The number of mortgage approvals rose in March as the Government's controversial lending scheme continues to assist homebuyers over small businesses.

According to the Bank of England, 53,504 mortgages were approved for borrowers in March, an increase of 3% on February’s figures.

Mortgage activity has stumbled at the start of the year, after reaching over 55,000 approvals in December.

But it has shown signs of promise, with the Government's Funding for Lending Scheme (FLS) helping borrowers to take advantage of record low mortgage deals.

However, the volume of lending to businesses has fallen by 3.6%, despite the financial incentives available for banks to provide loans.

Chancellor George Osborne confirmed last week that the scheme would be extended by a further year until 2015.

But the extension is expected to be weighted heavily towards SMEs, which have so far seen few benefits from the scheme (read more).

Mixed Response

The decision to lever the scheme away from the residential mortgage market has left some concerned.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said that any dilution of the scheme for residential mortgages "may limit the benefits to the mortgage market as a whole" and "ultimately impact the options for consumers."

But Ernst & Young’s influential ITEM Club Spring Forecast, which has predicted growth of 0.6% this year and 1.9% in 2014, said that new measures such as ‘Help to Buy’ would help to boost housing-related spending and consumption.

"Room for optimism" - Nationwide's chief economist, Robert Gardner.

Nationwide’s latest house price index is also cautiously optimistic. The society revealed that house prices across the UK had risen by 0.5% in the past three months compared to the previous quarter.

The return to growth in the first quarter offers tentative signs that wider economic conditions are improving, said Nationwide’s chief economist Robert Gardner.

"There are reasons for optimism that activity levels will continue to strengthen in the months ahead," he added.

Keith McDonald
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The Bank of Ireland has claimed that customers were warned in the small print about possible rate increases, as it hiked its tracker rates overnight for thousands of customers.

Typical rates on the tracker mortgage have now more than doubled, from 1.75% to 2.99%. Residential mortgage customers are set to receive a further rise, to 3.99%, in October.

But most affected customers are thought to be buy-to-let mortgage customers, which will prompt even more severe increases.

This is despite a record-low Bank of England base rate, which has remained at 0.5% for over four years.

Many customers with tracker mortgages taken out with the bank over the last ten years believed that the rate would only rise if there was an increase in the base rate.

But it has come as a shock that the Bank of Ireland has increased its tracker by such a considerable margin, following the announcement just seven weeks ago (read more).

The Bank of Ireland attributed the rate hike to the increased costs of operating these mortgages and the need to accumulate extra capital.

It added that a specific clause in the contracts permitted it to implement the increases.

Andrew Tyrie, the chairman of the Treasury Select Committee, has asked City regulator the Financial Conduct Authority to look into potential mis-selling practices (read more).

The FCA says that it has no jurisdiction to investigate.

Nevertheless, customers have been urged to forward complaints about the huge increase in their mortgage rates to the Financial Ombudsman Service, especially if the terminology included ‘life’, which had the potential to be misleading.

Keith McDonald
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Complaints about payday loans have almost doubled over the past year, in what the Financial Ombudsman Service (FOS) described as a "growing area of concern".

In the latest edition of Ombudsman News, the FOS said that it was receiving between 30 and 40 new disputes every month – an increase of 75% on last year – and that it was ruling in the consumer’s favour in three out of every four cases.

Problems frequently brought to the Ombudsman’s attention included the use of “continuous payment authority” by lenders, which allows them to make repeated attempts to reclaim payments directly from a bank account.

Lenders are increasingly claiming to be socially responsible. But struggling customers who had legitimately reported their difficulty in repaying a loan found that lenders quickly disregarded debt management plans.

One lender was also deemed to have acted unfairly after it registered a default against a customer's credit rating despite having an agreed deferment plan for repayment with the borrower. It also had no evidence of the correspondence it was required to serve for its action.

Inadequate Security

Concerns were also raised about inadequate identity checks. After a customer complained that a loan had been taken out fraudulently in their name, the lender had been forced to admit to the Ombudsman that its validation process involved matching card details with addresses, but that the correct name would not have been mandatory for the loan to be validated.

The Office of Fair Trading (OFT), which regulates the sector, has sought a more forceful approach with payday lenders found to be acting negligently.

It finally succeeded in shutting down MCO Capital in March after serious lapses in the lender’s security procedures allowed more than 7,000 loans to be taken out fraudulently (read more).

And new powers introduced in February now allow it to suspend credit licenses with immediate effect, meaning that negligent firms will no longer be able to continue trading under appeal.

