UK Finance News

Bank Of England governor Mervyn King has suggested that Banks should put ‘billions of pounds’ into a fund over the next ten years to prevent another Northern Rock disaster.

King told a meeting of the Commons Treasury select committee yesterday that banks should make “non-negligible contributions” into the Financial Services Compensation Scheme, adding that over ten years the fund would build up billions.

He added “I think it’s rather short-sighted that the banks shouldn’t put up money now, If you wait until there’s a problem, that’s a bad time to ask.”

King also suggested that the Bank Of England should have the power of deciding if a failing bank needed to be brought under the control of the authorities.

King said the central bank would have acted a lot sooner to save Northern Rock if the BoE had been given the power to use the proposed resolution scheme. “That bank would have been dealt with immediately,” he said. “We certainly would have handled it differently.”

UK Supermarket giant Asda has offered a crumb of comfort to the hard hit motorist by reducing the price of fuel on it’s forecourts by 3p per litre on unleaded and diesel.

The knock on effect swiftly saw supermarket competitor Morrisons follow suit, only their price cut is a saving of 4p per litre. Now Sainsbury’s have announced that their customers can save 5p per litre from Thursday, but only for customers spending £50 or more at their stores.

The Sainsbury’s promotion will be restricted to running for two weeks.

Asda and Morrisons say they are responding to the recent drop in oil prices, with the price settling at around $130 per barrel from the recent high of $147.

Asda trading director David Miles said: “We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers.

“We urge other retailers to follow our lead at a time when customers need as much help as possible.”

Reports in this weekends press suggest that only around 10% of HBOS shareholders participated in the banks rights issue to raise £4billion.

Experts are concerned that the take up may be so bad that it will leave underwriters Morgan Stanley & Dresdner with as much as £3.6bn worth of the banks stock.

HBOS had hoped to rally support from it’s estimated 800,000 small private investors who were given around 200 shares each following the demutualisation of Halifax Building Society ten years ago.

While the offer made by HBOS may have looked attractive when it was announced in April, since then the share price has plunged in value. The hammering taken last week as UK banks in general were hit on the stock exchange, saw HBOS share drop to a low of 228p against the original discounted rights issue price of 275p.

The next few days could be crucial for the bank and it will be interesting to see how experts Morgan Stanley & Dresdner emerge from the farce.

UK criminals are keeping one step ahead of credit card technology despite the introduction of Chip and Pin which was designed to give the customer more security.

Figures for credit and debit card fraud last year, rose to an incredible £535million, with criminals using new methods of committing credit card crime.

The skimming of cards being used abroad where ATM machines do not check Chip and Pin has become a popular way of obtaining card details.

Criminals are also using bugging devices which fit to till side payment systems to record details from the magnetic microchip, this method also allows the recording of the customers pin code.

Fraudulent use of cards at UK checkouts accounted for £73million of illegal spending, a rise of one million pounds from the previous year.

It is clear that the chip and pin system that was introduced to give users more security, is having absolutely no effect on credit card crime at all.

The million policyholders that lost half of their investment with Equitable Life in 2001, when the company came to the brink of collapse, have been given some hope that they will be at last be able to seek compensation for their losses as a report from the Parliamentary Ombudsman Ann Abraham, is published.

The ombudsman found evidence of “serial regulatory failure” by the government departments and watchdogs that were supposed to be protecting the insurer’s customers. She identified 10 instances of maladministration in the period leading up to December 2001, called on the government to apologise to policyholders for the “injustice” they had suffered and recommended that ministers set up a compensation scheme.

Chancellor Alistair Darling has insisted that the government cannot be held responsible for compensation, but he faces a tough fight from the ombudsman who’s report follows a European parliament finding that also claimed compensation should be paid.

Compensation for losses is likely to be around £4.5billion.