Payday Loans To Be Capped By Government

The cost of payday loans will be capped under new laws by early 2015, the Government has announced.

The industry has been criticised over the affordability of the loans and the way they are marketed, with critics claiming the firms take advantage of vulnerable people.

The Competition Commission is currently investigating the industry and an Office for Fair Trading (OFT) report in September said there were "deep-rooted" problems in the way the loan companies operate.

New financial regulator the Financial Conduct Authority (FCA) will now be forced by the Government to cap the loans.

The Government will amend the Banking Reform Bill currently going through Parliament to formally establish the cap.

The Labour leader has also heavily criticised the industry

The move comes after the Labour leader Ed Miliband spoke out over what he called the "Wonga economy".

Earlier this month he said payday loan companies were "running riot through our communities".

"They are responsible for a quiet crisis of thousands of families trapped in unpayable debt," said Mr Miliband.

Mr Miliband has also called for a ban on payday advertisements during children's television shows, accusing the companies of using "cartoon characters, trendy puppets or cute plasticine figures" to attract children.

George Osborne denied that the move marked a turnaround for the Government, which had initially resisted calls for a cap and denied that Labour had taken the lead on the issue.

The payday loan industry is worth £2bn

He said: "I don't accept it's a departury from any philosophy. The philosophy is we want markets that work for people, and people who believe in the free market, like myself, want that free market to be properly regulated."

He told the BBC Radio 4 Today programme: "The idea that we are following Labour - the Labour Party were in office for 13 years, Ed Balls and Ed Miliband. This issue came up, they were in the Treasury all those years, they did absolutely nothing.

"I am happy to pay tribute to some individual MPs like Stella Creasy, like Robin Walker the Conservative, who have campaigned on this issue.

"But the idea that the Labour leadership, who were running this country for 13 years and did nothing in this space, took a lead is, frankly, fanciful."

However, Ms Creasy said: "Just two months ago this Government criticised Ed Miliband for wanting to reform broken markets, and now today we see them following Labour's lead on the need to act against legal loan-sharking.

Critics claim affordability checks are not being properly carried out

"Whether in Parliament or out on Britain's streets in the Sharkstoppers campaign, we have been making the case that capping is a tried and tested method used in many other countries to tackle the problems caused by payday lenders. For too long David Cameron has ignored our pleas to act and it is cash strapped consumers caught in the spiral of debt these companies generate who have paid a heavy price as a result."

Business Minister Jo Swinson warned in September that interest rate caps to tackle payday lenders could mean people who could pay back loans found they could not get credit and turned to "unsavoury alternatives".

The Competition Commission investigation into the £2bn industry is due to reveal its findings next year.

It will be looking at claims that firms are emphasising the speed of the loan over cost and are "skimping" on affordability checks.

There have also been complaints of payday firms unexpectedly draining people's bank accounts through a type of recurring payment called a continuous payment authority.

Payday loan bosses defended their business in front of MPs

The Financial Conduct Authority, which will take over regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014, was already considering new controls before today's announcement.

Among its proposals are unlimited fines, limiting to two the number of times a payday loan can be rolled-over and compulsory affordability checks for all applicants.

Bosses of three payday loan companies, Wonga, QuickQuid and Mr Lender, defended their industry when they appeared in front of MPs earlier in November.

Citizens Advice chief executive Gillian Guy said: "This is a cap on the exploitation of people struggling with the rising cost of living. Payday lenders have failed to stick to their own promises to treat customers fairly. The Government's plan to cap the cost of loans only goes to show how out of control the industry is."

Richard Lloyd, executive director of consumer group Which?, said: "We're pleased the Government is committed to taking tougher action on payday loans by capping the sky-high fees and charges that drag people down in a spiral of debt.

"This will need to be part of a wider clean-up of the credit market. The Government and the Financial Conduct Authority must clamp down on irresponsible lending and excessive fees across the board, whoever the lender."

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Clegg: Too Many Mums 'Shoved Aside' At Work

The problem of mothers feeling "shoved aside" in the workplace is "far too common" and also bad for the economy, Deputy Prime Minister Nick Clegg has said.