The Citizens Advice Bureau has recently submitted a body of evidence to the OFT which shows lenders to be harassing customers, overcharging, and even preventing customers from making payments so that late payment charges are incurred (read more).

Are payday lenders fair and legitimate practitioners, or do we need greater regulation? Let us know by leaving a comment below!

Keith McDonald
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First-time buyer mortgages accounted for 43% of all approved mortgage loans during the month of February, according to the Nationwide Building Society.

The mutual’s latest House Price Index revealed that the proportion of new mortgages advanced to first-time buyers in February was the highest seen in the index’s eight-year history.

The sole exception was March 2012, when buyers hurried to exploit the final month of a temporary break on stamp duty.

Recent Bank of England figures showed a dip in mortgage approvals for February, after exceeding 55,000 in December. But they improved by 3% in March, to 53,504 (read more).

The Nationwide Index said that overall mortgage approval levels had averaged just over 53,000 per month between January and March, compared to an average of 51,000 in 2012.

House prices declined slightly by 0.1% in April, it said, but the annual rate of growth remains positive, with prices 0.9% higher than this time last year.

Robert Gardner, chief economist at Nationwide Building Society, said the figures showed that activity and prices had started to gain momentum in 2013.

“The number of mortgage approvals has edged up from the levels prevailing last year and there are reasons for optimism that activity levels will continue to strengthen in the months ahead,” he said.

The Funding for Lending Scheme, which has driven mortgage rates to record lows, should continue to provide support in lowering the cost of credit for prospective homeowners, he added, though he stressed that progress was “likely to be gradual.”

Keith McDonald
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Up to 500 hundreds are at risk after Nationwide announced that it would be integrating the Cheshire, Derbyshire and Dunfermline Building Societies into its main brand.

Nationwide, the UK's largest building society, acquired the three mutuals during the depths of the financial crisis.

Cheshire and Derbyshire became part of the Nationwide group in 2008, while Dunfermline followed in 2009.

As part of the integration process, around half the 91 branches operated by the three subsidiaries will be closed. The remainder will be re-branded to Nationwide.

Nationwide said that the proportion of its customers living within five miles of the bank would rise to 85% following the re-brand, which is expected to take around 18 months from the start of 2014.

It also wants to combine the societies to allow all the group’s customers to benefit from a vast investment to improve the IT system.

In a statement, Nationwide said that it would help to reallocate employees where possible.

It has already suggested that it may increase the quota at Caledonia House, the current headquarters of Dunfermline, which currently houses 300 employees.

Where relocation was not possible, employees "will be given access to appropriate training, support and advice that will help them find alternative work,” the society added.

End of an Era

The integration will end the smaller mutuals’ century-long affinity with the high street. The Derbyshire Building Society was founded in 1859, with the Dunfermline BS following in 1869, and the Cheshire in 1870.

The move is also likely to end any remaining speculation about Nationwide’s interest in the 316 branches the Royal Bank of Scotland.

Nationwide announced its interest in the branches late last year, though it expressed concerns about the synchronisation of the banks’ IT systems – the issue that had caused Santander to withdraw its bid for the branches (read more).

Keith McDonald
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Demand for investment ISA funds shrank by half in March from the previous year, figures have shown, raising further concerns that struggling households are unable to fill their yearly tax-free entitlement.

Figures from the Investment Management Association (IMA) have shown that net ISA sales reached just £787 million in March, compared to £1.42 billion in February and £1.54 billion in March 2012.

Overall, savers accumulated an additional £1.13 billion in ISA funds throughout the 2012/13 tax year, accounting for withdrawals.

But even with a typical last-minute surge, which saw £347 million invested in the first five days of April, the total still only just exceeded half of the £2.22 billion invested in the previous 2011/12 tax year.

The IMA Chief Executive, David Godfrey, described the last-minute rush as “a common trend.”

“Overall sales were lower in March compared to recent months,” he observed.

“The sector rankings for the month both for ISAs and funds in general suggest that investors are spreading their money across different asset classes and that both growth and income strategies are in demand.”

Withdrawals Up in 2013

The last minute additions of £347 million at the end of the tax year – higher than any monthly sales recorded in the last eleven months – reversed a heavy trend of withdrawals in the first quarter of the year.

Savers withdrew £142 million more in funds than they invested during the first three months of 2013.

This comes as a recent poll suggested that the equivalent of five million households were resorting to credit cards, overdrafts or savings to buy basic necessities.

Mr Godfrey said that regular monthly investments into tax-free funds could help investors to manage their cash-flow.

"Investors should be reminded that they can invest in ISAs on a regular monthly basis," he said.

