‘City bonuses to reach 7 billion this year’
October 21, 2010 at 4:08 pm
Bonuses for bankers in the city are expected to reach the £7 billion mark this year echoing payouts similar to the pre-financial crisis.
According to the Centre for Economics and Business Research (CEBR), bankers are set to receive billions in bonuses during 2010 but the total amount will be lower than last year’s £7.3 billion.
Research from the CEBR shows a weaker performance from city firms during the second half of this year and that means bonuses are expected to be less than those given out in 2009. However, it still takes the city back up to levels that were reached in 2004 before the credit crunch and recession.
But the taxman will receive a greater share of the bonuses than the city worker gets to take home. This is because of a new 50% tax rate on income over £150,000 that was introduced in April this year, and it takes Britain’s top rate of tax to one of the highest of all the G20 countries. Top earners will now pay more than half of their income to the chancellor, the CEBR explained.
Bankers are expected to receive approximately £3.8 billion after national insurance contributions (NIC) and income tax are paid and the government is likely to take around £4.1 billion as employers also have to pay main rate NIC of 12.8% on discretionary earnings.
Commenting on the research, CEBR economist Benjamin Williamson said that the “public coffers” would gain “considerably more from city bonuses than city workers themselves”. He thought that the findings from the research were “quite timely” as it suggested public anger towards banking bonuses “may be ebbing a little”. But he added that the £7 billion in bonus payouts would be “easier to stomach if the lion’s share went to the nation”.
‘Lloyds tops complaints list’
October 8, 2010 at 2:32 pm
Lloyds Banking Group has been named as the bank or building society to have received the highest number of complaints from customers so far this year. With almost 290,000 complaints fired in the direction of Lloyds, from an overall figure in 2010 of over one million, the results released by the Financial Services Authority (FSA) won’t have gone down too well with the financial giant.
The overall number of complaints in 2010 represents a significant rise of 5% on the 2009 figure and other major players in the banking world also fared badly, with Barclays and Santander narrowly missing out to Lloyds, who have responded to the news by stating that the number of complaints is an obvious result of them being a large bank, on top spot of worst offenders with regards to customer complaints.
HSBC and Royal Bank of Scotland were also named by the FSA as attracting grievances from consumers, with issues such as extortionate bank charges, poor customer service, and inadequate financial advice apparently the most common.
Whilst the news will obviously not go down well with consumers already suspicious of the banking sector following the recession, the FSA has promised to make changes to the ways complaints are handled in order to ensure that 2011 sees a significant improvement in this year’s figures.
Potential changes include encouraging banks to appoint a senior manager responsible for dealing with complaints and identifying solutions to recurring issues. It has previously been argued that certain current senior bank managers have little interest in getting involved in complaint handling and, as such, make poor decisions regarding customer interaction.
Sheila Nicoll of the FSA has been quoted as stating: "Good complaints handling standards should be the rule not the exception and complaints handling forms a key part of our intensive and intrusive approach to supervise how firms deal with their customers".
‘Bank of England says banks not passing on interest-rate savings’
October 1, 2010 at 2:24 pm
The Bank of England has criticised the UK’s lenders for not passing on interest-rate savings to their customers. It has stated that lenders are still charging extra for loans and mortgages even though the Bank of England base rates remain at the record low of 0.5%.
The study from the Bank of England found that people who are borrowing from lenders can now expect to pay 11% interest in some cases.
The Bank of England suggested that lenders are getting extra profits at the expense of struggling borrowers and that often they are charging interest that is higher than before the crisis.
Despite this practice being criticised as unfair, there is a more serious problem in that the high rates being charged by banks could slow the country’s economic recovery because people will not be able to take out loans for their businesses and homes.
The banks responded to the criticisms by saying that their own costs have risen since the financial crisis, which the Bank of England agreed with. However, it still claimed that lenders were making excessive profits and that operating costs won’t have changed considerably for many of them during the crisis.
It is quite a surprise for the Bank of England to criticise lenders in the UK so openly, as it normally stands up for them. However, with the economic situation being as it is, sometimes strong words are needed to change practices that are as unfair as those currently being used by the UK’s financial institutions.
