UK, european markets higher on session

Permalink: UK, european markets higher on session

Falling export stocks, hit by both a stronger yen and a less than exciting quarterly report from Nissan Motor sent the Tokyo equities markets lower on Monday. The Nikkei 225 dropped 1.1 percent to 17,344.80, while the Topix index was 1.5 percent lower to 1,716.28. The Nissan report send the rest of the auto sector lower, while the electronics sector also declined. Fast Retaling, on the other hand, was higher on a rise in same-store sales.

The FTSE Eurofirst 300 was higher, but just barely, adding only 0.7 points to close the session at 1,538.32 for a gain of 0.04 percent. The energy sector was lower on more mergers & acquisitions news and banks were hurt by profit-taking, while airlines were higher.

In London, the FTSE 100 added 0.1 percent to 6,317.9, helped out by oil and telecommunications shares. The FTSE 200 was also higher, gaining 0.6 percent to 11,406.5 on bids news in the house building sector. The oil sector also saw gains after an upgrade of BP by Goldman Sachs.

Wall Street was mixed in mid-afternoon trade, with the Dow Jones Industrial Average adding 0.1 percent to 12,666.63, boosted by Wal-Mart’s gain on better than expected sales in January. The Nasdaq Composite, however, dropped 0.2 percent to 2,471.86 and the S&P 500 was down 0.1 percent to 1,446.91. Trade was mostly driven by earnings reports and bids news.

Crude oil prices were up slightly, nearing a return to $60 per barrel, as cold weather continued in much of the United States and heating oil demand is expected to reach 20 percent above normal for the time of year. Heating oil and natural gas both also gained in price. Metals prices were mixed but mostly higher, with nickel being the main faller after gaining early in the session.

UK bird flu outbreak leads to Russian ban on imports

Permalink: UK bird flu outbreak leads to Russian ban on imports

In the wake of confirmation that the outbreak of bird flu in a turkey flock in Suffolk is the H5N1 strain that has killed not only birds but humans in other parts of the world, poultry industry officials acknowledged that the result is “not good news” and Russia has announced that it will ban the importation from the UK of live birds, hatching eggs, and all poultry products including meat, as well as feed and equipment for keeping and killing birds beginning Tuesday. A security zone has been set up around the farm where birds have died from the flu and the Department for Environment, Food and Rural Affairs has begun the process of killing all 159,000 turkeys in the flock.

Despite the fact that this outbreak is more serious than one in April 2006 when the same strain of bird flu was found in a swan in Cellardyke, Fife, industry officials hope that public fears will be quelled. They are trying to emphasize that the risk to humans from the outbreak is small, but they are well aware that chicken sales declined by 60 percent in France and Italy last year after similar scares. After revelation of bird flu in the swan in April, UK chicken sales dropped by a few percent for a couple of months before returning to normal, according to a spokesman for the National Farmers Union who nevertheless acknowledged that this case is more serious.

In addition to the ban in imports from the UK by Russia, Dutch and French officials have outlined measures to prevent the spread of the flu. Dutch farmers, for example, have been told to keep their commercial poultry indoors. The current outbreak in Suffolk is the most widespread on a commercial poultry farm in Europe.

Experts warn on pensions opt-outs for cash

Permalink: Experts warn on pensions opt-outs for cash

Pension experts are worried that too many companies are too readily offering their employees large cash incentives for them to quit their often deficit ridden employer-connected pension schemes and move into a personal pension plan, or to opt for a less generous pension. Often, members of such pension programs are often offered thousands of pounds in cash to exit pension funds that are in deficit so that the companies they work for can cut their liabilities. By taking the cash, the individual loses any right to a pension from their employer.

The problem is, many of those who take the cash don’t put it into a private pension account or invest it otherwise to provide for their retirement, but instead buy a new car or spend it on other high-ticket items. Experts are concerned that pension fund trustees who run pensions schemes are not making sure that their members are aware of the full consequences of taking cash to exit the scheme. They are also worried that by issuing guidelines on such pay-offs, the Pensions Regulator has in effect encouraged more companies to take that path.