"This not only reduces the financial burden of finding a lump sum but also reduces risk as you buy more units if prices fall, which then achieve higher proportionate gains when prices recover."

But bank bosses have rallied the government over recent months to raise the cash ISA allowance (currently £5,760) to match the higher allowance for riskier investment products (currently £11,520), arguing that investment ISAs are less relevant to customers' needs.

Keith McDonald
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A plan to expand the UK's network of credit unions is taking shape after 31 groups joined a government project designed to curb the influence of payday lenders.

The Association of British Credit Unions (ABCUL) said that 31 unions had signed up to the first wave of a £36 million government initiative, with more expected to follow.

The scheme is designed to double the membership of the non-for-profit institutions to two million over the next five years, and to increase their range of financial services to include budget-assisting current accounts and cash ISAs.

By raising the profile of credit unions, it is hoped that over a million hard-pressed consumers will be encouraged to use them instead of resorting to payday lenders.

In doing so, estimates show that they could save up to £1 billion in interest payments alone by March 2019.

These findings last month led welfare reform minister, David Freud, to describe credit unions as “the antidote to predatory loan sharks or high-interest lenders”, saying they were a vital alternative for the vulnerable (read more).

Mark Lyonette, the Chief Executive of ABCUL, which will be handling the expansion plan, praised the “ambitious and timely project” to proliferate the network.

"We will be supporting credit unions to offer a much wider range of great value products to many more members from a broad range of income groups,” he said.

He also confirmed that unions would be upgrading their systems to allow members to access financial services online.

“Consumers will soon be able to benefit from the latest online technology to sign up to credit union services such as current accounts, budgeting accounts and cash Isas,” he said.

Are you a credit union customer? If not, would you be interested in using credit unions if they expanded their services? Let us know by leaving a comment below.

Keith McDonald
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Just two standard savings accounts now protect savers from the rising cost of living, as the demise of introductory bonus rates threatens to rid the market of any meaningful returns.

Only the cash ISAs from Virgin Money and First Direct allow savers to match inflation, with tax-free returns of 3%. And neither are the most accessible of options.

The Virgin account requires savers to tie up their money until 2018, while the First Direct account will only return the top rate on balances above £40,000.

There are a number of regular saver accounts offering rates on or above the 4% mark, but savers would need access to a branch of the West Brom, Kent Reliance, or Cheshire Building Societies, and would have to endure starting from scratch and saving just a small amount per month.

Bonus Rates

The introduction of the Government’s Funding for Lending Scheme in August last year has had a grave effect on introductory bonus rates, which until recently had kept savings accounts in touch with inflation, even if only temporarily.

According to financial analysts Moneyfacts, the number of bonus-laden accounts has more than halved since the lending scheme began, from 73 in August last year to just 32 at the beginning of May.

The average bonus rate has also reduced by almost half, from 2.7% to just 1.45%.

It is unlikely to turn around soon, either. An extension to the Funding for Lending Scheme, widely attributed as the single most significant cause of the collapse in savings, has already been announced.

This, from June 2012, shows how some accounts flatline (ING / Halifax) after the temporary bonus rate expires. Returns on flat-rate accounts (without bonus) are not always as competitive for the first year, but they can catch up with weaker accounts soon afterwards.

Stay Its Hand

There has been plenty of scepticism – from here as much as anywhere – about the manipulative culture of ‘teaser’ bonus rates that disappear overnight and leave savers high and dry.

And Martin Wheatley, chief executive of the Financial Conduct Authority, has spoken a number of times about his plans to enforce changes.

Last month, he described these accounts as a tool for the savviest, with the most severe examples being “the financial equivalent of the Venus fly-trap.”

"The smart consumer switches at the end of that year to a new teaser rate," he said. "What do most people do? - Nothing! They stay in these products like a frog boiled in water." (Read more.)

But with inflation tipped to rise above 3% in the coming months due to rising food and fuel prices, savers risk becoming trapped in a dangerous spiral of long-term real losses.

It may yet be prudent to educate rather than regulate, lest we lose one of the few incentives left offering any hope to savers in the market for standard retail accounts.

(Our 2012 guide will tell you a little bit more about how bonus rates work and how to manoeuvre around them.)

Keith McDonald
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The European Commission is planning an overhaul that will allow European residents the right to open a basic bank account in any EU country and compare the costs.

Only a few EU countries currently regulate to ensure that people can access a basic bank account, even if they have previously been made bankrupt.

But the Commission hopes to push forward ambitious reforms to make accessibility to a bank account in any EU member state a mandatory right.