The Liberal Democrats leader said there was a need to dramatically change working practices to adapt to the realities of modern family life.

Mr Clegg's comments came as a survey showed three quarters of women who returned to work after having a child thought it made it harder to progress in their career.

The survey of 1,029 users of parenting site Mumsnet also found 60% of women felt less employable since having a child.

During pregnancy 17% of respondents felt that their employer or manager was not supportive, a figure which rose to 25% when asked about support on their return to work.

Mumsnet has recognised the efforts of five firms that consistently met family-friendly criteria for employees, customers and for their internal policies.

The winners of Mumsnet's gold Family Friendly Awards were: Metro Bank, Matalan, Butlin's, Pizza Express and Starcom MediaVest Group.

Mr Clegg said: "There are many employers out there who do understand the need to retain the best staff and who want to help families better balance work and home. The companies being recognised today set a shining example.

"Modern families come in every thinkable shape and size. In many cases mothers want to work and fathers want to spend more time at home.

"We need to dramatically update our working practices to accommodate these realities, helping families juggle their lives as they see fit.

"That is why from April 2015, the coalition Government is introducing shared parental leave to ensure career options remain open to women after pregnancy."

Mumsnet chief executive Justine Roberts said: "While we have legislation designed to protect women against discrimination in the workplace it's clear that in many cases companies are simply not following the rules.

"Our survey reveals how important the culture created at work is ... but with over half of mums saying they felt less employable and three-quarters saying it was harder to progress in their career since having children, it's clear there's still lots of work to be done to ensure family-friendly practices are commonplace."

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Former Co-op Chairman Released On Police Bail

Chancellor George Osborne has announced plans for an independent inquiry into the Co-operative Bank's near collapse, as its former chairman was released by police.

The review uses new powers under the Financial Services Act and follows calls from Prime Minister David Cameron for an inquiry into the bank's ailing finances and the decision to appoint Paul Flowers as chairman.

It will add to an investigation being considered by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), following the regulators' talks with Bank of England governor Mark Carney on Friday.

Mr Osborne announced the review

The Co-op faces a rescue which will see 50 branches close and investors including US hedge funds take control of 70% of the business.

The Treasury-led inquiry will look into mistakes made in the run-up to the Co-op Bank's woes and the £1.5bn black hole in its finances, dating back to at least 2008.

The Treasury said it will investigate actions of the regulators and government in relation to the issues at the bank.

It will also cover the Co-op's takeover of Britannia Building Society at the height of the banking crisis, as well as appointment procedures in light of the scandal surrounding Mr Flowers.

Since Mr Flowers stepped down in June, questions have been asked about his competence in the role.

The 63-year-old Methodist minister was arrested by West Yorkshire Police on Thursday night in Merseyside.

He has been held in connection with an "an ongoing drug supply investigation", police said.

Mr Flowers has been questioned all day by police, and was released on Friday evening.

Asked how Mr Flowers was feeling, his solicitor Andy Hollas said: "I think a rather ponderous frame of mind - I think anyone in his situation would be."

Mr Hollas added: "He's not necessarily guilty of anything, he's not been charged with anything."

Mr Flowers resigned as Co-op chairman in June

Mr Flowers was suspended by both the church and the Labour Party following newspaper allegations that he bought and used illegal drugs.

The Treasury's inquiry will not start until the outcome of criminal investigations into Mr Flowers, or it is clear proceedings will not be prejudiced.

As with the recent review into Royal Bank of Scotland, the probe will be independently chaired, which is seen as vital by the Treasury Select Committee because the role of the regulators will also come under scrutiny.

The FCA said it "fully agrees" the investigation should be led by an independent person.

The Co-op is already at the centre of a barrage of investigations, with the group being grilled by MPs on the Treasury Select Committee into the bank's failed Project Verde bid for 632 Lloyds Banking Group branches.

Sky News has learned that the former Bank of England governor, Lord King, warned of a "political desire" for the Co-op to buy the branches.

