankfurt, according to the FT. This follow reports of a ‘run’ developing on Greek banks last week, which were emphatically denied by the Greek PM’s office. Greeks were reportedly withdrawing up to 700 mln Euro every day – a rate that would have effectively broken their banking system. If Greece were to reject EU austerity and leave the euro zone the immediate reaction might be an ECB decision to pull the plug. An ECB threat in 2010 to do the same helped ‘persuade’ Ireland to accept an international bailout plan. No doubt, its governing council will hope to concentrate minds similarly in Athens. No specific details of the plan have been provided by the ECB but it is thought this use of its emergency liquidity assistance budget would be withdrawn should Greece leave the euro zone. Greece's four largest commercial banks are due to receive €18 billion in recapitalisation funds by Friday, a senior banker at one of the four was quoted by Reuters on Tuesday. "We will get the money by Friday at the latest. Maybe we will get it tomorrow," said the banker who declined to be identified. The funds, in the form of European Financial Stability Fund bonds will recapitalise Alpha Bank, National Bank of Greece, EFG Eurobank and Piraeus Bank respectively, and allow them resume funding operations with the European Central Bank "With this €18 billion in EFSF bonds we will participate again in ECB liquidity operations," the source said. The ECB banned some Greek banks from funding operations last week because their capital was too low, forcing them to get higher-cost funding from an emergency programme at the Bank of Greece. Greek banks saw a significant decrease in their capital this year because of losses in an historic bond swap that wiped out most of the value of their holdings of Greek government debt.

Greece’s banking industry secretly gets €100 billion

Greece's struggling banking industry has been secretly injected with around €100 billion in emergency liquidity from the country’s centr...

Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro.

While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising defaults in other indebted euro nations. Enlarge image UBS, the third-biggest manager of money for the wealthy, sees a 20 percent chance of Greece leaving the euro within six months, the bank’s chief investment office, led by Alexander Friedman, told client advisers in an internal note last week., Europe’s biggest bank by assets, tapped “a small amount” of ECB cash to help fund corporate and retail business in continental Europe, where it has sizeable operations in Italy and Spain. Photographer: Hannelore Foerster/Bloomberg “A Greek exit would be a Pandora’s box,” said Jacques- Pascal Porta, who helps manage $570 million at Ofi Gestion Privee in Paris, including shares in Deutsche Bank AG (DBK) and BNP Paribas SA. (BNP) “It’s a disaster that would leave the door open to other disasters. The euro’s credibility will be weakened, and it would set a precedent: Why couldn’t an exit happen for Spain, for Italy, and even for France?” The prospect of Greece leaving the 17-nation euro region increased after parties opposed to the terms of the nation’s second bailout by the European Union and the International Monetary Fund won most of the votes in May 6 elections. A fresh round of voting will be held June 17 after politicians failed to form a government. For the first time since the crisis began in November 2009, European leaders and central bankers are speaking openly of Greece abandoning the currency union. Deposit Flight The immediate risk for Europe’s banks, and for the euro region, would be a deposit flight from indebted nations such as Portugal, Ireland, Spain and Italy on speculation those countries also might quit the currency. Lenders in Germany, France and the U.K. had $1.19 trillion of claims on those four nations at the end of 2011, Bank for International Settlements data show. Should Greece go, its new currency probably would suffer an immediate devaluation of as much as 75 percent against the euro, forcing individuals and companies to default on foreign loans, economists at UBS AG (UBSN) said. Unless European leaders could make a credible case that a Greek exit was an exceptional and isolated incident, depositors in other nations might decide to withdraw euros from banks or shift them to countries seen as safer. “The highest risk facing the banks at the moment is the possibility of deposit runs,” said Andrew Stimpson, a banking analyst at Keefe, Bruyette & Woods Ltd. in London. “The more policy makers continue to openly discuss an exit, the more likely that people in Spain, Ireland and Portugal pull money out of their local banks.” Greek Withdrawals That already may be happening. Banks in Greece, Ireland, Italy, Portugal and Spain saw a decline of 80.6 billion euros ($103 billion), or 3.2 percent, in household and corporate deposits from the end of 2010 through the end of March, European Central Bank data show. Lenders in Germany and France saw an increase in deposits of 217.4 billion euros, or 6.3 percent, in the same period. Greek central bank head George Provopoulos told President Karolos Papoulias last week that savers have withdrawn as much as 700 million euros and the situation may worsen, according to the transcript of the president’s meeting with party leaders published May 15. Greece had 160 billion euros of bank deposits on March 30, down almost 75 billion euros from the peak in 2009, according to the latest data from the central bank. Greece’s pledge to inject 18 billion euros of capital in the nation’s banks may help staunch the outflow in deposits. The Hellenic Financial Stability Fund said late yesterday it approved terms of the recapitalization and the contract would be sent today to the lenders and the European Financial Stability Facility for final approval.

Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro.

While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europ...

How Facebook's Revenue Is at Risk

Facebook's (Nasdaq: FB  ) IPO glow sure didn't last long, with shares promptly plunging on their second public day. There are plenty of other risks looming on the horizon, most notably increasing advertising rivalry from top dog Google (Nasdaq: GOOG  ) and social gamer Zynga's (Nasdaq: ZNGA  ) obvious interests in broadening its horizons. In addition, will Facebookers stay engaged forever? When all else fails -- advertise! We can break down Facebook's current figures for deeper insight. We know that the majority of Facebook's "payments and other fees" revenue comes directly from Zynga. We also know that of Zynga's player base, a disproportionately small number of players actually contribute to sales, and these players are affectionately known as "whales," just like the high rollers in Vegas. Last quarter, Zynga had only 3.5 million paying players out of 182 million monthly unique users, or MUUs. That's just 1.9% of the MUU base willing to pay up. By that rationale, an even smaller fraction of Facebook's overall MAU base actually contributes to the "payments and other fees" revenue, inflating the average revenue per user, or ARPU, for the rest of us who will never heed the call of a virtual tractor in FarmVille. I've never paid a cent for anything on Facebook's platform, and I never will. On top of that, Zynga is assuredly interested in eventually moving away from Facebook's payment platform in favor of its own. Backing out the payments segment and focusing on the core advertising business is useful for both of these reasons. Here's what happens to worldwide and North American (the segment with the highest monetization) ARPU if you back out payments revenue, which effectively looks at average advertising revenue per user.

How Facebook's Revenue Is at Risk

Facebook's (Nasdaq: FB ) IPO glow sure didn't last long, with shares promptly plunging on their second public day. There are plenty...

Fraud warning: new card scam nets £1m in four months

Victims are telephoned by fraudsters and duped into revealing their PIN and then handing over their bank card to a courier in this new form of crime, which has seen more than £750,000 taken from customers since the beginning of the year. The scam involves a person being called by someone claiming to be from their bank. They are told that their debit or credit card needs collecting as it needs replacing following fraud on their account. The caller often suggests that the person hangs up and calls the bank back if they want to ensure the call is genuine, but stays on the line, tricking the person into thinking they’re calling their bank. The criminal will then ask the person to key in their PIN number, before sending a courier to collect the card. The victim is told the card is going to the bank to be changed but it is actually delivered to the fraudster to use along with the PIN obtained during the scam. DCI Paul Bernard, head of the Dedicated Cheque and Plastic Crime Unit, said: “Many of us feel confident that we can spot fraudsters but this type of crime can be sophisticated and could happen to anyone. While we have seen an increase in this type of fraud, we know collectively we can stamp it out. “If you become a victim of this type of crime, you should contact your bank in the first instance. If you have friends or relatives who you feel may be vulnerable to this, please help them to be more aware of the potential risks and what to look out for. Remember, if you are the innocent victim of card fraud you will not suffer any financial loss.”  The Payments Council found in a survey of account holders that more than three quarters feel confident that they would be able to spot a fraudulent telephone banking call. However, after hearing how the card fraud phone scam works, over half of the 4,000 people surveyed were surprised by how sophisticated it was, one third worried they were more vulnerable than they thought and four fifths felt that anyone could be a potential victim of the fraud. Mr Bernard said that customers should follow some simple tips to avoid being a victim. These include making sure you can hear the dial tone when you call your bank, and never handing over your card. Your bank or the police will never ring you and tell you that they are coming to your home to pick up your card, so never hand it over to anyone who comes to collect it. He added that your bank will never ask you to authorise anything by entering your PIN into the telephone. The only times that you should enter your PIN are at a cash machine or when you use a shop’s chip and PIN machine.

Fraud warning: new card scam nets £1m in four months

Victims are telephoned by fraudsters and duped into revealing their PIN and then handing over their bank card to a courier in this new form ...