Trade unions are also concerned, as they have received more inquiries from their members about what they should do when offered these cash incentives to quit their pension scheme. The unions have called for requirements that employers and pension fund trustees explore all other options before being able to offer cash payments to employees to induce them to exit the pensions schemes.

Calls for tighter lending rules after record insolvencies in 2006

Permalink: Calls for tighter lending rules after record insolvencies in 2006

A report released last week by the UK government’s Insolvency Service that said the number of people declaring personal insolvency in 2006 probably exceeded 100,000, a new annual record, has spurred the Financial Ombudsman Scheme, a financial watchdog group, to call for UK banks to implement more stringent rules for issuing credit cards and granting loans. The most recent data, from the third quarter of 2006, showed that insolvencies rose in that period by 55 percent over the same quarter in 2005, and includes both individuals who declared bankruptcy and those who took out Individual Voluntary Arrangements (IVAs) to pay back part of what they owe to creditors.

The call for more stringent rules comes after a report that less than 10 percent of those being offered a credit card were asked for proof of income before being offered a card. Half were asked to disclose their income, but only a small portion of those were required to provide bank records proving that they make what they said they do.

The Insolvency Service report blamed the rise on insolvencies not only on more personal debt, which has doubled since the beginning of the decade, but also on the fact that more people are aware that they can declare insolvency and the fact that doing so carries less of a social stigma than it once did. Another factor contributing to the rise in insolvencies was said to be easier access to IVAs, in which their credit report is damaged but does not carry the risk of the individual losing their home, as in a bankruptcy.

UK house prices up 10 percent in 2006

Permalink: UK house prices up 10 percent in 2006

A new survey from the Royal Institution of Chartered Surveyeors’ that reviewed the state of European housing markets in 2006 says that UK housing prices rose at a faster pace during the year than did housing prices in other major European economies. The survey found that UK house prices were up by around 10 percent last year. Meanwhile, house prices in Germany did not grow at all. Prices were up by 4 percent in Italy and by around 7 percent in France.

On the other hand, house prices in some Scandinavian and Central and Eastern European nations grew at a much faster pace than did UK house prices. House prices in Sweden did not grow much faster than UK rates, at 11 percent, while the price of houses grew at a pace of 17 percent in Norway and were up by 22 percent in Denmark. The fastest pace of house price growth took place further east. House prices grew at a rate of nearly 20 percent in Bulgarian and Estonia, while Poland witnessed house prices grow by more than 30 percent.

The author of the report, Professor Michael Ball, said that the survey shows that fears of a price slowdown in the housing markets in high-value markets such as the UK seem to be misplaced.

Equities markets mostly higher; oil, nickel prices gain

Permalink: Equities markets mostly higher; oil, nickel prices gain

The Nikkei 225 closed at a 10-month high Friday, adding 0.2 percent to 17,547.11, while the Topix index also gained 0.2 percent to 1,742.40 as several companies saw significant daily gains. Among those gains was a 13 percent rise by Nikko Cordial after an earnings restatement convinced some that it was working toward a new start after its recent accounting scandal. Dowa Mining also saw double digit gains on an upgraded earnings forecast as the end of its fiscal year approaches.

In Europe, the FTSE Eurofirst 300 ganed 1.6 percent on the week to close Friday’s session at 1,537.65. German energy company Eon saw big gains after the withdrawal of Gas Natural from the bidding for Endsea left Eon as the only contender for the Spanish power generator. The truck making and airlines sectors were also higher on the week.

The FTSE 100 was 0.4 percent higher on the day and up 1.3 percent over the week as it closed at 6,310.9 on Friday. The FTSE 250 was up 1.1 percent for the session and 2 percent for the week when it closed at an all-time high 11,343.3 at the end of Friday’s session. Grocers were up on continuing speculation that a private equity group will bid for J Sainsbury based on interest in the properties it owns. These rumors also helped other property-backed stocks. Volume was an active 4.2 billion shares traded on the day.