It also emerged earlier that the Co-op is seeking to recover £31,000 paid to Mr Flowers since he quit his £132,000-a-year post in June.

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Dreamliner Warning After Plane Engines Ice Up

Boeing has warned airlines to avoid flying some Dreamliner planes near high-level thunderstorms due to a risk of engine icing problems.

The warning applies to 15 carriers who have 747-8 and 787 Dreamliners with engines made by General Electric (GE).

It is the latest alert for an aircraft which has suffered a number of technical glitches since its launch, including overheating lithium-ion battery systems that caused the planes to be grounded worldwide for three months earlier this year.

The engine warning follows six incidents between April and November involving five 747-8s and one 787, all of which suffered temporary loss of thrust while flying at high altitude.

The problem was caused by a build-up of ice crystals, initially just behind the front fan, which ran through the engine, a GE spokesman said.

All of the aircraft landed at their planned destinations safely, he added.

Boeing has prohibited the affected aircraft from flying at high attitude within 50 nautical miles of thunderstorms that may contain ice crystals.

In response, Japan Airlines (JAL) pulled 787 Dreamliners from two international routes.

Other affected airlines include Lufthansa, United Airlines, an arm of United Continental Holdings and Cathay Pacific Airlines.

A Boeing spokesman said: "Boeing and JAL share a commitment to the safety of passengers and crews on board our airplanes. We respect JAL's decision to suspend some 787 service on specific routes."

JAL said it will replace Dreamliners on its Tokyo-Delhi and Tokyo-Singapore flights with other types of aircraft.

It also dropped plans to introduce 787s to its Tokyo-Sydney route from December.

The company will continue to fly the aircraft on other international and domestic routes, which are unlikely to be affected by cumulonimbus clouds for the time being.

A spokesman for GE, which is working with Boeing on software modifications to the engine control system in a bid to eliminate the problems, said: "The aviation industry is experiencing a growing number of ice-crystal icing encounters in recent years as the population of large commercial airliners has grown, particularly in tropical regions of the world."

All 747-8s are powered by GE's GEnx engines, while 787s are powered either by GE units or the rival Trent 1000 made by Rolls-Royce.

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Bereavement: Workers 'Should Get Paid Leave'

Campaigners are urging the Government to give workers the legal right to paid leave if they have been affected by a family bereavement amid growing public support for the move.

Two thirds of people said it was unfair that bereavement leave was unpaid, a survey of more than 1,500 adults showed.

The poll, commissioned by the Change Bereavement Leave campaign, also showed that seven out of 10 people said they would back a national guaranteed minimum of paid leave.

The findings were welcomed by Lucy Herd who discovered that her partner could only take three days unpaid leave from work when their 23-month-old son Jack drowned in their garden pond in Cumbria three years ago.

"David Cameron acknowledged he was able to take two weeks off after the death of his own son, but sadly not all parents have sympathetic or understanding employers or can afford unpaid time off," she said.

"We would like to see four weeks of paid bereavement leave for parents."

TUC general secretary Frances O'Grady said: "Thinking about how they might cope following the death of a close family member is clearly not something many of us want to spend much time contemplating.

"Most people will be surprised to learn that unless they have an understanding employer, they may not be able to take much time off work following a death in the family, and if they are, any compassionate leave will almost certainly be unpaid.

"Coping with the sudden loss of a loved one is traumatic enough without having to worry about work too. The Government should do the right thing and give people a legal right to paid time away from their jobs after someone close to them has died.

"Employers can also help ease the upset of their bereaved employees a little by being more generous depending on someone's individual circumstances - for example a parent coping with the sudden loss of a child is likely to need much more time off work."

Labour MP Tom Harris has raised the issue in the Commons, saying that many bereaved parents go back to work too early after the death of a child because they have no right to employment leave.

"Most people are unaware that there is currently no right to bereavement leave for parents. This is an injustice that Parliament needs to address," he said.

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Student Loan Sale Nets Government £160m

The Government has sold off student loans totalling almost £900m to a private debt collection agency for £160m amid warnings of an impact on every taxpayer.

