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EQ Weekly Roundup

This week’s roundup includes news that a US private equity company has been accused of ‘misleading’ the government on its £13bn purchase of former Northern Rock mortgages, inflation fell by more than expected in September and more than 13 million people have lost half of their local bank branches.

 

Northern Rock: US firm ‘misled’ UK government on mortgages

A US private equity company has been accused of misleading the government about the biggest sale of state assets in UK history.

BBC Panorama has discovered Cerberus told the government it was planning to offer homeowners better mortgage deals before its £13bn purchase of former Northern Rock mortgages in 2016.

But the company hasn't provided any new mortgages and 65,000 homeowners are still trapped on high interest rates. Many of the homeowners are mortgage prisoners, who cannot shop around for a better deal because their loans are too large or their credit rating has been damaged.

Cerberus denies the allegation. The private equity firm said: ‘Cerberus and our affiliates take great pride in being good corporate citizens who are committed to compliance with the strongest ethical standards and all legislative and regulatory requirements. We reject any allegations by BBC Panorama to the contrary.’

Cheaper food drives UK inflation lower in September

The UK inflation rate fell more than expected in September after hitting a six-month high in August.

The Office for National Statistics said the fall to 2.4%, down from 2.7%, was largely driven by lower prices for food and non-alcoholic drinks.

The Consumer Prices Index figure surprised economists who had been expecting inflation to fall to 2.6%.

The result is expected to ease pressure on the Bank of England to raise interest rates in the near future.

September's inflation figure is important as it will be used to set state pensions, which are expected to rise by about £4.25 a week. It will also be used to determine business rates for the coming year, with the British Retail Consortium forecasting a £180m increase in retailers' costs.

September’s fall in inflation comes a day after figures showed that wages were rising by 3.1% - the fastest pace in nearly a decade - easing pressure on consumer spending power.

13 million people have lost half of local bank branches

About 13 million adults in the UK live in areas where at least half of the local banks and building societies have closed, analysis by the BBC reveals.

Figures from the Office for National Statistics (ONS) show nearly 6,000 local branches have shut since 2010, a fall of a third. Banks and building societies have been closing as services have moved online and fewer people visit branches.

Trade association UK Finance said closing a branch was a last resort when usage falls, while the consumer group Which? called the number of closures ‘alarming’.

The breakdown of ONS figures shows that 133 out of 650 parliamentary constituencies across the UK have seen the number of branches fall by at least half since 2010.

Figures from Link, a cash machine network, also show that between January and August of this year 1,400 free to use cash machines closed across Great Britain.

Name checks to begin on bank payments

The name of someone receiving a payment will be as important as their banking details for the first time from next summer, in an attempt to combat fraud.

At present, anyone wanting to transfer money enters the intended recipient's name, account number and sort code. However, the name is not checked.

Under plans from the UK's payments operator, the sender will be alerted if the name does not match the account.

Banks have been accused of dragging their heels in introducing the system.

The aim is to cut down on so-called authorised push payment (APP) scams, in which people are conned into sending money to another account. A total of £145m was stolen from bank customers in this way in the first half of the year, with many victims unable to get the money back because current legislation means they are liable for any losses incurred if they authorise a payment themselves.

Under current plans, banks and building societies should have the technology in place by April, with the system up and running by July.