Mid-session in New York found the markets mixed on the day but higher on the week. The Dow Jones Industrial Average had lost 0.2 percent at noon to 12,646.20 but still 1.3 percent higher for the whole week. The Nasdaq Composite was 0.1 percent higher at mid-session at 2,470.93, a gain of 1.5 percent on the week, while the S&P 500 was even on the day so far but up 1.7 for the week at 1,445.75. The Russell 2000 index of mid-caps was 2.7 percent higher on the week at lunchtime, having breached the 800 level for the first time in its history. Earnings reports and mergers activity were both in the spotlight during the week.

Currency markets saw the US dollar and the yen both generally weaker during the day as the yen was faced with possible discussion at the G7 meeting coming up in Germany and the greenback dealt with fallout from the US Federal Reserve’s decision to keep interest rates on hold.

In commodities markets, crude oil saw slight gains on Friday. Over the week gains were stronger, with West Texas Intermediate crude up 3.7 percent in the five sessions. Among metals, copper and zinc both fell significantly on Friday, while nickel was up by $550 per tonne on Friday even though it lost nearly 2 percent during the week. Gold was lower on the day.

Ruling: banks must reveal clients’ offshore account details

Permalink: Ruling: banks must reveal clients’ offshore account details

After a legal dispute, four UK banks will be forced to hand over the details of offshore bank accounts held by approximately 100,000 customers to Revenue & Customs so that unpaid taxes can be collected. The ruling does not extend to secret Swiss bank accounts and some other offshore jurisdictions, however. But the information on accounts held in offshore accounts in places such as the Channel Islands is expected to lead to the collection of up to £275 million in unpaid taxes. While it has been legal to put money into such offshore accounts since 1979, concealing the amount of interest earned in an effort to avoid paying taxes on it is against the law.

The banks involved in the ruling are believed to be HSBC, HBOS, Royal Bank of London and Lloyds TSB. However, none of the banks were willing to confirm that they were included in the ruling. While HSBC said that it was aware of the ruling, the other three banks refused any comment on the issue. A similar ruling was issued in regards to clients of Barclays last year. The special commissioner who decided in favor of Revenue & Customs in the present instance said that he had taken his decision because it was, in his view, the only way that investigators could access the information they need.

Revenue & Customs is expected to announce in the spring that it will offer reduced penalties for investors who come forward and report their interest earnings from the offshore accounts voluntarily. The plan, now expected to be announced in April, will likely offer a reduced penalty of around 10 percent of the maximum during a limited period of about six weeks, although account holders will still be liable for 20 years of unpaid tax and interest. They will then have four months to complete disclosure and pay any taxes owed.

Study: UK pension deficits hit new low

Permalink: Study: UK pension deficits hit new low

According to a new study, Britain’s top companies cut their pension deficits by £8.2 billion in January, down to £31.8 billion. This is the lowest pensions deficit since records began in 2002. The previous low was reached in April 2006 when the deficit fell to £34.3 billion. At its highest it reached £90 billion, in March 2003. The study, by Watson Wyatt, credits most of the decrease to higher bond yields, up by 0.15 percent in January, as well as to gains in the equities markets.

Pension deficits are carried as debt in a company’s accounting, and often companies have to divert money into retirement plans for their employees to balance the books. In other cases, companies either convert to less expensive plans or shut their pension plans down completely.

Pension funds commonly purchase bonds to meet their liabilities, but when prices rise and yields fall the fund accures a deficit. But when prices fall and yields rise, as has happened recently, the deficit in the fund declines. The other place where pension funds typically put their money is into equities shares. When those shares perform well, as is currently the case, deficits in the funds are reduced.

Deficits are expected to decline further as the year progresses, according to the report.