Three killed in northern Italy earthquake

Three people have been killed in a 5.9-magnitude earthquake that struck northern Italy near Bologna, according to reports. The quake that struck at just after 4am local time was centred 21.75 miles north-northwest of Bologna at a relatively shallow depth of six miles, the US Geological Survey said. Italian news agency Ansa, citing emergency services, said two people were killed in Sant'Agostino di Ferrara when a ceramics factory collapsed. Another person was killed in Ponte Rodoni do Bondeno. In late January, A 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. The tremor was one of the strongest to shake the region, seismologists said. Initial television footage indicated that older buildings had suffered damage. Roofs collapsed, church towers showed cracks and the bricks of some stone walls tumbled into the street during the quake. As dawn broke over the region, residents milled about the streets inspecting the damage. Italy's Sky TG24 showed images of the collapsed ceramics factory in Sant'Agostino di Ferrara where the two workers were reportedly killed. The structure, which appeared to be a hangar of sorts, had twisted metal supports jutting out at odd angles amid the mangled collapsed roof. The quake “was a strong one, and it lasted quite a long time”, said Emilio Bianco, receptionist at Modena's Canalgrande hotel, housed in an ornate 18th century palazzo. The hotel suffered no damage and Modena itself was spared, but guests spilled into the streets as soon as the quake hit, he said. Many people were still awake in the town since it was a “white night”, with shops and restaurants open all night. Museums were supposed to have remained open as well but closed following the bombing of a school in southern Italy that killed one person. The quake epicentre was between the towns of Finale Emilia, San Felice sul Panaro and Sermide, but was felt as far away as Tuscany and northern Alto Adige. The initial quake was followed about an hour later by a 5.1-magnitude aftershock, USGS said. And it was preceded by a 4.1-magnitude tremor. In late January, a 5.4-magnitude quake shook northern Italy. Some office buildings in Milan were evacuated as a precaution and there were scattered reports of falling masonry and cracks in buildings. In 2009, a devastating tremor killed more than 300 people in the central city of L'Aquila.

Three killed in northern Italy earthquake

Three people have been killed in a 5.9-magnitude earthquake that struck northern Italy near Bologna, according to reports. The quake that s...

Social care 'at breaking point'

The social care system is at breaking point, with 88% of social workers fearing that cuts are putting vulnerable children's lives at risk. Nearly five years after the death of Baby P, Peter Connelly, the British Association of Social Workers (BASW) issued a warning about the "dire" state of the profession as a survey showed high proportions of social workers are concerned about unmanageable caseloads. Of 1,100 social workers surveyed by the association in two weeks in March, 88% said vulnerable lives could be put at risk by cuts to services, and 85% had seen notable cuts to services in the last 12 months. Some 77% were concerned about unmanageable caseloads; 65% were concerned about use of unqualified staff; and 46% said they were afraid to speak out for fear of repercussions. The BASW said despite Government pledges to protect frontline services, cuts had increased caseloads and stopped social workers from spending time with vulnerable children and adults. One social worker reported working at "dangerous caseload levels" while another described the situation in their team as "another serious case review waiting to happen". Peter Connelly was 17 months old when he died in Tottenham, north London, at the hands of his mother Tracey, her violent partner Steven Barker and his brother Jason Owen on August 3, 2007. He suffered more than 50 injuries despite being on the at-risk register and receiving 60 visits from social workers, police and health professionals in an eight-month period. The scandal prompted Government pledges to transform social services. But the BASW survey found social workers said cuts in back office staff meant they are spending even more time on administration than before, including having to clean toilets, buy their own stamps and clean their own offices instead of spending the time they need with children and adults at serious risk of harm. BASW said it has written to Education Secretary Michael Gove to raise its concerns about the state of social work, and is also urging the All Party Parliamentary Committee on Social Work to hold an urgent inquiry into the risks to vulnerable children and adults of an overstretched social work service. The association called on the Government and local authorities to take three steps, urging them to: take immediate measures to reallocate local authority administrative staff from less critical roles; place a moratorium on any further cuts to social work allowances or the introduction of any new charges; and to ensure that Ofsted and the Care Quality Commission (CQC) prioritise the risks of high caseloads in inspections and try to uncover bullying. Hilton Dawson, BASW chief executive, said: "The survey statistics are damning, and the hundreds of comments we have had from social workers are deeply alarming."

Social care 'at breaking point'

The social care system is at breaking point, with 88% of social workers fearing that cuts are putting vulnerable children's lives at ris...

