Finance banking insurance fresh information.

News - Warning over endowment complaints

jweiss123 — Mon, 26 May 2008 13:57:14 +0000

The Financial Services Authority has warned insurers that they will face millions of pounds in fines - unless they start handling complaints about endowments properly.

In a letter sent to the chief of larger mortgage endowment firms and financial advisers, the regulator told mortgage endowment providers not to use the Financial Ombudsman Service as an to handling complaints themselves.

Watch Virginia’s report and industry reaction

Other stories in today’s programme

The history of banking in this country goes back to King Charles I who took the private gold deposited in the Tower of London. Since he walked off with everyone’s gold - people got nervous. They started giving it to goldsmiths to look after. Adam took a look at the evolution of the banking system.

Shoppers chose to stay away, or spend less, in the run up to Christmas than they did last year. But we hit the sales like there was no tomorrow. So what effect did this have on retail figures and why does it matter? Gillian, who has recently been released from Newsnight for good behaviour, gave us the answers.

The British fundraising effort for the Asian Tsunami is being co-ordinated by the Disasters Emergency Committee (DEC). So far, more than 76m has been pledged. But what exactly happens to this money and how can we be sure it will actually reach those who need it most? We talked to Pat Wilson of the DEC.

Millions have vanished from Turkish bank accounts. But it’s all above board as the government there has knocked six zeros off the Turkish Lira.

The life insurance company, Axa Sun Life, has lowered annual bonus payouts for up to 50,000 with-profits investors.

A petrol price war could break out in the UK after two leading cut the price of fuel. Asda announced it is shaving 3p off the cost of a litre of unleaded petrol - cutting the price to 76.9p.

News - Caribbean hurricane fund launched

jweiss123 — Sat, 24 May 2008 22:45:57 +0000

Caribbean nations hit by future hurricanes will be able to draw on emergency funding immediately under a new by the World Bank.

The development body is launching an insurance fund designed to enable countries to finance key services in the aftermath of a natural disaster.

Countries set to benefit include the Bahamas, Barbados, , Trinidad and Tobago and Jamaica.

Hurricanes are estimated to have cost the Caribbean up to $16bn since 1979.

Reducing risk

Hurricane Ivan, which struck the region in 2004, cost an estimated $800m in losses and raised questions about the speed of the response from the community.

In this and other similar disasters, it has taken months for donor countries to raise and deliver emergency funding.

One of the gaps in the current approach to natural disaster is after a hurricane or an earthquake hits

Caroline Anstey, World Bank

The new initiative, set to be unveiled on Monday, would provide a standing fund of up to $50m which countries could draw upon in the event of future incidents.

Countries would have to pay annual premiums into the fund, as well as a one-off entry fee, in order to access any money.

The level of premiums will depend on a country’s risk profile and could range from about $200,000 to $4m, the Bank said.

Funding salaries

The fund’s structure is designed to reduce the risk facing individual countries. World Bank donor nations, such as the US, UK and France, are not expected to provide any direct funding themselves.

“One of the gaps in the current approach to natural disaster is after a hurricane or an earthquake hits, a government is dependent on trying to get support from donors,” said Caroline Anstey, the World Bank’s director for the Caribbean region.

“That period is an extremely important one, to allow the to carry on working to pay salaries.”

According to its own forecasts, the World Bank believes hurricanes will hit the region every two and a half years.

News - GE bank fined for sales breaches

jweiss123 — Fri, 23 May 2008 14:55:57 +0000

GE Capital Bank, which is behind many High Street store cards, has been fined 610,000 ($1.2m) for payment insurance (PPI) sales breaches.

The Financial Services Authority (FSA) said the General Electric UK subsidiary failed to adequately control insurance sales and to treat customers fairly.

PPI is a form of insurance that covers people in case they cannot pay loans as a result of illness or unemployment.

The fine is the biggest imposed by the FSA over PPI selling so far.

We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly

SA director of enforcement Margaret Cole

The PPI industry is worth an estimated 5.5bn a year.

