Rip-off News round-up. Our pick of the last week's media (Thu 31st July)

Regulators want reckless bankers to be criminally liable under new plans

The bosses of leading City firms are to be made more accountable for their actions under proposals that could make them wait up to seven years for their bonuses and potentially be jailed if their banks fail. Responding to recommendations made by the parliamentary commission on banking standards, the two main City regulators on Wednesday set out lengthy consultations aimed at framing a new licencing regime for bankers and the creation of a "potential criminal liability under a new offence relating to a reckless decision causing a financial institution to fail". The Financial Conduct Authority and the Bank of England's regulation arm, the Prudential Regulation Authority, want the new regime to be in force by January next year and would force bankers to prove they had acted appropriately – a reversal of the burden of proof. Bankers would be subjected to annual checks to ensure they comply with a regime which covers those involved in what is known as a "significant harm function". But the regulators have stepped back from the idea of the parliamentary commission – set up in the wake of the Barclays' fine for rigging Libor two years ago – that bonuses be deferred for as long as 10 years. "The PRA and FCA note that increasing the overall length of deferral is not the only way in which the typical present pattern of deferrals might be altered to improve risk alignment. There is scope to increase the proportion of awards that are held for longer within the overall deferral period, either by requiring a greater proportion of awards to be deferred, or by delaying the start of vesting, which typically starts a year following the initial award," the regulators said. Instead, for the most senior bankers, bonuses must be deferred for seven years and for less senior staff for five years, according to the consultation. And the new rules coming into force will allow bonuses to be clawed back for up to 10 years. This would force bankers to repay bonuses already received as well as having deferred bonuses withheld. GUARDIAN

Energy firms to 'double' profit margins, predicts Ofgem

A year ago, Ofgem estimated that suppliers would make an average profit of £53 per dual fuel customer, a margin of 4%. But in the year ahead they now expect energy firms to make £106 per customer, increasing their margin to 8%. The industry said the figures do not take tax or interest into account. However Ofgem - which will officially publish the details on Thursday - said it was further evidence that the market was not working as well as it should. It has already referred the industry - and the profits it makes - to the Competition and Markets Authority (CMA). It has also written to the suppliers to ask why falls in wholesale prices last winter have not resulted in lower bills. BBC NEWS

UBS and Deutsche Bank questioned over 'dark pool' trading

Two more banks – UBS and Deutsche Bank – have been drawn in to the controversy over "dark pools", the private trading systems recently highlighted by bestselling author Michael Lewis in his latest book on Wall Street. Dark pool exchanges are operated by banks and allow dealers to remain anonymous until their trades are executed. Lewis argues they are used by high frequency traders who try to make profits by trading faster than everyone else. Barclays is already defending itself against accusations of fraud by the New York attorney general over the way it advertised its dark pool. GUARDIAN

Nearly 2m working adults still live at home with parents

A leading charity has called on politicians to stop pumping money into loan schemes that ‘inflate’ house prices further and instead take ‘bolder action’ to build more affordable homes for a ‘clipped wing generation’ who cannot fly the nest. The plea comes from Shelter, which pointed to exclusive Census data showing there were 1.97million young adults in England who are still living with their parents despite working - this amounts to a quarter of all those aged between 20 and 34 in employment. And a separate survey of 250 young adults who live with mum and dad found nearly half of them are not moving out because they cannot afford to rent or buy a home, Shelter added. Campbell Robb, chief executive of Shelter, said: 'The “clipped wing generation” are finding themselves with no choice but to remain living with mum and dad well into adulthood, as they struggle to find a home of their own. And those who aren’t lucky enough to have this option instead face a lifetime of unstable, expensive private renting... From helping small local builders find the finance they need, to investing in a new generation of part rent, part buy homes, the solutions to our housing shortage are there for the taking.’ DAILY MAIL

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Lloyds fined £218m for rigging Libor and the taxpayer-backed bailout scheme that saved them

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Graphs At A Glance: Elections in the UK are decided by people who don't vote.