UK may need more QE, warns Bank of England's Adam Posen

In an interview published by newswire MNSI, Mr Posen also said he was not sure the UK had avoided falling into a Japan-style downturn. ...

Payday loan borrowers 'trapped in debt spiral'

Almost two-thirds of people who took out expensive payday loans have used the money to pay household bills or buy essentials such as food, nappies and petrol, a survey by Which? has revealed. But while payday lenders say the loans help people ease through tricky points of the month, the research indicates many become trapped in a spiral of debt because they cannot afford to repay their loans by the agreed date, and so incur exorbitant penalty charges. A third of people said they experienced greater financial problems as a result of taking out a payday loan, while one in five were unable to pay it back on time. A quarter said they had been hit with high, hidden charges for reminder letters and failed payments. Which? highlighted the charges of lender QuickQuid, which has a £12 fee for a missed payment, while CashCall charges £30. Quid24 charges £25 for each of its first four letters to borrowers and £50 for a reminder on the 10th day. Dan McDonald, chief executive of the Medway Citizens Advice bureau, said his advisers frequently came across people who have borrowed to pay the rent or mortgage and have been drawn into a tangle of debts. "We recently advised a woman who had a £500 QuickQuid loan, £800 on a Vanquis credit card and £5,000 on an Aqua credit card, but still had £2,000 in rent arrears," he said. "Private landlords and housing associations are coming down very hard [on people who owe rent], and if people are desperate they will do anything they can to meet their rent payment. It's only going to get worse with the new housing benefit caps." Which? said the debt trap was compounded with 57% of borrowers being encouraged to take out further loans, and 45% rolling over their loans at least once. Borrowers are usually required to pay the outstanding interest before a loan is rolled over, meaning a lender can make hundreds of pounds in profit from a small loan even if the borrower eventually defaults. People were also potentially being allowed to take on credit they couldn't afford. Eight out of 34 companies do not carry out credit checks as part of their approval procedure, and nearly two-thirds of borrowers surveyed were not asked about any aspect of their financial situation apart from their salary. Some payday loan websites failed to provide any terms and conditions, and many of those that did had little or no information about a borrower's rights and obligations. or references to free debt advice. Fourteen out of 34 lenders failed to inform consumers about their complaints procedures. John Lamidey, chief executive of the Consumer Finance Association, a trade body which represents several payday lenders, said: "Despite the report's concerns that payday borrowers may get 'hooked', the fact is that payday loans actually make up a tiny proportion of overall consumer debt. "In fact, for every £100 of problem debt, payday loans never make up more than £1.20 of that debt, whereas credit cards and unsecured (mainstream) loans together account for between 60% and 70% of unmanageable debt. "Responsible payday lenders, such as the CFA's members, have no desire to lend to consumers that cannot afford to pay back their loans or trap them in a cycle of debt." But debt counselling charity the National Debtline said it had seen a huge rise in the number of calls about payday loans, from 288 in August 2010 to 1,547 in March 2012. The charity said it received 4,725 calls for help with payday loans in the first three months of 2012, 58% more than the previous quarter and 133% more than the same quarter of 2011. National Debtline spokesman Paul Crayston said: "Payday loans are fast becoming a very serious problem in this country. We have strong concerns over the lending and collections practices of many payday lenders. We have even heard from people who have been approved for payday loans despite being insolvent." Which? executive director, Richard Lloyd, said: "It is unacceptable for this rapidly growing number of people to be inadequately protected from extortionate charges and dodgy marketing techniques. The regulator should properly enforce the existing rules that apply to this industry, but they must go further and impose a cap on the amount that lenders can charge for defaulting."

Payday loan borrowers 'trapped in debt spiral'

Almost two-thirds of people who took out expensive payday loans have used the money to pay household bills or buy essentials such as food, n...

