Rip-off News round-up. Our pick of the last week's media (Thu 3rd Nov)

Pensions Regulator begins legal proceedings against Sir Philip Green

The Pensions Regulator has begun formal legal proceedings against Sir Philip Green and Dominic Chappell that could force them to fill the £571m deficit in the BHS pension scheme, marking a dramatic escalation of the scandal surrounding the demise of the high street chain. The regulator said that after a “complex investigation” and months of talks with Green about a rescue deal for the pension scheme it was sending warning notices to the billionaire tycoon, Chappell and their companies. Lesley Titcomb, chief executive of TPR, said it was yet to receive “sufficiently credible and comprehensive offer” to bail out the BHS pension scheme, which has more than 20,000 members, despite Green pledging to fix the problems facing it. BHS collapsed into administration in April, leading the loss of 11,000 jobs and leaving a pension deficit of £571m. Green controlled BHS between 2000 and 2015, during which time his family and other shareholders collected more than £580m. Green sold BHS in March 2015 to Chappell, a serial bankrupt with no retail experience, for just £1. Retail Acquisitions collected an estimated £17m from BHS despite owning it for just 13 months until it fell into administration. Last month the House of Commons voted unanimously to strip Green of his knighthood, which was awarded a decade ago for services to retail. During a fiery debate in parliament, Green was lambasted and described as a “billionaire spiv”. GUARDIAN

HMRC chasing £1.9bn tax from UK's richest people

The National Audit Office said HMRC's specialist unit recovered £416m in 2015 from 6,500 "high net worth individuals" with wealth of more than £20m. But efforts are ongoing to recover an estimated £1.9bn, the NAO said. Each one of the group of 6,500 is assigned their own HMRC official to liaise with over their tax bill. The £416m is in addition to tax the wealthy individuals voluntarily declare, which totalled more than £4.3bn in 2014-15. They often have complex tax affairs involving different countries. The £1.9bn figure of tax that is "at risk" of not being received, is an estimate and not all of it will be owed once each case has been examined in detail, the NAO said. According to the NAO, HMRC is criminally investigating 10 high net worth individuals in relation to illegal offshore tax evasion, although just one has been prosecuted since 2010. It is aiming to increase the number of prosecutions to 100 by 2020. The specialist unit recovers £29 for every £1 spent on staffing costs, the NAO said. HMRC is also investigating the huge leak of records from law firm Mossack Fonseca, known as the Panama Papers, which revealed how the rich and powerful use tax havens to hide their wealth. According to the NAO report, tax officials have identified 40 of the wealthiest group in the leaked data and are deciding whether their files warrant further investigation. The report also found that 137 of the country's richest who had undisclosed assets in Liechtenstein used an agreement with the tax haven in 2009 to admit their liabilities in return for less harsh penalties, with an average settlement of £1m per person. BBC NEWS

Death of the payday loan? Lending plunges by 70 PER CENT as watchdog crackdown bites

Around 1.8million loans were issued last year, down from ten million just three years earlier, according to the chief executive of the Consumer Finance Association Russell Hamblin-Boone. The majority for firms offering high-cost short-term credit have moved out of the market altogether, with just 60 authorised firms remaining where once there were 240, analysis of FCA figures from the industry body suggest. ‘Margins are very small now and we have seen a reduction in the market as a result of the regulation and price control,’ he said. Stringent controls were placed on payday lenders in 2014 and 2015, in an attempt to protect borrowers from eye-watering fees and debts spiralling out of control. The new rules mean that borrowers incur no additional charges over and above 0.8 per cent interest per day. The maximum penalty that a lender can charge a customer who misses a payment is £15 over the length of the loan. The loan cost cannot escalate in interest beyond 100 per cent of the amount borrowed in the first place. Loans still incur very high levels of interest. However lenders are obliged to make sure that their customers can afford them and are treated fairly if they fall into difficulties. The new rules mean that for many firms operating in this area, offering payday loans was no longer profitable. Speaking to the Financial Exclusion Committee at the House of Lords, Mr Hamblin-Boone pointed out that people who take out this type of loan are ‘from all walks of life – in senior positions in industry to those on zero contract hours in catering and cleaning’. The average income of a borrower is £25,500, compared to the UK average of £26,000, while they are more likely to be working full time than the population as a whole, he said. The FCA crackdown saw several lenders issued with large fines and demands to pay compensation to customers. In 2014, Wonga was ordered to pay £2.6million to around 45,000 customers for unfair and misleading debt collection practices. CFO Lending, which traded under names including Payday First and Money Resolve, had to repay almost £35million to nearly 100,000 customers after the watchdog found evidence of ‘unfair practices’. DAILY MAIL