Standard Life announces increased payouts for policyholders

Permalink: Standard Life announces increased payouts for policyholders

UK life insurer Standard Life said on Thursday that stock market gains have made it possible to increase payouts on all types of policies this year. This was especially good news for mortgage endowment policy holders, which are expected to go up at a rate of 5.75 percent, per guidelines issued by the Financial Services Authority. Because Standard Life had a growth rate of 10.4 percent last year, shortfalls would be reduced.

Even with this development, however, up to 90 percent of those who hold mortgage endowment policies with the company are at risk of not being able to pay off their entire mortgage with proceeds from their policies. The other bad news was that Standard Life will not increase guarantees for their with-profit policy holders, saying that hiking bonuses would decrease its ability to fund growth. Instead, bonus rates will remain at last year’s level.

There was bad news for shareholders, as well, as Standard Life said that it would not extend the benefits of its surplus cash to them because when the company was first floated last summer, its with-profits fund was wholly-owned by members.

Besides mortgage endowment policy holders, there was also good news for holders of Standard Life pension plans. Payouts on pensions will be higher this year.

European, UK markets see significant gains

Permalink: European, UK markets see significant gains

In Japan on Thursday, the Tokyo equities markets were higher despite another huge decline by scandal-beset Nikko Cordial. The Nikkei 225 was 0.8 percent higher to 17,519.50, while the Topix index added 1 percent to 1,738.58. The electronics sector was mixed, while carmaker Honda saw declines in an otherwise higher automobile manufacturing sector.

The FTSE Eurofirst 300 was also 1 percent higher on the session, 15.5 points higher to 1,530.13. Banks were higher, as was the pharmaceuticals sector. The oil sector was also higher, while engineering was lower after Atlas Copco’s profits report was disappointing.

In London, meanwhile, the FTSE 100 added 1.3 percent to 6,282.2 on strong finishes in several sectors, including oil and pharmaceuticals. The FTSE 250 was also up strongly, 1.1 percent higher to 11,221.5. Trade was strong, as 4 billion shares changed hands.

The New York markets were mixed in mid-afternoon trade. While the Dow Jones Industrial Average, the S&P 500, and the Russell 2000 index of small and mid-caps were all higher, the Nasdaq Composite had dropped 0.1 percent to 2,461.61. The Dow was 0.1 percent higher to 12,637.55, while the S&P had added 0.3 percent to 1,442.45 after going as high as 1,444.01 as trade began, and the Russell was up 0.5 percent to 804.57 after a record close on Wednesday. In earnings news, ExxonMobil reported that it notched the highest ever yearly profit in 2006 despite fourth quarter profits falling by 4 percent.

Crude oil prices were mixed during the day, while natural gas prices dropped substantially after US stockpiles were reported to be down less last week than had bee expected. In metals markets, gold was higher. Aluminium was higher as well, but most other base metals prices declined.

UK manufacturing grows in January

Permalink: UK manufacturing grows in January

New data from the Chartered Institute of Purchasing Supply and the Royal Bank of Scotland, released Thursday, put its main index of manufacturing activity in January up from December, with the January figure at 52.8. December’s number, which was revised upward, was 52. Analysts had expected that the January figure would drop to 51.7.

Growth was evident all sectors, and orders were see to increase in both the domestic and foreign markets. Foreign orders were especially robust from China and India. There was also higher demand from the United States, although sterling strength was seen to be holding US business back to an extent.

CIPS/RBS also reported that employment in the manufacturing sector was up a bit in January after declines in November and December, despite a complaint from the British Chamber of Commerce that interest rate hikes had cost a loss of 8,000 manufacturing jobs in January.

With data on the services sector due on Monday, the news out of the manufacturing sector sent sterling higher versus the euro and the US dollar after analysts said that the unexpected growth makes it more likely that the Bank of England will raise interest rates again next month.

Royal London says new business up 10 percent in 2006

Permalink: Royal London says new business up 10 percent in 2006

Royal London, the UK’s largest provider or mutual life and pensions coverage, said that it saw a 10 percent jump in new business in 2006. Single premium business was up to £491million from £469.1 million, while regular premium sales to individuals was lower, dropping from £186 million to £156 million last year. These results came in a year when demand has been strong generally.