It estimates that over 50 million people across the EU do not have access to a bank account, making it more difficult for them to receive salaries or to pay bills.

The decision by the Co-operative Bank to stop offering bank accounts to discharged bankrupts in the autumn of last year left Barclays as the sole remaining bank in the UK to cater for that sector of the market.

Sarah Brooks, Director of Financial Services at Consumer Focus, said that the lack of availability would only worsen the industry’s attempts to reduce the million people without a bank account in the UK (read more).

The government responded by discussing changes to insolvency law that would make it easier for banks to offer these accounts by reducing their liability for funds that should be heading to creditors (read more).

But the Commission also wants to improve transparency as part of a sweeping move that will make it easier for consumers across Europe to compare the costs of banking and to switch providers.

Under its plans, banks will have to send customers a list of its charges for basic services to allow consumers to compare between different institutions.

It also wishes to make it easier for people to switch bank accounts by imposing a 15-day deadline for banks to switch accounts between providers in the same country, and a 30-day deadline for banks to switch accounts across EU countries.

The UK is set to implement a seven-day switching mandate later this year, which. it is hoped, will boost competitiveness between banks.

Keith McDonald
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Sainsbury's shrugged off the news of falling pre-tax profits by announcing that it was buying up the remaining half of its banking operation from Lloyds Banking Group for £248 million.

Sainsbury’s Bank became a joint-venture with HBOS in 2007 after initially setting up in partnership with the Bank of Scotland 10 years earlier.

The bank offers credit cards, savings accounts, loans, insurance, and a currency-exchange service. It currently has around 1.5 million active customer accounts.

The supermarket said that the transition of support and back office services from Lloyds would take place over the next 42 months.

Sainsbury's hopes to expand its 1.5 million active customer accounts as it buys out the 50% stake from Lloyds.

Sainsbury's said that the move from the part-taxpayer-owned Lloyds would provide a "significant opportunity to prudently grow the bank,” adding that it would provide a £100 million boost in capital to the brand over a three year period.

It also expressed its wish to correlate products more closely to the needs of Sainsbury’s customers, and plans to use Nectar card data to inform its financial service development.

Chief executive of Sainsbury's, Justin King, said: "This is an exciting transaction for Sainsbury's which has the potential to deliver significant benefits to our shareholders, customers and colleagues.

The Importance of Trust

Mr King also reflected upon the ‘trust’ that the brand has established with its customer base – a far cry from Lloyds, which has seen numerous hits to its credibility in recent months.

The beleaguered group has set aside more for PPI mis-selling activity than any other bank. In February, it received a £4.3 million fine from the Financial Services Authority for delays in paying out compensation to affected customers (read more).

The bank's staff have also exposed its ‘Salespoints’ scheme, which prioritised products that were valuable to the bank rather than those necessarily best suited to customers’ needs.

(See our feature: Salespoints, Selling & Scandals: Lloyds TSB.)

To Mr King, trust is fundamental to increasing the customer base of Sainsbury's Bank.

"We have 23 million transactions each week by customers who know and trust the Sainsbury's brand," he said.

"We see a great opportunity to increase the number of bank customers by offering accessible, high quality financial services products which reward customers who bank and shop with us."

Keith McDonald
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New proposals drafted by the European Commission that would allow Europeans to switch bank accounts across borders without charge might bring an end to free bank accounts in the UK, experts are warning.

In its draft laws published yesterday, the Commission said that it wanted to improve transparency as part of a sweeping move to make it easier for consumers across Europe to compare the costs of banking (read more).

But analysts believe that UK banks may adopt the European norm of charging for services including current accounts and ATM withdrawals to compensate for being undercut elsewhere and to prevent thousands of overseas clients opening UK accounts to avoid charges in their home nations.

"The overall cost of adding a new customer to a banking system is not trivial. If customers start bouncing back and forth, costs for the bank are going to go up," noted Ralph Silva, Director at research organisation SRN.

The proposed changes, which could impact British banks if they are approved to EU law and the UK remains within the Eurozone, decree that banks will have to send customers a "fee information document" – a list of charges for basic services to allow consumers to compare between different institutions.

"Our aim is that consumers are better informed about fees both before and after they open an account, and that they can change their provider rapidly and easily if they so wish," said Tonio Borg, European Commissioner for Health and Consumer Policy.

But banking business models vary so greatly across different countries that straightforward price comparison will prove almost meaningless unless banks harmonise their pricing models.

"This could hasten the demise of free banking in Britain," said Gareth Lodge, senior analyst at Celent.