The sale, revealed over the weekend by Sky's City Editor Mark Kleinman, covers loans taken out by 250,000 students who began courses between 1990 and 1998 amid intensifying efforts in Government to raise money for the public purse from the student loan book.

The National Union of Students (NUS) was quick to criticise the sale, telling Sky News it amounted to "the public subsidising a private company making a profit from public debt."

The Department for Business Innovation & Skills (BIS) said Erudio Student Loans was selected as the successful bidder through a "competitive process".

It said its offer was judged to represent the best value for money for the taxpayer and the price paid exceeded the estimated value to the Government of retaining the loans, which have a poor return rate.

Of the 250,000 loans sold, around 46% are earning below the repayment threshold, 14% of borrowers are still repaying and 40% are not repaying their loans in accordance with their terms.

BIS argued the private sector was thought best placed to collect the outstanding debt as it allowed the Student Loans Company (SLC) to concentrate on administering newer loans.

Universities Minister David Willetts said: "The sale of the remaining mortgage style student loan book represents good value for money, helping to reduce public sector net debt by £160m.

"The private sector is well placed to maximise returns from the book which has a deteriorating value.

"The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans.

"Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans."

The mortgage-style loans at the centre of the sale were the last of their kind on the Government's books.

Under the terms, borrowers are required to repay in fixed monthly instalments over a set period of five or seven years with interest charged at a rate equivalent to the Retail Prices Index (RPI).

But repayments can be deferred for a year at a time if a borrower's income is below a threshold of 85% of national average earnings - currently £28,775.

The coalition is drawing up plans to sell the entire outstanding student loan-book, which has a face value of roughly £40bn.

But such a move was criticised by the National Union of Students in the wake of today's sell-off.

Its president, Toni Pearce, said: "This announcement is extremely concerning and is one that will see the public subsidising a private company making a profit from public debt, which is incredibly problematic.

"The impact of this sale won't only affect borrowers, but will affect everybody.

"The simple fact is that having these loans on the public books would be better off for the Government in the long run. Selling off the loan book at a discount to secure a cash lump sum now doesn't make economic sense.

"The current student loans system is completely unsustainable. Forcing debt onto students as a way of funding universities is an experiment that has proven not to work and there needs to be some serious thought about moving the system away from this ridiculous model."

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RBS To Probe Claims It Drove Firms To Collapse

The Royal Bank of Scotland has hired a law firm to investigate allegations the bank deliberately drove small businesses to collapse for its own gain.

The claims are contained in a dossier, compiled by government adviser Lawrence Tomlinson, which has now been passed to City regulators by Business Secretary Vince Cable, as Sky News revealed at the weekend.

The report suggests RBS - the largest lender in the UK to small firms - drove businesses to collapse so it could buy back their assets at rock-bottom prices.

Chancellor George Osborne has described the allegations as "shocking", but small business campaigners say anecdotal evidence suggests the practice was widespread.

A spokeswoman for RBS - 80% owned by the taxpayer - confirmed that it had now hired law firm Clifford Chance to look into the claims.

Mr Cable referred the claims to City watchdogs

Mr Tomlinson, who has been compiling the report independently for the past six months, focuses allegations on the turnaround division at RBS - its Global Restructuring Group (GRG).

The division handles loans classed as being risky and is understood to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.

But the report alleges that firms not necessarily in immediate financial distress are "engineered" into GRG, sometimes through small technical breaches of loan terms, such as late filing of minor financial information.

They are then hit with exorbitant rates and fees, which in some cases cause them to collapse, allowing RBS to buy their property and assets on the cheap for the benefit of its West Register property arm, according to Mr Tomlinson.

His report claims that fees charged by GRG can run into hundreds of thousands of pounds.

One business that submitted evidence to Mr Tomlinson said that it forked out £256,000 in fees alone while in GRG.

Another said that RBS made them pay an immediate sum of £40,000 to continue borrowing terms with the group.

Mr Tomlinson said he was calling for "immediate action to stop this unscrupulous treatment of businesses".