Growth could have been higher, according to the company, but it is hesitant to pay high commissions for new business that it does not keep on the books long enough to turn a profit. It does not believe that new business that does not stay on the books for longer than four or five years is not a suitable business model because it is simply not profitable.

This is especially true, the company’s chief executive said, of the pensions market, which is very price-competitive. Because most pensions business is sold as a stakeholder product, if the buyer finds a better price and changes to a new plan with a new company, the company he or she is currently with must transfer the lump sum to the competitor without being able to deduct the cost of setting up and selling the pension. As it is, it can take 10 years or longer for a provider to replace the full cost of setting up a pension with the 1 percent management charge for Stakeholder Pensions.

ING Direct under fire for lagging rates

Permalink: ING Direct under fire for lagging rates

ING Direct has been the target of criticism recently for not passing on recent interest rate hikes from the Bank of England on to the 1.1 million holders of its savings accounts. When it launched its much-advertised savings main savings account in 2003, it said that it was determined to keep it as the best account available. However, it has now admitted that the current rate on the account, at 4.75 percent, is not the best rate available - Landsbanki’s Icesave account currently pays 5.7 percent - while saying that it will not change the rate on that account.

Instead, the savings provider has created another savings account, available only on the internet and called Web Saver, and that the rate on that account will go from 5.25 percent to 5.65 percent. This new account is touted as being for those who wish to manage their savings online and is only available to existing ING Direct customers.

ING blamed its delay in addressing the issue on it being “a big call” for them, and that changing rates is a big decision when it is dedicated to paying all customers a good rate. However, at least one analyst said that ING will likely continue to face criticism for its delay in introducing a higher-yielding account and in keeping the original account at the same rate, given their statements at launch.

New York markets gain on Fed decision, other markets see declines

Permalink: New York markets gain on Fed decision, other markets see declines

In Japan on Wednesday, the Nikkei 225 dropped 0.6 percent to 17,383.42, while the Topix index fell by the same percentage to 1,721.96 as some sectors were hit by profit-taking again. Shippers were also hurt by rising oil prices, while Nikko Cordial was hit by another setback connected to continuing accounting irregularities.

In Europe, the FTSE Eurofirst 300 was also lower, falling 0.5 percent to 1,514.65. Earnings and broker comments were key to the day. The steel sector was higher on consolidation hopes after the sale of Corus while Italian banks gained, also on merger news and broker comments.

London, too was lower on the session, with the FTSE 100 0.6 percent lower to 6,203.1 and the FTSE 250 down 0.3 percent to 11,100.3 as trade volumes picked up to more than 3.5 billion shares traded. Gainers on the day included miner Kazakhmys, on the possibility of stake building in the Eurasian National Resources Corporation. Corus also gained on the day on the news that it was being bought by Tata Steel.

New York markets bucked the trend and gained ground in mid-afternoon trade after the Federal Reserve decided to keep US interest rates at 5.25 percent for the time being. The Dow Jones Industrial Average was 0.7 percent higher to 12,607.67, while the Nasdaq Composite added 0.4 percent to 2,457.81 and the S&P 500 gained 0.4 percent to 1,435.04. The Dow was also helped by a better than anticipated quarterly report from Boeing. Time Warner and Eastman Kodak also issued positive reports.

In currency markets, the US dollar was lower versus the euro after the Fed’s decision, while sterling was also weaker. The Swiss franc made gains against both the greenback and the euro. The yen was also higher.

Oil prices rose early, fell right after the US Energy Information Administration issued its weekly inventories report, then were up again my mid-afternoon in New York. Crude oil and gasoline stockpiles were higher last week, but distillates were down on higher demand for heating oil as cold weather set in to the US Northeast and Midwest. Metals prices were also higher on the session.