A survey by the market research organisation Survation looked into why people don't vote:

In answer to another question in the same survey: "If a UK general election was held tomorrow, would you be likely to vote or not?", the survey showed 56% of people who didn't vote in 2010 said they would vote if an election was held tomorrow. A severe case of non-voters remorse.

The main reason for not voting is people "don't believe my vote will make any difference".

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At last! From September 2014 financial education becomes part of the national curriculum in schools!

Fee, KJ and Chris wonder what difference it'll make...

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Rip-off News round-up. Our pick of the last week's media (Thu 25th July)

U-turn: RBS bosses 'wilfully obtuse' over alleged mistreatment of small firms

Senior directors at RBS have been strongly criticised for giving misleading evidence to MPs investigating claims that the bank mistreated small firms. An earlier report by Lawrence Tomlinson, a Government adviser, alleged that the bank’s Global Restructuring Group (GRG) division was forcing small businesses into administration so that the bank could take their properties and sell them for a profit. Another report by Sir Andrew Large concluded that there were potential conflicts of interest between GRG and its small business clients because the division was an “internal profit centre”. The former Deputy Governor of the Bank of England argued that GRG could be tempted to drive profits from clients rather than help them and turn them around, as the division was designed to do. In reply, giving evidence to MPs, RBS bosses had repeatedly insisted that GRG was not a “profit centre”. However, in a new letter to Andrew Tyrie, chairman of the Treasury Select Committee, deputy chief executive Chris Sullivan, who is leaving RBS next year, said he had to “correct the statement he made to the Committee” since he now agreed that GRG was indeed a profit centre. Mr Tyrie concluded: “If this is how RBS deals with a parliamentary Committee, how much can customers and regulators rely on it to be straightforward with them?” TELEGRAPH

Parliament says disabled benefit delays a 'fiasco'

The Public Accounts Committee said the new Personal Independence Payment scheme had been "rushed" through, with a "shocking" impact on claimants. "Many" faced six-month delays, with terminally ill people waiting a month on average for the payment, it said. New claims for the Personal Independence Payment (PIP) - which replaces the Disability Living Allowance (DLA) - began in April 2013. They are worth between £21 and £134 a week. The Department for Work and Pensions began processing new claims for PIP in northern England, but had only made 360 decisions when the scheme was introduced nationwide in June. Reassessment of the existing 1.7 million DLA claimants began in October, but was effectively paused after a backlog of some 780,000 claims built up. Committee chairwoman and Labour MP Margaret Hodge said: "The department's failure to pilot the scheme meant that the most basic assumptions, such as how long assessments would take and how many would require face-to-face consultations, had not been fully tested and proved to be wrong." Ministers defended the system and said the committee’s figures were out of date. BBC NEWS

George Osborne's deficit reduction plan under pressure as borrowing rises

George Osborne is on course to miss his goal of trimming Britain’s deficit this fiscal year after figures showed public borrowing climbed 7.3pc in the first quarter. The Government borrowed £11.4bn in June, just £100m less than the same month last year, and well above analysts’ forecasts of a deficit of £10.7bn. Last month’s borrowing increased the 2014/15 deficit to £36.1bn, up from £33.7bn at the same point a year ago. It also brought total public sector net debt to a record £1.305 trillion in June, equivalent to 77.3pc of GDP (the figures exclude the effects of financial interventions and other one-off factors). The news underlines the magnitude of the task facing Mr Osborne. The Chancellor is aiming to cut the deficit to 5.5pc of GDP in the 2014/15 fiscal year, from 6.5pc last year, to meet targets set by the Government’s forecaster, the Office for Budget Responsibility (OBR). When the coalition came to power in 2010 Mr Osborne promised to eliminate the annual deficit - which at that point stood at 11pc of GDP - by the 2015 election. This goal has since been pushed back by two years to 2016/17, but even the revised target has been thrown into doubt. TELEGRAPH