Taxpayers may lose 2 billion pounds on Northern Rock rescue

UK taxpayers could lose up to 2 billion pounds from the government's 2008 rescue of mortgage lender Northern Rock by the time all the assets are wound down, according to the country's spending watchdog. The National Audit Office (NAO), an independent body that monitors value for money in government spending, said last year's sale of part of the bank was a good choice and the loss should be seen as part of the overall cost of securing the benefits of financial stability during the financial crisis.  Find out here UK Financial Investments (UKFI), the body that holds Britain's stakes in banks it rescued, has said the taxpayer will recover all of the cash provided to Northern Rock, but the NAO said that may be optimistic. Britain nationalised Northern Rock in early 2008 after failing to fund a buyer after providing emergency liquidity support to the lender the previous year. After nationalisation the business was split into two companies. A new stand-alone "good" bank, Northern Rock plc, was sold to Virgin Money at the end of last year. The second company, Northern Rock Asset Management, is running down the book of "bad" mortgages that were left, and remains in government hands. The taxpayer will lose about 480 million pounds of its original 1.4 billion pound investment in Northern Rock plc, the NAO said. Repayments of the support provided to NRAM will be spread over many years and be subject to changes in the economy. UKFI expects to recover all the support provided to Northern Rock, including the loss on the sale of the "good" bank, and reckons the taxpayer will earn a return of 3.5 percent - 4.5 percent a year by the time all the assets run off. But the NAO said a private-sector investor would require a higher rate of return as compensation for the risks taken. Its forecast of a loss of 2 billion pounds is based on applying a higher discount rate of 6 per cent a year to the cash flows. The NAO said UKFI ran the sale of Northern Rock Plc well and the price paid by Virgin Money compared well with market prices. Although Northern Rock Plc failed to meet its lending targets or deliver the performance expected during its two years of public ownership, no alternative was likely to have been significantly better, the report said.

Taxpayers may lose 2 billion pounds on Northern Rock rescue

UK taxpayers could lose up to 2 billion pounds from the government's 2008 rescue of mortgage lender Northern Rock by the time all the as...

Millions of British bank customers were left in panic today as Santander became the latest giant to be hit by the eurozone crisis.

The High Street chain saw its credit rating was slashed as anxious consumers in Spain withdrew £1bn - sparking fears of a run on the countr...

‘Save euro’ plea to Germans as Spain slumps

BRITAIN yesterday piled pressure on German Chancellor Angela Merkel to save the euro. 6 comments Related Stories PM: Make or break for euro HE to issue plea to Merkel to fork out as only way to stave off meltdown New French Pres gets a soakingFrench warning for CameronSarky poll malarky will leave PM narky David Cameron and Chancellor George Osborne said she must use her financial clout to stop the single currency collapsing. The PM hammered the message home in emergency talks via video-link with Mrs Merkel and French president Francois Hollande. It came as the chaos in Greece spread to Spain — with fears of a run on banks in both countries. Greeks have taken £560million from local banks in the past week. And yesterday Spain’s Bankia bank was forced to deny reports customers had taken £800million out of its coffers in the past seven days. Last night the fears hit Santander UK as credit rating agency Moody’s downgraded the bank along with its Spanish owner and 15 other Spanish banks. And credit agency Fitch downgraded Greece on fears it will be booted out of the Eurozone. Earlier, Mr Osborne said the Treasury had drawn up emergency plans to cope with Greece quitting the euro. He told MPs: “Britain will be prepared for whatever comes.” Mr Cameron had warned countries such as Greece and Spain can only survive if richer countries did more to “share the burden of adjustment”. He also backed Eurobonds to raise billions to prop up crisis-hit countries — a proposal that would have to be bankrolled by Berlin. After the video chat, a Downing Street spokesman said the PM urged the eurozone to take “decisive action to ensure financial stability and prevent contagion”.

‘Save euro’ plea to Germans as Spain slumps

BRITAIN yesterday piled pressure on German Chancellor Angela Merkel to save the euro. 6 comments Related Stories PM: Make or break for e...

Spain’s banking crisis reached Britain’s high streets last night when the credit rating of Santander UK was cut.

In a sweeping reassessment, ratings agency Moody’s announced in Madrid that it is downgrading 16 Spanish banks because it could not be sure of the ability of the country’s government to provide the necessary support.Santander UK was among the banks highlighted after the ratings agency took aim at its parent Banco Santander, based in Spain. <div><img alt="The Spanish banking crisis has hit the British high street, with the news that Santander has had its credit rating cut" height="339" src="http://i.dailymail.co.uk/i/pix/2012/05/17/article-2146112-000024DD00000CB2-620_468x339.jpg" width="468" />The Spanish banking crisis has hit the British high street, with the news that Santander has had its credit rating cut</div>Santander is one of the biggest players in UK retail banking, having taken over the former Abbey National, Alliance & Leicester, Bradford & Bingley and most recently the English branches of the Royal Bank of Scotland.The new lower A2 credit rating is certain to be a cause of anxiety to Santander UK’s millions of British customers. Nevertheless, they can be confident that their deposits up to £85,000 are guaranteed by the British government should there be a loss of confidence.