Watchdogs have been carrying out a investigation into the industry, and earlier this month the BBC learned that 10 banks and lenders would face fines following the probe.

Review

In a statement, the FSA said it had acted as GE Capital Bank had not reviewed its sales procedures, despite widespread evidence which emerged in 2005 that it was failing to meet recommended sales practices.

Failings pointed out by the FSA included:

Not ensuring that customers had adequate before signing up for a policy
Failure to make sure staff were trained properly
Not monitoring or managing information properly
Failing to contact customers that the bank found had been sold PPIs erroneously in an effort to remedy the situation

The bank has now agreed to take action to resolve the problems.

GE Capital Bank provides many of the store cards that people are offered in High Street shops. About 300,000 shop staff sell insurance for the cards on behalf of the company.

According to the FSA, more than 850,000 policies which included PPI were sold by GE Capital in 2005.

“Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up,” FSA director of enforcement Margaret Cole said.

“Our focus on Payment Protection Insurance will remain very high this year. We are determined to see significantly better practice in PPI sales and will crack down where firms fail to treat their customers fairly.”

News - Obituary: Gamze Gunoral

jweiss123 — Thu, 22 May 2008 09:27:04 +0000

The only Turkish national to die in the bombings has been laid to rest in Istanbul.

Gamze Gunoral, 24, left her aunt’s house in Totteridge, north London, on the morning of 7 July.

On her way to her language college in , west London, she died on a line Tube train near Russell Square.

Osman Hokelek, an at the Active Learning School, said: “This is tragic, really shocking. She was a lovely girl.”

Born in Istanbul and an only child, Miss Gunoral graduated from the University of Marmara, Istanbul, with a degree in insurance and banking.

She worked in the finance of Gisad, Turkey’s largest textile export company, and decided to come to London to improve her English.

Miss Gunoral had been a student in the UK since May and had just settled in and made some close friends, Ms Hokelek said.

She was looking forward to returning to Turkey with much improved English and better to continue her career.

Her mother took her body back to Turkey, where she was buried in a ceremony in Istanbul.

News - Robust economy raises Turkey’s hopes

jweiss123 — Wed, 21 May 2008 09:21:00 +0000

It was a upset, and though investors remain wary, there has been a gradual return to the Turkish market.

“The Turkish economy has shown considerable resilience in the wake of the financial markets’ turbulence earlier this year,” according to a recent International Monetary Fund (IMF) report.

“Domestic demand has slowed, but by less than expected, and there are signs of an upturn in exports that is helping to sustain output.”

Falling inflation

Economic growth is seen as vital in order that Turkey can rise to a level where it can join the European Union on a par with existing members.

Facts and figures about potential EU member Turkey

At-a-glance

True, economic growth has slipped this year to an expected 6%, from 7% last year, and the economic output per head remains at less than a third of the EU average.

But Turkey’s GDP per head is not much lower than that in Romania, which is about to become an EU member.

Besides, the rates of both and inflation in Turkey have fallen to high figures - quite an achievement, given that it is only five years since Turkey had an inflation rate of 70%.

And there is no lack of optimism for the future.

Earlier this week, Central Bank President Durmus Yilmaz said Turkey’s rate of inflation should fall below 5.2%, perhaps as far as 1.7%, by 2008.

Excessive spending?

Yet in the short term, inflation worries remain, the IMF points out.

Early this year, the Central Bank predicted a drop to 5% by year-end. Now it warns the rate could climb back into double digits.

IMF’s John Lipsky warns against excessive spending

As such, “inflation remains above the target path”, warns the IMF, as it urges the government to curb spending and the Central Bank to resist any urges to reduce interest rates.

And while the Bank appears to be all ears, with Mr Yilmaz having already raised interest rates sharply to stabilise the lira and vowed to tighten monetary policy further if inflation gallops out of control, the government appears less disciplined.

Two weeks ago, the government announced plans for a 17% increase in its 2007 budget, sparking of irresponsible populist spending ahead of next year’s and general elections.

“Financial markets are showing greater sensitivity to countries like Turkey that have high debt levels, a widening current deficit and are subject to inflationary pressures,” observes John Lipsky, IMF first deputy managing director.