A third of money that banks make from customers comes from overdraft interest and charges. Watchdog to probe fees

Despite the huge cost, customers are rarely aware of what they pay and even more rarely switch accounts to pay less. As a result, the Financial Conduct Authority says it will take action to improve competition in the current account market. It follows a series of recommendations proposed by the Competition and Markets Authority in August as part of its investigation into retail banking. Data from information website Moneycomms shows that the Halifax reward account, NatWest/RBS select and TSB classic typically have the highest annual fees for slipping into the red. The average cost of a high street bank overdraft is now six times higher per month than it was seven years ago, rising from £2 monthly in 2008 to £12 today. More than half of UK adults incur a fee from spending over their limit. DAILY MAIL

Payday and car finance loan sharks forced to wipe off £414m of unpaid debts for more than 500,000 people

Motormile Finance, which bought debts from payday lenders including Cash Genie, Mr Lender, Lending Stream and WageDayAdvance, was found to have unfairly pursued customers. Now the Financial Conduct Authority has forced it to wipe out £414million of unpaid debts, and repay £154,000 to more than 2,000 affected customers. It said Motormile had been unable to provide evidence that the outstanding debt amounts were correct, leading to 'poor treatment of customers'. Online customer forums highlight a catalogue of complaints against Motormile, with borrowers claiming it added default notices to their credit histories even when they had not borrowed money. Others said they had been hounded by emails and house visits from debt collectors. Another person said Motormile had contacted her workplace, and provided personal details to her manager. 'The message stated they were sending an agent to my work,' she added. 'I got called into the office to ask if I was in any trouble and it was very embarrassing.' Yorkshire-based Motormile also trades as MMF, MMF Debt Purchase and MMF UK. In a statement chief executive Denise Crossley apologised to affected customers. Motormile is owned by Neil Petty, 52, and Barnaby Page, 46, who were paid £1.5million in 2014, and £530,000 last year, according to documents filed at Companies House. It collected £12.3million from debtors last year, and in 2014, it said it owned debt worth £808million. DAILY MAIL

Buying a home ‘cheaper than renting’ in two out of three towns

Website Zoopla compared rents being asked for twobedroom homes in 50 locations with average mortgage premiums and a 10 per cent deposit – the size often put down by first-time buyers. It found that in 60 per cent of towns and cities, buying was more cost-effective than renting. The proportion has increased since April, when buying was cheaper in 48 per cent of places. Owners in Glasgow fare particularly well, the research suggests, parting with an average of £450 per month, while renters fork out an average of £596. Owning in Birmingham and Bradford was also found to be particularly cost-effective. But renting often works out cheaper in southern England where house prices can be particularly high. In London, renting can work out £1,118 cheaper per month than a mortgage, while the difference in Cambridge can be £549 per month. The research assumed that a mortgage holder would be on a 25-year repayment deal with a fixed interest rate of 4.5 per cent. Lawrence Hall, of Zoopla, said: “Whereas back in April it was cheaper to service a monthly mortgage than pay rent in just under half of Britain’s big [towns and] cities, buyers are now offered better value in nearly two-thirds of these locations.” EXPRESS

Buy-to-let and second homes made up a QUARTER of all property sales this summer

Despite typical stamp duty costs tripling for second home buyers in April, HMRC data shows that 56,100 of 235,000 property purchases in the third quarter included the additional surcharge. As a result, this stamp duty hike clawed in an extra £440million for the taxman in the three month period of July to September. In total, HMRC has creamed an additional £670million from the move since April. The statistics show in the three months of April, May and June, a slimmer 30,300 of 207,900 purchases were for second properties, indicating investors had already rushed to beat the 1 April hike. This data indicates that despite the extra costs and the EU referendum decision, appetite for buy-to-let remains robust. The stamp duty surcharge on second homes was introduced by Chancellor George Osborne who announced it in his Autumn Statement in November 2015. As well as investors and holiday home buyers, it has hit buyers in a raft of scenarios, including parents buying for children. On top of the stamp duty hikes, landlords are losing one of their major tax breaks next year. A tax relief change will curb the amount of mortgage interest landlords can offset against tax on their property investments and could mean buying and renting out property is no longer viable for some. Some experts believe that as a result of the moves, rents could rise or tenants could be evicted as landlords look to sell before they are phased in. DAILY MAIL