UK civil servants strike over privatization, pay issues

Permalink: UK civil servants strike over privatization, pay issues

Civil servants and state employees in the UK remained away from their jobs on Wednesday over concerns about wages, job cuts, and privatization of government services. The Public and Commercial Services Union said that public services are being disrupted over the Treasury’s determination to cut 100,000 civil service and public sector jobs. Public sector employees are also upset that Chancellor Gordon Brown is insisting that pay raises for public sector positions be limited to the Bank of England’s inflation target of 2 percent. The strike, scheduled for 24 hours, could be followed by further actions if its concerns are not addressed, the PCS has said.

The current action has halted the processing of tax returns on the day that they are due and have reportedly prevented the delivery of at least one batch of returns to Revenue & Customs offices, possibly causing those taxpayers to be fined £100 for missing the deadline. Benefits offices were closed, and court proceedings - including the trial of six alleged terrorists - were put on hold. Picket lines set up by the union were also expected to close museums and galleries, including the British Library and the National Gallery. Union members were also expected to picket government departments.

The union’s demands include an end to the government’s efficiency drive, an end to the privatization of public services, and pay raises for workers that at least meet retail price inflation.

UK home repossession up in 2006, expected to rise again in 2007

Permalink: UK home repossession up in 2006, expected to rise again in 2007

Home repossessions in the UK are expected to rise in both 2007 and 2008, a result of higher interest rates. This comes after repossessions rose by 65 percent in 2006 over their number in 2005. According to the Council of Mortgage Lenders, there were 17,000 repossessions in 2006, a smaller number than the 18,000 that had been anticipated in a December projection.

There were more repossessions in the second half of 2006 - 8,860 - than there were in the first half of the year, when 8,140 homes were repossessed. The Council believes that repossessions could rise to 19,000 this year and to 20,000 in 2008. Repossessions in the UK were at a low in 2004, at only 6,030, but the figure rose to 10,310 repossessions in 2005.

The new data spurred a call from Adam Sampson, the chief executive of Shelter, a homeless charity, for lenders to be more responsible for the loans they make. With the Bank of England raising interest rates three times since autumn, it has made it more difficult to pay their mortgages. Mr. Sampson said that rising interest rates, coupled with a shortage of housing in the UK, are causing more families to have to pay more than they can afford to become homeowners. This causes what he referred to as “thousands of hard working families” to face the possibility of becoming homeless.

Eurofirst, Wall Street, London markets see gains; Tokyo mixed

Permalink: Eurofirst, Wall Street, London markets see gains; Tokyo mixed

World equities markets were mixed but mostly higher on Tuesday. Europe, London and Wall Street all saw gains, but the Tokyo markets were mixed.

In Tokyo, the Nikkei 225 was 0.1 percent higher to 17,490.19. The Topix index, however, dropped 0.1 percent to 1,731.60 and the Mothers market of small and mid-caps fell 3.5 percent to 1,181.13 on profit-taking. Steel was mostly lower on disappointment with outlooks, while consumer finance dropped on losses. Export sectors were mixed on profit-taking, but the securities sector saw gains on quarterly results which were down from last year but better than the previous quarter.

The FTSE Eurofirst 300 added 0.4 percent to 1,522.33. Airlines were higher on recent lower oil prices and on mergers & acquisitions news. Machinery manufacturing was also higher, but the telecommunications sector was mixed and pharma dropped on bids rumors.

In London, the FTSE 100 added 0.03 percetn to 6,242 and the FTSE 250 gained 0.2 percetn to 11,131. Miners were higher, and in the supermarkets sector J Sainsbury gained after rumors that it is a target of a private equity house. The energy sector was mixed, with British Energy lower on rumors of problems at some of its nuclear power stations as well as on falling wholesale prices for power.