He told Sky News: The main conclusion you could come to out of this is RBS was doing this for their own gain ... they just ended up with properties quite cheap and they'd made a lot of fees and extra interest while the business was on its way down."

In response, RBS said it was "already committed" to an inquiry on how it treats small firms, following recommendations by Sir Andrew Large whose separate report released on Monday highlighted a potential conflict of interest in the bank's business lending activities.

Sir Andrew, the former deputy governor of the Bank of England, also found that RBS failed to understand even the basic needs of its small business customers.

An RBS spokesman responded to the Tomlinson report by saying that GRG's role was key to helping the bank face up to its commercial property "mistakes" made in the run-up to the financial crisis.

RBS is the largest lender in the UK to small firms

He said: "In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy.

"RBS did more than its fair share to fuel this and commercial property lending was one of the key drivers of our near collapse as valuations rapidly plummeted.

"GRG successfully turns around most of the businesses it works with, but in all cases is working with customers at a time of significant stress in their lives.

"Not all businesses that encounter serious financial trouble can be saved."

The report found a "disproportionately high" number of complaints against RBS, but also hinted at similar practices at other banks.

Fellow part-nationalised Lloyds Banking Group was also accused of concentrating on short-term gain at the expense of its business customers but the bank was angered by its inclusion in the dossier - suggesting there was no basis for such a claim.

Its statement said: "The specific practices discussed in the report are attributed to another bank and are not a reflection of Lloyds Banking Group's approach."

The report said Santander UK was among a few banks that were praised by small business customers for their treatment."

However, the campaign group Bully-Banks - which lobbies on behalf of small and medium-sized firms - claimed the behaviour of the wider banking sector was damaging the UK's economic recovery.

Its director, Jeremy Roe, told Sky News: "All of the major high street banks have major issues with the way they have conducted themselves.

"It is the bank's attitude to this sector that is a major cause of concern."

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Oil Prices Fall On Iran Nuclear Agreement

Oil prices fell and world shares were lifted after Iran's historic deal to curb its nuclear programme in return for an easing of sanctions.

The agreement - struck in Geneva over the weekend - helped Brent crude shed over $2 a barrel, its biggest drop for more than three weeks, to trade at around $108.70.

It was seen as positive in terms of not only easing immediate tensions between western powers and Iran but also eventually leading to more oil coming to market - helping to bring down the cost of petrol and other oil-based products.

However, the terms of the agreement mean Iran will not be allowed to increase oil sales for six months.

Despite fierce opposition to the deal from Israel, European shares extended last week's solid gains which took some back to multi-year highs - with Germany's DAX hitting a fresh record.

However, the rises were tempered by uncertainty over the region's economic outlook.

Analysts also said that trading volumes were likely to suffer further this week due to the US Thanksgiving holiday on Thursday, with the end of the month nearing.

In London, the FTSE 100 was trading positively - boosted by airline stocks.

But David Battersby, an investment manager at the stockbroking firm Redmayne Bentley, told Sky News he did not expect the fall in oil costs to be extended.

He said of the rise in airline shares: "Many of the contracts for the purchasing of oil will have been hedged one to two years out so it's more an expectation that things will get better on the geopolitical front that we have a better outlook for the companies rather than a short term lift in revenues for them."

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Government To Publish 50,000-Page HS2 Bill

The Government is to make its case for the £50bn high speed rail line amid claims it is not giving campaign groups long enough to make their objections to the plans.

The Hybrid Bill with its environmental statement – effectively the Government's planning application for the first phase of HS2 from London to Birmingham – will be published later today.

Those opposing the bill claim that at 49,910 pages, the eight-week consultation limit is not long enough for them to respond sufficiently.

Campaigners say they will have to read 891 pages a day simply to get through the documents and then respond to the points raised. It is the largest bill the UK has ever seen.

Woodland Trust: 21 ancient woodlands destroyed or badly damaged

Woodland Trust policy director Hilary Allison said: "We have recruited a new full time conservation expert whose sole priority over the coming weeks will be the dissection of these documents.

"The enormity of the task being asked of all who have something to contribute to this consultation is undeniable; given its immense length, we feel the timescale given to read and respond is unfair."