Banks face new criminal investigation over foreign exchange market manipulation

The Serious Fraud Office has launched a criminal investigation into whether a number of traders at top banks colluded to artificially fix rates in the £3 trillion-a-day foreign exchange markets. Regulators around the world, including the UK, US, Switzerland and Hong Kong, are already looking into alleged rigging of foreign exchange rates but the SFO’s intervention will mark the first official criminal investigation. London is where around 40pc of foreign exchange trading takes place and traders are alleged to have colluded via online chatrooms with names such as the “Bandits’ Club” and the “Dream Team”. The Bank of England has also been dragged into the affair - it has asked Lord Grabiner QC to look into whether any of its own officials were implicated in forex manipulation between 2005 and 2013. So far more than 25 traders working at a number of the world’s biggest banks have been fired or suspended while regulators around the world continue their investigations. TELEGRAPH

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We need to cut wages to stay competitive? But our wages are already lower than our rivals'

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Graphs at a glance: Britain is a low-pay economy with falling average wages. Beware of politicians bearing legislation to push wages down further.

The economic crisis caused by the banking crash of 2008 has been used as a smokescreen for many fundamental changes in Britain.

UK GDP has already recovered to its pre-crisis level. However employment rights, pension rights, legal rights and more have been permanently cut under cover of this temporary crisis.

Among the most basic rights is pay. Since the 2008 crisis pay in both public and private sector has fallen well behind inflation. 
The graph, using Office for National Statistics (ONS) figures, shows that average earnings have grown in cash terms from £134.20 per week in January 2008 to £149.30 per week in January 2014. 

However, although Average Weekly Earnings before 2008 kept up with inflation, since 2008 in terms of buying power (inflation adjusted) average wages have fallen by 9%.

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Since the 2008 bank collapse the incomes of those under 30 have fallen 13%, almost twice as much as anyone else’s

Chris and his wife figure out who's rescuing who...

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Rip-off News round-up. Our pick of the last week's media (Thu 17th July)

Young adults hit hardest by financial crisis: Think-tank claims real incomes of those under 30 fell 13% since 2008

Between 2008 and 2013, the real household income of the under 30s fell by 13 per cent while among 31 to 59 year-olds, the fall in household income was just over half that at 7 per cent. The IFS said the employment rate among the under-30s fell by 4 per cent following the financial crisis while remaining unchanged for 31 to 59-year-olds. Moreover, those under-30s that could find work found their average pay fell by 15 per cent compared with just 6 per cent for 31 to 59-year-olds. Just over one quarter of adults under the age of 30 continued to live with their parents, the IFS study found, helping to cushion the impact of the recession on their household incomes. Those living with their parents found their income fell by 8 per cent between 2008 and 2013, compared to those living on their own whose incomes fell in real terms by 17 per cent. In contrast those over the age of 60 saw almost no impact on their pay or employment. The report comes four months after the Chancellor delivered a Budget that was largely seen as being aimed squarely at older voters, with reforms to pension rules among one of George Osborne's big announcements. ‘Young adults have borne the brunt of the recession” said report author Jonathan Cribb, a research economist at the IFS. ‘Pay, employment and incomes have all been hit hardest for those in their 20s. 'A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects’. DAILY MAIL

FTSE fat cats now earn 180 times the average worker, as their salaries hit £4.7m a year

The gap between bosses and workers has soared over the past 20 years - from just 60 times the average wage in the 1990s. On average the bosses of Britain's 100 biggest companies took home £4.7million last year - up from £4.1million the year before, according to the High Pay Centre. Ordinary workers, meanwhile, earned £26,884. A Business Department spokesman said: 'The Government has introduced comprehensive reforms to give shareholders more powers in order to restore the link between top pay and performance, which in recent years has become excessive and increasingly disconnected.” But the High Pay Centre said shareholders were still signing off soaring executive pay despite being given the power to vote them down at annual meetings. They urged the government to take 'radical action' to close the gap, such as requiring firms to cap executive pay at a fixed multiple of their lowest paid employees. High Pay Centre director Deborah Hargreaves said: 'The Government's tinkering won't bring about a proper change in the UK's pay culture... We need to build an economy where people are paid fair and sensible amounts of money for the work that they do and the incomes of the super-rich aren't racing away from everybody else... A maximum pay ratio would recognise the important principle that all workers should share in a company's success and that gaps between those at the top and low and middle earners cannot just get wider and wider.' DAILY MAIL