"Forcing banks to accept customers regardless of profitability or risk moves the banks from a business to a social tool."

Keith McDonald
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The chief executive of the Co-operative Bank has resigned after its debt was reduced to ‘junk’ status by a leading credit ratings agency.

It is understood that Barry Tootell, the bank's chief executive for just under two years, planned to step down following the collapse of a deal to buy 631 branches from Lloyds Banking Group – also known as Project Verde.

Mr Tootell brought forward his resignation following the decision by Moody’s to downgrade the bank’s debt rating, and will be replaced by Rod Bulmer on an interim basis.

Moody’s estimates that the bank’s toxic debt ratio rose by a third in 2012 on the previous year, to 10.9%. Much of this is thought to stem from the takeover of the Britannia Building Society in 2009 and poorly performing commercial property loans.

The Co-op, which posted losses of £674 million last year, responded to Moody’s decision by pointing out that its “strong funding profile” exceeded regulatory requirements.

It conceded that it faced the same challenge as other banks in having to strengthen its capital position pending stricter regulatory requirements.

“Our primary current account base in recent years has enjoyed significant growth,” the bank said in a statement.

“The actions we will now take to strengthen our balance sheet and simplify our business model around a core relationship banking offer, will create a compelling co-operative banking business which is truly distinctive within the banking sector.”

The bank has already signalled plans to streamline its services by closing 37 branches in a merging process with Britannia (read more).

Keith McDonald
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A spring bloom in credit card spending has revitalised consumer spending in April, figures show, suggesting that there may be signs of growth in the economy.

Spending on debit and credit cards leapt by 3.6% in April on the previous year, Barclaycard told The Mail on Sunday.

The lender’s statistics cover around half of all the card payments made in the UK.

But the high street continues to be hit hard, and even supermarkets are feeling a cutback in spending.

DIY stores have profited from a 3.7% in spending as consumers show signs of cutting out expensive servicemen to carry out repairs themselves.

And a rise in spending on visual entertainment, such as cinema tickets, rose by almost a quarter on last year, as consumers look to occasional treats rather than elaborate expenditure, Barclaycard said.

Growth

Valerie Soranno Keating, Barclaycard’s chief executive, told The Mail that that this was the first time since 2011 that consumer spending growth had remained above 2% for three consecutive months.

The National Institute of Economic and Social Research (NIESR), Britain’s leading macroeconomic think-tank, said that UK growth had risen by 0.8% in the three months to April, though it attributed this in part to a weak January.

"Things haven't suddenly taken off," said institute director Jonathan Portes. "The data has improved a little but we would still describe this as a relatively slow recovery."

NIESR economist Simon Kirby said that a technical recovery was not likely until 2015 at the earliest.

The Credit Card Market: What’s on Offer?

Sainsbury's Nectar Low Rate Card has a standard rate of just 7.8%, with no balance transfer fee.

The credit card market is still in reasonable health, especially for those with an excellent credit rating.

For those looking to offload their debts more affordably, Which4U is currently listing five cards which offer 0% on balance transfers for 24 months or more.

Balance transfer fees have crept up over the past year. The market-leading 26-month 0% balance transfer card from Barclaycard will add 3.5% to the balance. So transferring a balance of £3,000, for example, would cost an extra £105.

But this is not without competition. Halifax’s 25-month balance transfer card currently has a fee of just 2.5% for online applicants – a saving of £30 on this example.

If you are likely to make inroads into your debts more quickly, Halifax’s All-in-One card has a 15 month balance transfer for a fee of just 1% for those applying online.

This is also one of the best cards on the market for purchases, offering the same period (15 months) for interest free spending – though minimum payments on the card must still be met.

In the market for low standard rate cards, Sainsbury’s Nectar Low Rate Credit Card is heading the market, at 7.8% APR.

This card allows holders to accumulate Nectar points more quickly (10 points per £1 on Sainsbury’s shopping for the first 3 months) and comes without a balance transfer fee.

Growth in spending does not have to augur warnings that a wave of irresponsible borrowing has descended over the nation once again.

Rather, playing the market and finding good credit card offers helps to keep consumer borrowing both responsible and affordable.

James Booker and Keith McDonald

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Payday lenders have appointed a former standards committee chief to help them tighten up their act, but the voluntary nature of the compliance board will see many firms continue to act outside of its guidance.

Seymour Fortescue, former chief executive of the now defunct Banking Code Standards Board, will chair the Short-term Lending Compliance Board, which has been set up by the Consumer Finance Association to monitor practice across payday loan firms.