In mid-afternoon trade in New York, equities markets were up ahead of a decision from the Federal Reserve on interest rates, due Wednesday. The Dow Jones Industrial Average was 0.2 percent higher to 12,426.95, while the Nasdaq Composite was also up 0.2 percent, to 2,446. The S&P 500 added 0.45 percent to 1,426.95. At the height of the earnings season, reports were mixed. Airlines were down after gains earlier in the day. The pharmaceuticals sector and stock exchange operators also saw losses.

In the currency markets, the yen was flat versus the US dollar and the euro, while sterling was stronger versus the greenback and the shared currency even though house price growth slowed in January. The US dollar remained range bound, while the Swedish krona gained on higher retail sales in December.

Crude oil prices were higher on a report in the Wall Street Journal that Saudi Arabia will cut production again on February 1and forecasts of cold weather in the Northeast US through mid-February. In metals markets, gold was range bound while most base metals were lower with nickel dropping 4.4 percent. Copper was the main exception, with prices higher on lower inventories.

Prudential sells Egg to Citigroup

Permalink: Prudential sells Egg to Citigroup

UK insurer Prudential has sold internet bank Egg to Citigroup for £575 million, £375 million less than the value assigned it by Prudential when it bought out minority shareholders a year ago. Prudential decided to sell due to growing losses for Egg. The bank lost £145 million last year, higher than previous estimates.

Citigroup purchased the internet bank for 40 percent less than the business had been valued a year ago. Prudential has defended the low selling price by citing losses due to growing bad debts on personal loans. The sale is part of a review of Prudential’s business which has been interpreted by some analysts as ripe for break-up.

Analysts said that Prudential’s decision to sell now, and at this price, was a good one and that the insurer could not have gotten a better price. They argue that waiting for a better price would have required an additional infusion of capital that might not have gone over well with shareholders.

In announcing the purchase, Citigroup says it plans to retain the bank’s name and will offer a wider range of services to UK customers than Prudential had provided. Citigroup also says that it expects to make Egg profitable in short order, using its experience in lending to consumers with less than ideal credit histories.

As part of the sale, Prudential will continue to provide Egg customers with pensions and life assurance products for five years and Citigroup will distribute Prudential life assurance products in parts of Asia.

House price inflation cool at 0.3%

Permalink: House price inflation cool at 0.3%

The Nationwide has reported that property inflation for January was a cool 0.3%.

This represents the lowest growth in property prices for 8 months, and cuts the previous 12 month inflation to 9.3%, down from December’s figure of 10.5%.

On a three-monthly indicator, prices were running at a growth of 3.3%.

The Nationwide attributed recent interest rate rises as a key factor in the cooling, and figures from the Bank of England indicate that there was a significant drop in house sales through December.

Despite the latest figures, general expectations are that short supply of housing will keep the UK property market relatively bouyant through 2007, with a general slowdown rpedicted for 2008 onwards.

However, the housing market so far has proved difficult to predict, with most analysts predicting a slowdown in 2006 when in fact the market accelerated.

It remains to be seen what impact the surprise rise in interest rates to 5.25% in January may have on the general property market through the year, especially as further rate rises remain a possibility.

FSA fines GE Capital over PPI

Permalink: FSA fines GE Capital over PPI

In an ongoing investigation by the Financial Services Authority (FSA) over Payment Protection Insurance (PPI), and the possible mis-sale of policies, GE Capital Bank Ltd (GECB) has been fined £610,000.

GE Capital mainly provides finance via branded store cards, credit cards and sales finance - including PPI.

However, the FSA ruled that GE Capital had failed to “have adequate systems and controls for selling insurance” and for failing to “treat its customers fairly”.

A particular complaint was that even when branded store cards were used, customers would receive sales calls from GE Capital even after they had declined PPI at the store.

In 2005 alone, over 850,000 policies which included PPI were sold on its behalf by an estimated 300,000 retail staff.

The FSA is currently in the middle of a two-year investigation into the selling of PPI policies, and is reviewing the procedures of over 200 companies supplying PPI policies.

GE Capital received a 30% discount on its fine by settling early and applying corrective procedures in place.