“In this context, it is only natural that financial markets will be paying particular attention to whether fiscal discipline is maintained in the run-up to next year’s elections.”

The IMF, currently considering whether to release the next tranche of a $10bn loan arrangement, stresses that Turkey must step up the fight to hold down inflation.

It wants Turkey to “strengthen tax administration, reform the tax regime, prepare for next year’s launch of the new pension and health insurance systems, and reform the financial sector”.

But Turkey has also come a long way in many areas.

Government debt as a proportion of GDP has fallen sharply since 2001 and is set to fall further, as an extensive privatisation programme is going ahead nicely.

Foreign investors are diving into a range of sectors, from telecoms to steel to banking, with land reform expected soon.

Which all adds up to one point only: it is getting harder for those opposed to Turkey’s EU membership ambition to rely on economic arguments in an effort to block its entry.

News - California joins insurance probe

jweiss123 — Tue, 20 May 2008 00:00:58 +0000

California is preparing to join the widening of the US insurance business.

“We have opened the first pages of what will be a long and very sordid book,” said California insurance John Garamendi.

The probe began a week ago when New York attorney general Elliot Spitzer sued broker Marsh & McLennan.

Mr Spitzer alleges that Marsh took illegal payments for steering clients to firms.

Shares in Marsh, the world’s largest insurance broker, have collapsed since the Spitzer investigation was unveiled, and the firm is now renegotiating $2.8bn in bank financing.

This is going to be a long, long unhappy for the insurance industry

John Garamendi, California insurance commissioner

Those of the companies alleged to have made the payments - including insurance giant AIG, Ace and Hartford Financial - have also suffered.

The firms concerned have said they will co-operate with the investigation.

Rules change

California has yet to identify which firms it will be looking into.

But Mr Garamendi made it clear that he was working closely with Mr Spitzer - and that his inquiry, already eight months old, would go beyond the corporate insurance which was the focus of the New York suit and into the consumer market too.

“The early is that it’s an extremely serious breach of trust,” he told reporters.

“Where (the investigation) leads we do not know. This is going to be a long, long unhappy situation for the insurance industry.”

California, the largest state in the US and by some measures the sixth largest economy in the world, has also tightened up its rules on how insurance is sold.

In the future, firms will have to disclose any money they get for selling a product.

News - FSA arranging avian flu exercise

jweiss123 — Sun, 18 May 2008 15:35:54 +0000

The Financial Services Authority (FSA) is to hold a six-week exercise to test the of the UK’s financial institutions to an avian flu pandemic.

Starting on 13 October, some 60 banks, firms and other financial will take part.

The exercise will look at a number of factors including how firms could cope with a greatly reduced workforce.

It was by FSA chairman Callum McCarthy in a speech at the Mansion House in the City of London.

‘Vital test’

Mr McCarthy said that government departments, health agencies and other experts were also involved in the simulation.

“I am confident that we will all learn much from this test - as we need to do,” he said.

“It is an area we would neglect at our peril, and we are determined not to allow this to happen.”

The announcement of the avian flu exercise came as Mr McCarthy said the UK’s financial services industry remained in good shape, but should never be about possible economic downturns over the horizon.

News - Lloyd’s of London head chides FSA

jweiss123 — Sat, 17 May 2008 14:03:36 +0000

The head of Lloyd’s of London, the insurance market, has criticised Britain’s financial watchdog, the Financial Services Authority (FSA).

In a speech on Monday, Mr Prettejohn urged the FSA to force brokers to disclose the size of their commissions.

“The FSA should change, and change now” said Mr Prettejohn, who wants it to move from “disclosure on request” to mandatory disclosure.

The call came in a speech on improving the London insurance market.

Call for action

“The FSA should not bide their time and ‘wait and see’. They should seize the moment,” Mr Prettejohn, Lloyd’s chief executive said.

The FSA took over of the general insurance sector in January, but it sidestepped calls to require brokers to disclose the commissions they earn from insurers to their clients.