Mr Fortescue estimated that payday lenders would face compulsory regulation if they did not improve their practices within twelve months and promised to take a zero-tolerance approach to make self-regulation an effective option for the sector.

He leaves his role of chairman of Portman Group after four years working to establish a self-regulating responsibility group for the alcohol industry.

And he pointed to this experience as an example of how self-regulation could work in such socially sensitive industries if it was executed properly.

Lenders Opting Out

However, the first task on his hands for the payday loan industry will be establishing any kind of widespread compliance.

The monitoring carried out by the Short-term Lending Compliance Board will only apply to members of the Consumer Finance Association, which Wonga and many smaller lenders have shunned.

This comes as Wonga faces increasing scrutiny into the scrupulousness of its security protocols, with greater numbers complaining that they have been victims of fraud.

It also raided the bank account of 15-year-old Simon Oliver to reclaim a loan that he had never applied for.

And the Advertising Standards Authority has banned an advert for payday lender Cash Lady, featuring former bankrupt Kerry Katona, following 29 complaints.

(See our feature article: The Slippery World of Advertising: Who’s in Charge of What?)

Office of Fair Trading: Progress

The Office of Fair Trading, which regulates the sector, has been stepping up its efforts to remove credit licences from the worst offending companies.

It finally succeeded in closing down MCO Capital after the lender was found guilty of serious security flaws that prompted thousands of fraudulent loans.

A recent boost to the regulator’s powers now allows it to revoke credit licenses with immediate effect (read more).

Previously, firms with revoked credit licenses were able to continue trading under appeal, which gave them leave to remain for up to two years

Keith McDonald
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The Post Office has launched its three new current accounts today, two of which carry a monthly fee.

The new bank accounts are being trialled across 29 branches in East Anglia ahead of a nationwide launch in 2014.

Only the Post Office’s new ‘Standard’ account will be fee-free, and it can be opened with an initial deposit of £100.

The ‘Packaged’ account, which comes with European multi-trip family travel insurance, breakdown cover, and identify theft protection, will cost £8 per month.

Customers with either of these accounts can apply for an overdraft facility at any time, which is charged at 14.9%.

The ‘Control’ account, which is a specialist budgeting account and is aimed towards those who need tighter controls over their finances, will cost £5 per month.

Customers with the ‘Control’ account can arrange cheaper tariffs for utility bills by setting up Direct Debit in the knowledge that they will not be charged for failed payments.

The accounts are being issued in partnership with the Bank of Ireland, which has attracted negative publicity in recent weeks for hiking its lifetime tracker mortgage rates via a loophole in the small print (read more).

Infrastructure

With 11,500 branches, the Post Office branch network outnumbers all major high-street banks combined, and is expected to be a popular choice in rural areas and local communities.

But it is keen to monitor the additional strain to its counter services before it rolls out the account, which is expected to compete with major banks, in full across the country.

The Post Office already sports around three million customers for its other financial services, which include credit cards, savings accounts, mortgages and insurance.

Nick Kennett, director of financial services as the Post Office, said that the new accounts would prove an alternative for customers that felt cheated by complex charges associated with their accounts.

"When they go overdrawn they often don’t realise how much it will cost and this can have a real impact on their finances.

"With the Post Office what you see is what you get – no surprises, just a fair and transparent way to manage your money."

Postal Affairs Minister, Jo Swinson, chose to overlook the recent Bank of Ireland debacle, pointing to the trust and confidence that customers had in the Post Office brand.

"The Post Office has always been, and continues to be, a universally recognised and much loved presence on the high street," she said.

"Customers have real trust and confidence in the Post Office and with more branches than the high street banks combined, I welcome the increasing role it is playing in meeting the financial needs of its customers."

She added that the government is dedicating £1.34 billion to maintain and modernise the post office network to enable branches to offer a full range of financial services.

The trial, available in the following 29 branches, will allow the Post Office time to renovate its infrastructure before the complete roll-out next year.

Will you be tempted to switch to the Post Office? Let us know your views on these accounts.

Keith McDonald
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The number of people interested in buying a home has hit its highest level since November 2009, according to the Royal Institute of Chartered Surveyors (RICS).

Inquiries and sales rose last month, it said, while a majority of surveyors reported that prices also went up – the first time this has happened in three years.

Figures released by Connells Survey & Valuation show that the number of residential surveys conducted in April rose by 24% on March, and by 39% on the previous year.

Demand amongst first-time buyers is particularly strong, the figures suggest, with a 40% rise in valuations year-on-year. It marks the best April results in six years.

