Although the mood in the City suggests that interest rates are coming down sooner rather than later – perhaps even before the July 4 election – consumer credit providers don’t seem to be listening.
As I reported earlier this year, Marks & Spencer has increased the interest rate on its credit card – from 21.9 to 24.9 per cent – while Barclaycard will increase borrowing rates on its platinum card in July.
The latest lender to join this bandwagon is Lloyds Bank. It has just written to bank account customers of its key brands (Bank of Scotland, Halifax and Lloyds), informing them of imminent changes to the interest charged on authorized loans. Not everyone will pay more.
Letter: Lloyds Banking Group has written to customers about changes to interest rates for approved loans
The current interest charge is usually 39.9 per cent, although some customers, such as those with Club Lloyds accounts, pay 27.5 per cent.
Under the new tiered pricing regime, some customers will pay less: 19.9 or 29.9 percent. Others could pay the same (39.9 percent) or more (49.9 percent). The 27.5 per cent Lloyds Club rate will disappear.
I am sure that Winchester’s commercial health is helped by having an almost full staff of banks.
I spent a few hours in Winchester eight days ago, taking part in a park run and then buying my youngest son some football souvenirs at the market.
What caught my attention was the vibrancy of the city, with buskers catering to the requests of those enjoying a coffee in its pedestrian heart and a main street with some high-end retail brands.
I’m sure Winchester’s commercial health is helped by having an almost full complement of banks, including a hypermarket-sized Barclays, a Lloyds (even open on Saturdays), an HSBC digital branch and a Santander. Building societies Nationwide and Newbury also have a presence.
Coincidentally, reader Kay Coope agrees. She told me that she had just spent a few days in Winchester and was impressed by the numerous bank and building society branches and the free-to-use ATMs.
If only this were the norm and not the exception.
Lloyds tells me that the rate individual customers receive will depend on information from credit reference agencies and the way customers use their accounts.
If a customer’s rate increases, they will be given 60 days’ notice of its introduction and for the first six months, the increase will be no more than 7.4 percentage points above their current overdraft rate.
Inevitably, the letter detailing these changes has not gone down well with some customers whose borrowing charges will increase. They say the explanation given for the increase is offensive.
It’s hard to disagree. The letter says: “Your new rate is based on the credit information we have about you and how you use the accounts you have with us.”
Among those unhappy to receive such a letter is Peter Wall, a 77-year-old retired Birmingham lawyer and a regular source of stories for this column.
He has been told that the borrowing rate on his Lloyds Club account will rise from 27.5 per cent to 34.9 per cent in August, and then to 39.9 per cent at the end of January next year.
Peter uses Club Lloyds because it pays interest on credit balances of up to £5,000 and waives a monthly fee of £3 whenever £2,000 or more is paid into the account in the same month. He also receives six free movie tickets a year.
Peter has not used (and intends never to use) the overdraft, so rate rises do not affect him. For the record, he thinks they are “horrendous” and in “loan shark territory.” But it is the reference to the “credit information” the bank has on him that is irritating.
“The letter implies that I am a bad credit risk,” he says.
“But I don’t have any loans and I always pay off my credit card balance every month.”
Outraged, he went to his local Lloyds branch for an explanation.
After much back and forth involving conversations with Lloyds’ complaints department, he was told the new rate he had been offered was for “good” customers – those with “weak” credit histories would pay 49.9 per cent.
This didn’t sit well with Peter and he told the bank what he thought. Lloyds has promised to get back to him in the coming days.
Raising interest rates is bad enough without offending loyal customers in the process.
Is the NFU Mutual boss really worth £1.7m?
A friendly mole in the Midlands sent me a copy of NFU Mutual’s 2024 AGM brochure, ahead of next month’s meeting in Hinckley, Leicestershire.
It is an interesting read, especially the section detailing the remuneration received by the group’s 11 directors (two of whom are women).
Financial campaign group Transparency Task Force (TTF) is calling for disgraced investment manager Neil Woodford to be stripped of the CBE he received 11 years ago for services to the economy.
He launched his campaign last week after the Financial Conduct Authority issued Woodford, right, a “warning notice” over the abrupt collapse of his investment fund five years ago.
This could result in the regulator taking enforcement action against him over the way he ran the £3.7bn Woodford Equity Income Fund before its suspension in 2019, and its subsequent dissolution.
TTF founder Andy Agathangelou says Woodford’s actions left thousands of investors with significant losses (despite a compensation scheme set up by the FCA).
It also says the trustee continued to benefit from the fund as it withered by refusing to drop ongoing charges, a move The Mail on Sunday condemned at the time.
Aggrieved investors can support the group’s call by emailing honours@cabinetoffice.gov.uk and explaining why Woodford’s CBE should be forfeited.
Last year, the six chief executives (one of whom retired three months into the financial year and another left at the end of March 2021) received a collective reward of £4.1m. This comprised a combination of salaries, bonuses, pensions, benefits and payments from a long-term incentive plan.
This sum was 14 per cent higher than in 2022 and partly reflects the strong performance of the business in 2023, with total profits of £164 million.
However, one row of numbers made me cringe and it related to CEO Nick Turner’s compensation.
Last year, he received £1,765,963, 35 per cent more than in 2022. His basic salary increased by 20 per cent and he also received an annual bonus of more than £586,000.
In Turner’s defense, he oversees a very good business. NFU Mutual, which combines insurance, pensions and investments, retains 95 per cent of its customers.
This is a level of customer retention – helped by a mutual bonus scheme (a discount scheme for loyal policyholders) – that most rivals can only dream of.
But it does seem rather insensitive for Turner to enjoy such generosity at a time when many clients are struggling with their household budgets.
Members can express concerns about Mr Turner’s remuneration by voting against the directors’ remuneration report at (or before) the Annual General Meeting. They can even vote against his re-election.
Nothing will necessarily change (the report will be approved and Turner will be re-elected).
But it might make you feel better if you’ve taken a stand against corporate excess.
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