Last week, the City watchdog gave brokers and insurers guidance on managing conflicts of interest. Brokers must give information on their commissions if, and only if, their customers request it, the FSA said.

US probe

In the US, lack of transparency about brokers’ commissions has led to problems. The world’s biggest insurance broker Marsh & McLennan said last week it would pay $850m to settle charges, raised by New York Attorney General Eliot Spitzer in October, that it sought to rig bids in with insurers.

The probe centred around so-called commissions, whereby brokers were rewarded according to how much business they brought to an insurer, an arrangement that did not always benefit brokers’ customers.

All of the insurance business written in the Lloyd’s market is placed via brokers.

News - The FSA is getting tough on advisers

jweiss123 — Fri, 16 May 2008 05:06:00 +0000

David Severn is head of retail projects at the FSA and the man responsible for the new framework.

“We’re talking about a document that doesn’t just apply to financial advisers, it applies to any firm which is giving financial advice like banks or insurance companies.”

“What we’re trying to do here is to give the firm the opportunity to explain the services that it provides and also the consumer the cost of the advice” he added.

Breakdown of charges

Under proposals, will be given a breakdown of charges when they first see an adviser.

This will make clear to the consumer the service being offered and the options they have for paying for it.

This could be through an up-front, hourly fee paid to the adviser or through commission on any products bought.

If the customer decides to go down the commission route they will also be shown the maximum rate of commission for that product and will also be the average commission charged for this type of product across the market so they can compare the two.

Helps consumers understand

The FSA hopes the table will help consumers understand the impact of paying for advice through commission, and encourage them to ask questions and shop around if the fees or commission charged by an adviser are above average.

In the past commission based advisers have been accused of just being salesmen but some advisers say that prefer a commission based system rather than paying a flat fee for a small premium product.

John Cobb from Trinity Wealth , is a fee based adviser and has his doubts about commission based products:

“If you’re working with a fee based adviser what you’ll pay is agreed before any work is carried out so both people know how much its going to cost.”

Thursday’s proposal is part of the FSA’s shake-up of the way financial products are sold.

The new rules could be in place later this year.

News - Yell shares make bright start

jweiss123 — Thu, 15 May 2008 01:52:12 +0000

Shares in Yell, the owner of the Yellow Pages business, were in healthy demand as London’s biggest flotation in two years was launched.

At the start of the day Yell shares rose to 306p from 285p in conditional trading - dealing between big city banks ahead of the official start of trade - but by lunchtime had settled back to 292.25p.

The price slid further to close at 289.5p, 1.6% higher than its debut.

The pricing of Yell shares at 285p gives the total group a market of about 2bn ($3.2bn), making it large enough to enter the FTSE 100 list of top companies.

The flotation, which was cancelled last summer because of poor market , is the largest so far this year and is seen by some analysts as a sign of renewed confidence in the stock market.

Official trading in Yell’s shares is due to start on 15 July, which is when private investors will be able to buy the shares.

Strong response

“We are delighted with the way new investors have embraced the Yell story,” said chief executive John Condron.

YELL GROUP

Publishes Yellow Pages and Business Pages UK telephone directories

Operates Yell.com, the online directory service

Operates Yellow Pages 118 247, a telephone directory service (formerly called Talking Pages)

Publishes Yellow Book directories in the US

Had a turnover of 1.1bn in 2002/03

Employs 7,800 people (3400 in UK)

“The strong response to the Yell share offer reflects the quality and potential of the business.”

The telephone directories business was bought by private equity firms Apax and Hicks, Muse, Tate & Furst from BT Group in 2001.

They will continue to hold 30% of the listed company with Yell and staff holding 5%.

Appetite returns

Yell is the biggest firm to come to market since insurance group Friends Provident floated in 2001.

Neil Austin, head of new issues at KPMG Corporate Finance, said the float was an encouraging sign that the market could be about to pick up.

“I think it does signal that the appetite’s come back,” Mr Austin told BBC Radio Five Live.

“We’ve had twelve months of complete silence with sitting on their hands - this shows there is some appetite there.”