The RICS said that the Funding for Lending Scheme along with the new Help to Buy scheme announced in the recent Budget were attracting interest in higher loan-to-value loans to give fresh impetus in the housing market.

"Help to Buy in combination with the Funding for Lending Scheme appears to be giving the market a shot in the arm," said Peter Bolton King, RICS's Global Residential Director.

However, he warned that the supply of housing needed to increase at the same volume to avoid an escalation in prices.

Meanwhile, it is important that lenders continue to support the market, said Ben Thompson of Legal & General Mortgage Club.

"With the number of house viewings, the number of surveys being carried out and the number of new houses available all on the increase, we can see that there is definitely growing demand," he said.

"What we need now is even more encouragement from lenders in the shape of more lending so this trend can continue."

Keith McDonald
Which4U Editor

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HMRC has published its second list of tax dodgers, three months after the first, in its attempt to deter companies from escaping tax.

Like the first list published in February, which received criticism for targeting ‘smaller’ offenders rather than big companies, the offenders include pubs, restaurants, and small traders.

A bar in Troon, a kebab shop in Peterborough, and a Tandoori restaurant in Blackpool all received fines ranging from £19,200 to £52,000 for offences relating to unpaid taxes between the window of April 2010 and April 2012.

But the new list, published three months after the first, does target some bigger culprits.

It includes details of a £1.12 million fine for Paymaster Ltd, described as a labour provider based in Birmingham, which leaves the company with an outstanding sum of just under £2 million.

Petroleum wholesaler EU Oil Ltd, previously based in Harlow, Essex, faces a total fine of £719,000, taking its total unpaid bill to over a million pounds.

The total tax arrears of the 15 firms is a hefty £4.6 million, though the argument will doubtlessly surface again that this is a minor sum compared to the billions thought to be skilfully avoided through legal loopholes and complex tax avoidance mechanisms.

Collective Action

Chancellor George Osborne has spoken of the importance of the need for collective action against tax evasion and avoidance.

The issue was discussed at a meeting of the G7 last week, with Britain expressing its hopes that all members of the EU will all sign up to a pilot scheme that will allow tax authorities to share data.

Mr Osborne also called upon traditional British tax-havens need to play a more important role in ensuring that due taxes were paid to the right territories.

"Of course you have to respect that many of these territories have important industries and we don't want to unnecessarily damage them," he said.

"But it is necessary to collect tax that is owed and it is necessary to reduce tax avoidance and the crown dependencies and the overseas territories need to play their part in that drive and they need to do more."

The move by HMRC to name and shame domestic tax dodgers was described in February as a "welcome first step", but the tax authority was warned not to focus solely on smaller offenders at the expense of larger firms.

Keith McDonald
Which4U Editor

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It has to be said, it’s more than a little embarrassing to witness the dregs served up by the current savings market, with so little available to match inflation.

Rates on fixed-rate bonds have become so low that you’ll barely scrape a return of 2% after tax – even if you commit to locking away your money until 2018.

So the Bank of England’s latest prediction that inflation will fall to its target of 2% within two years seems scant consolation right now, at a time when earning are growing at their slowest rate for over a decade.

ISAs or Fixed-Rate Bonds?

In the past, we’ve witnessed a reasonably close contest between bonds and ISAs, with bonds traditionally offering greater incentives for longer commitments, even accounting for tax. (See our guide: cash ISAs vs. fixed-rate bonds.)

But that balance has switched following the Government’s Funding for Lending Scheme, which has offered banks the funds they’ve needed and cut all competition for detail deposits.

Following the subsequent deterioration in returns for savers, the only hope of matching inflation through standard savings accounts is to lock away funds for five years in a tax-free ISA with Virgin Money (which at least allows inbound transfers), or holding at least £40,000 in deposits with First Direct.

Both of these accounts will return 3.00% tax free, though you’ll only be able to add £5,760 in this current tax year.

For instant access ISAs, we’re left with the Cheshire Building Society (2.30%), alongside its parent mutual, Nationwide, and the government-backed National Savings & Investments (NS&I), which both offer 2.25%.

The latter, supported by the Treasury, ensures that all savings are protected, rather than the £85,000 maximum compensation limit imposed on deposits in other banks through the Financial Services Compensation Scheme. (See our guide to secure savings and compensation.)

But that’s a mute point. The savings arm of the Treasury is exceeding its quotas, and though it’s made the respectable choice of automatically transferring old cash ISA savings from pitiful returns of 0.5% to its Direct ISA at a healthier 2.25%, it’s not allowing inbound transfers of existing nest eggs. (How do you transfer a cash ISA? Find out with our savings guide!)