Fleecing the elderly: home and car insurance price rises that shame the insurance industry

Over the last year, market rates for home and car insurance have plummeted. In Manchester, average car premiums are down by more than £100 and are heading back to rates last seen five years ago. So it is scandalous how insurers chase new customers with low prices while fleecing their elderly, more loyal ones. But there is now a glimmer of hope. If new proposals come into force, customers receiving their annual renewal on car or home insurance will have to be told what they paid last year. It's extraordinary that until now they have had to dig out old documents to see whether they're being shafted with a rise. Many people don't – allowing the insurers to sneak through rise after rise. In March 2008, we highlighted the case of Robert King who was quoted a home insurance renewal price of £551 by Direct Line. Yet when he went to its website, posing as a new customer, he was quoted £173. He had been a customer for 10 years. Ans an 83-year-old Derbyshire pensioner, living in a modest two-bed bungalow, had his home and contents policy with the same insurer for 58 years. It progressively ramped up his premium to £648 a year – yet if he bought it as a new customer it was just £135. So when you open your renewal letter, look for a premium that is lower than last year. If it's not, it's time to switch. GUARDIAN

Uncovered... great sun cream swindle: Prices inflated then slashed to give illusion of discounts

Supermarkets are putting up the prices of lotions just before offering discounts to make shoppers believe they are getting a better deal, it has been claimed. Shops such as Boots, Sainsburys, Asda, Morrisons and Tesco now face accusations that they are manipulating British families ahead of the summer holidays. An investigation by mySupermarket.co.uk, tracked the prices of major brand and own-brand sun tan lotions over the last year. The price comparsion website found a ‘zig-zag’ pattern, where prices were raised shortly before being slashed to ‘half-price’, to create the impression that consumers were getting a bargain. Boots’ own-brand Soltan kids’ SPF 50+ spray is currently half-price as part of a ‘Get the Most out of Summer’ promotion, reduced from £10.50 to £5.25. But the spray was only £10.50 during term-time between January and March this year, when it was also on buy-one-get-one-free. Ever since it has been sold for £5.25. The Department for Business rules for traders state that ‘the price used as a basis for comparison should have been your most recent price available for 28 consecutive days or more; and the period for which the new (lower) price will be available should not be so long that the comparison becomes misleading.’ DAILY MAIL

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Graphs at a glance: The UK has the worst investment record of the 27 EU nations, so where does all the money go?

For years one of the favourite excuses for making all us Ripped-off Britons worse off by hiking prices and keeping down wages has been the need to pay for "investment". 

Energy , telecoms and transport companies warn of blackouts and overcrowding unless we swallow price hikes for "investment". 

Employers and governments say wages and pensions can't go up because the  money kept from us is needed for "investment".


A report by the National Audit Office, "Infrastructure Investment: the impact on consumer bills", reveals the extent of the rampant rises:

"Spending [by consumers paying their bills] on energy and water bills rose by 44 per cent and 21 per cent respectively, in the period 2002 to 2011 while median incomes were still the same in 2011 as they were in 2002 (all figures calculated in 2012 prices)"

And yet when the rain pours, the wind puffs, or the wrong type of snow falls everything seems to grind to a halt. Is all the investment we pay for with higher bills and stagnant wages being wasted? Or is it simply not happening at all?

Figures from a European Union report, "In Depth Review for the UK", suggest that the "investment" is actually woefully inadequate. The report shows that the UK has about the worst investment record of all 27 EU nations.

Makes you wonder where all the  money actually does go:

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