Spain’s banking crisis reached Britain’s high streets last night when the credit rating of Santander UK was cut.

In a sweeping reassessment, ratings agency Moody’s announced in Madrid that it is downgrading 16 Spanish banks because it could not be sure ...

JP Morgan's $2 Billion Trading Loss Is Already $3 Billion

Jamie Dimon said it could get worse... and it is. The JP Morgan trading loss that was $2 billion four days ago is now $3 billion, report Nel...

Cost of Greek exit from euro put at $1tn

<div id="main-content-picture"><img alt="Mervyn King" height="276" src="http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2012/5/16/1337201458108/Mervyn-King-009.jpg" width="460" /><div>The cost of a possible Greek exit from the euro has emerged as Mervyn King warned that Europe is ‘tearing itself apart’. Photograph: Chris Ratcliffe/Getty</div></div><div id="article-body-blocks">The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europewas "tearing itself apart".Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the eurozone of Greece making a disorderly exit from the currency at $1tn, 5% of output.Officials in the United States are also nervously watching the growing crisis: Barack Obama on Wednesday described it as a "headwind" that could threaten the fragile American recovery.In a speech in Manchester before flying to the United States for a summit of G8 leaders, the British prime minister, David Cameron, will say the eurozone "either has to make up or it is looking at a potential breakup", adding that the choice for Europe's leaders cannot be long delayed."Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone, or we are in uncharted territory which carries huge risks for everybody."Whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system."Officials from the Bank, the Treasury and the Financial Services Authority are drawing up plans in the expectation that a Greek departure from monetary union – increasingly seen as inevitable by financial markets – could be as damaging to the global economy as the collapse of Lehman Brothers in September 2008.With a second election in Greece called for 17 June, King dropped a strong hint that the Bank would take fresh steps to stimulate growth if policymakers in Europe failed to deal with the sovereign debt crisis."We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country's history, the biggest fiscal deficit in our peacetime history and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution," he said.Doug McWilliams, of the Centre for Economic and Business Research, said a planned breakup of the single currency would cost 2% of eurozone GDP ($300bn) but a disorderly collapse would result in a 5% drop in output, a $1tn loss. "The end of the euro in its current form is a certainty," he added.Alistair Darling, who was Chancellor of the Exchequer under the former Labour administration, said: "This has the seeds of something disastrous. It is madness. If it spreads to bigger countries, this could be really disastrous for Europe. It could consign us to years of stagnation."Capital flight from Greece has increased since it became clear that a coalition government could not be formed after the election earlier this month. The Greek president, Karolos Papoulias, said citizens were withdrawing their money amid "great fear that could develop into panic" at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency's website. In little more than a week following the election on 6 May, €3bn was withdrawn from bank accounts. The central bank reported that €800m was taken out in a single day earlier this week.The head of the International Institute of Finance banking lobby, Charles Dallara, said money was leaving Greece at a growing pace due to political uncertainty. "There has been a pickup of deposit flight from Greece, but I think that is stabilisable once you get a new government in place, if that government reaffirms its intention to remain in the eurozone." The damage to the rest of Europe if Greece were to leave the euro would be "somewhere between catastrophic and armageddon", he said.The Spanish prime minister, Mariano Rajoy, told parliament that his country faced trouble financing itself as borrowing costs shoot up to "astronomic" levels. The Irish finance minister, Michael Noonan, said Dublin's plan to return to capital markets in late 2013 might not be achievable because of the uncertainty.The first meeting between French president François Hollande and German chancellor Angela Merkel helped to calm nerves in the markets at one stage, with suggestions that Berlin might be amenable to initiatives to boost growth in Greece and the other austerity-stricken nations of the eurozone.But the jittery mood was underlined by a fall in European shares and the single currency late in the day amid reports that the European Central Bank was cutting off its funding lifeline to Greek banks that had failed to amass enough capital to protect them from future losses.The ECB later said it expected the Greek central bank to use part of the €130bn bailout from the EU and IMF to ensure that the country's banks were safeguarded from collapse, and that they would receive additional help from Frankfurt only once this had happened. Already delayed by the political uncertainty in Greece, €18bn is now expected to be released to recapitalise the banks.Sony Kapoor, of the Brussels-based Re-Define thinktank, said: "The high-stakes game of chicken between Greek and other EU politicians must end now. Those saying that a Greek exit from the eurozone will not be a big deal either don't know what they are talking about, or have some ulterior motives. The social, political and economic damage to the EU from a Greek exit is potentially incalculable."At the G8 summit, which starts on Friday, Obama will press Merkel tolean more towards a growth package for Europe, instead of pressing so hard for the austerity measures that were rejected by Greek voters.But foreign affairs analysts said that Obama's leverage with the European leaders is minimal. Although the US has the economic muscle to help Europe out of its mess, the Obama administration has taken the strategic decision not to become involved directly.Instead, Obama is to use the Camp David summit for some quiet diplomacy, hoping to sway Merkel to endorse some immediate actions to help growth.King, speaking at the publication of the Bank of England's quarterly inflation report, said growth in Britain was weaker and inflation higher than Threadneedle Street had expected three months ago. It would take until 2014 for output to return to where it was in 2008, when Britain's deepest post-war recession began."What is so depressing about it is that this is a rerun of the debates in 2007/08 – these are not liquidity problems, they are solvency problems," King said. "Imbalances between countries in the euro area have created creditors and debtors and at some point the credit losses will need to be recognised and absorbed and shared around," he said."Until that is done, there will not be a resolution. That is why just kicking the can down the road is not an answer. The European Central Bank has performed heroically in trying to buy time but that time hasn't been used to put in place fundamental underlying solutions."</div>