NS&I: towards the top of the market for instant-access ISAs but won't allow inbound transfers.

Merits

As pointless as they may seem right now, there are still merits for savers to pursue the best products on the market.

Firstly, the difference between the top of the savings market and the bottom remains significant enough. Earlier this year, the Bank of England found that the average cash ISA rate without a bonus had fallen to just 0.88%.

So, as a measure of comparison, investing the full year’s tax-free cash allowance (£5,760) in the Cheshire account would yield £132.48 in interest after the first year, compared to this average rate, which would return only £50.69. It’s not a huge amount, by any means, but it’s something.

The advent of social lending (or peer-to-peer lending) has provided an alternative for savers who are prepared to take a degree of risk in the hope of higher returns.

But if you’re determined to stick to the tried and tested, it’s common sense to insulate yourself as much as possible from the rising cost of living.

Secondly, the tax-free allowance does not roll-over from one year to another. Any remaining unused allowance at the end of the tax year is lost for good.

So there’s merit in fulfilling as much of your tax-free allowance as possible so that you reap the benefits when economic recovery brings better conditions for savers. It’s very unlikely that there will be a chance to recoup that in the future.

Keith McDonald
Which4U Editor

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Banks and building societies will be spared an investigation by the Competition Commission into their provision of current accounts.

The Office of Fair Trading has been investigating whether banks are deliberately obstructing consumers from switching their bank accounts.

It concluded that despite major concerns, it would not refer the case at this time and would inspect the market again in two years’ time.

The market is concentrated around four banks – HSBC, Barclays, RBS and Lloyds – which controls three-quarters of the market.

Both RBS and Lloyds are required to sell off branches and, by extension, a proportion of their customers, by the European Commission, as a condition of the state bailouts they received during the height of the financial crisis.

Both have encountered difficulties, however, with the Co-operative Bank recently withdrawing from a deal to buy 600 branches from Lloyds Banking Group (read more).

New entrants to the market have also failed to make major inroads into the market.

Affable challenger Metro Bank, the first retail bank to join the high street in over a century, continues to grow at a slow and steady pace, while the long-anticipated initiation of current accounts at Tesco has been delayed by numerous technical difficulties.

The Post Office has recently begun a trial of its three new current accounts in East Anglia, with a view to rolling the products out nationwide in 2014.

With a branch network that dwarves all existing high street banks combined, the products could become popular with customers in rural areas and local communities (read more).

The European Commission hopes to make it easier for consumers to switch current accounts through a directive that reduces the time for banks to switch current accounts from 30 to 15 days.

Banks in the UK have already agreed to stricter conditions, and will cut the time required to switch accounts to just seven days starting later this year.

Keith McDonald
Which4U Editor

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The value of secured loans reached a three-year high in April, according to the Loans Warehouse – a further sign that confidence may be returning to the economy.

A 15% rise in April from the previous month saw the value of secured lending soar above £40 million for the first time since 2010, according to the Loan Warehouse’s Secured Loan Index.

The £41.75 million recorded for April is also a considerable leap on the £26 million in secured lending recorded in the same month last year.

A fall in lending rates since the launch of the Government’s Funding for Lending Scheme in August 2012 has worked to support a momentum of growth in secured lending, which has now seen 18 consecutive months of year-on-year increases.

The demand for these loans, usually secured against property, reveals greater levels of confidence in the ability to repay.

"Breaking the £40,000,000 barrier is a milestone and reaffirms the resurgence of our industry," said Sam Busfield, the Managing Director of Loans Warehouse.

"With the year-on-year monthly figures demonstrating sustained growth, everything is pointing towards 2013 being the real turning point."

"There will no doubt be many challenges ahead but there is an appetite and buzz within the industry not seen for some time," he added.

Secured Lending Protects Home Values

The time is ticking on leases that could render homes unmortgageable. Secured loans could prove a solution.

Secured lending could continue to grow as homeowners look to protect the value of their homes.

Almost 1.5 million homes in England and Wales could fall into negative equity as the elapse of their lease takes them outside of the lending criteria for high-street banks.

If homeowners end up with properties that do not qualify for further mortgages, they will end up unable to sell to anyone except cash buyers.

They can protect themselves from this fate by using secured loans to extend the term of the lease, noted fellow Loans Warehouse MD, Matt Tristram.

"Secured loan lenders will lend with shorter leases that mortgages, and most are happy to lend and assist when the purpose of the loan is to extend the term of a lease," he said.

"This is just another example of when secured loan lending trumps the terms offered by the high street mortgage lenders."

Keith McDonald
Which4U Editor

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