The trust has calculated that 21 ancient woodlands will be destroyed or significantly damaged by the first phase of the project.

As part of the bill, opponents will be given the chance to petition Parliament and have their case heard by a committee of MPs.

The first phase will run from London to Birmingham

The Government is expecting up to 25,000 objections, according to the Financial Times.

The publication of legislation for phase one marks a significant milestone in the project. The Government hopes it will be passed by 2015.

Once Royal Assent has been achieved, the Government will be able to start forcibly purchasing land needed to build the line.

It is expected that construction of the line from London to Birmingham will begin in 2016/2017 allowing it to open in 2026.

Transport Secretary Patrick McLoughlin said: "HS2 is the most ambitious and important infrastructure project in the UK since we built the M25 30 years ago, and in 30 more it will be just as integral a part of the nation's prosperity.

"The Bill will give us the powers we need to get the railway built and start delivering the extra room on our railways that this country so desperately needs. It will also start the process of rebalancing the economy and bringing our great cities closer together."

Phase two will run from Birmingham to Manchester and Leeds

A Department for Transport spokesman said the eight-week consultation period compared "very favourably to the 21 days and 28 days that are the minimum requirements for planning applications".

There have been significant objections that the rail line will have a devastating environmental impact on vast swathes of England's countryside.

In addition Labour has raised concerns over the increasing costs of the project.

The TSSA transport union has warned that high speed rail must not become a "rich man's toy" and that fares must be affordable.

The British Chambers of Commerce said HS2 had to be built "to avoid crippling delays, stifling carriage conditions and weekend chaos that conventional upgrades will bring" while the city councils of Manchester, Derby and Leeds are among the local authorities fully backing the project.

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Big Six Energy Firms Face New Profits Storm

The big six energy companies made £23 more in average profit from each UK household on aggregate last year - a rise of 75% on 2011 - and profits are still rising, according to the industry's regulator.

Ofgem said the latest average profit for all suppliers from the average dual fuel customer hit £53 in 2012 but was measured at double that on November 21 this year at £105.

The regulator announced the figure after releasing its analysis of the companies' accounts for 2012, which found average profit margins of 20% for energy generation.

The revelation prompted the watchdog to suggest it may insist on greater clarity in future to ensure that the profits are a fair reflection of investment in future power generation.

It found that the average profit margin for supply to household customers was 4.3% - in line with the claims made by the industry - as energy use rose and bills went up.

EDF is involved in the planned new Hinkley Point nuclear power station

But it calculated the profit margin made in generating energy in 2012 at 20% - slightly lower on the previous two years - but still high in the context of rising household bills.

The study sought to explain the disparity between supply margin and that for generation by pointing out that the generation part of a business needed significant sums of money over the long term to invest in building new power stations.

Ofgem said it was now considering whether companies needed to provide additional profit measures in generation which took account of capital investment to help ensure greater transparency.

The big six - SSE, E.ON, EDF Energy, Scottish Power, npower and Centrica's residential arm British Gas - have faced a backlash from politicians and consumer groups since the latest round of bill increases - up to 11% in some cases - was announced.

npower's Pembroke power station replaced old gas capacity

Of the firms, only E.ON is yet to confirm its increase ahead of the coming winter.

Ofgem's report follows analysis of statements the companies have had to submit annually since 2009 as part of efforts to subject the firms to greater financial scrutiny.

The statements showed that across all six suppliers, overall profits for energy supply and generation fell from £3.9bn in 2011 to £3.7bn in 2012.

However, profits in supply to households and businesses increased from £1.25bn in 2011 to £1.6bn.

Energy companies have insisted their profits are fair, reflect wholesale costs and the country's need to invest in future supply.

Amid the criticism of the industry over the latest rises to bills, the firms highlighted the growing cost to households from so-called green levies.

The environmental and social charges could be placed under general taxation by the Government in the coming Autumn Statement.

The firms have pledged to cut the rises to bills to match any reduction to the charges confirmed by the Chancellor on December 5.

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