Cost of Greek exit from euro put at $1tn

The cost of a possible Greek exit from the euro has emerged as Mervyn King warned that Europe is ‘tearing itself apart’. Photograph: Chris R...

Eduardo Saverin Might Not Be Allowed Back In The U.S., According To Citizenship Law

Facebook co-founder Eduardo Saverin might not be allowed to return to the United States. Billionaire Saverin, who ditched his U.S. citizenship ahead of Facebook's mega IPO, is said to own a 4 or 5 percent stake in the social network. Bloomberg reported last week that he is moving to Singapore, possibly to slash taxes he might owe the U.S. government. According to a U.S. immigration law highlighted by Talking Points Memo (TPM), Saverin might face difficulty re-entering the country due to the timing of his expatriation. From Sec. 212. [8 U.S.C. 1182] of the law, per TPM: Former citizens who renounced citizenship to avoid taxation.-Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable Facebook is seeking to raise as much as $18 billion in it what is expected to be the largest Internet IPO ever. Based on a regulatory filing the social network submitted to the Securities and Exchange Commission on May 16, the stock's planned price range is currently between $34 and $38 dollars per share; the company may be valued as high as $104 billion as a result. Bloomberg reports that Saverin likely saved himself $67 million in federal income taxes on his shares; the Times pegs his savings at $100 million or more. A separate TPM post links to a document that one would have to file with the U.S. State Department's Bureau Of Consulate Affairs in order to relinquish citizenship. An item in that document also mentions possible exclusion of a person who has renounced citizenship in order to dodge taxes: My renunciation/relinquishment may not exempt me from United States income taxation. With regard to United States taxation consequences, I understand that I must contact the United States Internal Revenue Service. Further, I understand that if my renunciation of United States citizenship is determined by the United States Attorney General to be motivated by tax avoidance purposes, I will be found excludable from the United States under Immigration and Nationality Act, as amended. A spokesman for Saverin has emailed multiple media outlets to say that Saverin, who was born in Brazil, did not become a resident of Singapore to avoid taxes in the U.S. "Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," the spokesman wrote. "He still has very strong ties to Brazil and is extremely passionate about not only his homeland, but also the U.S." Saverin told the New York Times in an interview, “I’m not a tax expert [...] We complied with all the known laws. There was an exit tax.” An exit tax is applied to an expatriate's capital assets, including unsold stock. Forbes estimates that, even though Saverin settled up with the government before the imminent spike in the value of Facebook's shares, he probably paid nearly $500 million to leave the country. While still a Harvard student, Saverin served as the first CFO of Facebook. He held that position from 2004 until Mark Zuckerberg and other execs muscled him out in 2006 and diluted his 34 percent stake in the company. Saverin established his current stake in the social network as a result of a settlement with Facebook in 2009. Exact terms of the settlement were not disclosed.

Eduardo Saverin Might Not Be Allowed Back In The U.S., According To Citizenship Law

Facebook co-founder Eduardo Saverin might not be allowed to return to the United States. Billionaire Saverin, who ditched his U.S. citizens...

Top