The announcement follows on from the regulator’s own review of 173 such sales last year, of which more than 90 per cent broke regulations and it accused the banks of selling small businesses “absurdly complex products”.
The products were typically sold to "protect" borrowers from rising rates but in many cases, lenders insisted that small business clients had to take out the hedging products as a pre-condition for receiving a loan.
Businesses that bought the products before the 2008 financial crisis were then unable to benefit from the Bank of England's decision to cut interest rates to a historically low 0.5 per cent and many found they could not terminate the arrangement without paying huge fees to their lenders and in some cases, the product was for a larger amount or lasted many years longer than the loans they were supposed to be hedging.
Knowing that the review was coming, the banks have already set aside more than £700m against potential swap mis-selling claims, with Barclays making the largest provision so far of £450m.
However, with the FSA’s findings these provisions are likely to be increased, with the total bill expected to reach at least £1.5bn, though it is believed that the final cost could easily exceed £10bn.
The banks have been given six months to complete their reviews of mis-selling, though the Authority said that lenders with large numbers of customers could take up to 12 months.
The regulator said it hoped that five other lenders, Allied Irish Banks, Bank of Ireland, Clydesdale and Yorkshire, the Co-operative Bank and Santander, would launch their own reviews by 14 February.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 30 views ) | permalink |
( 3 / 551 )The tax agreement between the UK and Switzerland, which was struck in August 2011 and came into force on 1 January 2013, has just delivered £342m to the Treasury in the first tranche of revenue from UK taxpayers in Switzerland.
According to HM Revenue & Customs (HMRC) this is the first instalment of a levy on these taxpayers’ accounts to cover arrears of tax, while current and future tax liabilities will be covered by a new withholding tax of 48 per cent on income.
Under the agreement, people with taxable assets in Switzerland have a choice of authorising their financial institution to disclose the details to HMRC or have the levy and withholding tax applied by the institution.
Until now, HMRC has only been able get details of interest payments on Swiss accounts by providing the Swiss with complete details of specific accounts, information that is rarely available.
Exchequer Secretary David Gauke said that the agreement with the Swiss government will deliver around £5bn of previously unpaid tax to the UK and added that offshore evasion costs the UK billions of pounds every year, which the Government is determined to tackle.
He said that one of the ways to do this is through information exchange, so this agreement makes it easier for HMRC to obtain information about UK taxpayers suspected of hiding money in Switzerland.
Chancellor George Osborne also hailed the payment and joked that it was the first time “that money due in taxes has flowed from Switzerland to the UK", as the nation has been famously secretive about its banking arrangements.
In fact, its reputation for financial discretion has helped Switzerland build up a $2 trillion offshore financial sector. But, since the financial crisis, the country has faced an international campaign against tax evasion from governments with big budget deficits. The agreement with the UK follows a similar agreement struck recently with Germany.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 9 views ) | permalink |
( 3 / 680 )According to new research by the Taxpayers’ Alliance, taxes will have been increased almost 300 times by the coalition Government before its term of office ends in 2015.
Despite 119 historic or impending cuts in taxation, 254 tax rises have come into effect, with 45 more planned before the next election, with the result, according to the Alliance that the amount of tax paid in Britain will rise in real terms by 15 per cent by the end of the Government’s tenure.
The Taxpayers’ Alliance (TPA) forensic study of Treasury and HMRC documents looks at how many different tax reliefs, allowances and rates the Government has changed, along with the number of new taxes that have been levied or abolished during its time in office.
In 2009-10, the last year of the previous Government, £513 billion was paid in taxes, which amounts to £549 billion at 2012-13 prices, while by 2015-16, the Government plans to increase that amount to £671 billion or £633 billion in today’s money.
Meanwhile, through other research, the TPA has found that the average family pays £656,000 in tax over their lifetime in direct and indirect tax both over their working lifetimes and in retirement.
Based on the current level of taxes applying over a working lifetime of 40 years and 15 years of retirement the TPA has calculated the total taxes paid by households broken down by income.
This amounts to £1.3m in the highest income quintile, falling to £235,000 in the lowest income bracket. The research also revealed that the four most burdensome individual taxes over a lifetime are Income Tax, VAT, employee National Insurance contributions and Council Tax.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 6 views ) | permalink |
( 3 / 749 )Speaking at the World Economic Forum in Davos over the weekend, incoming Governor of the Bank of England, Mark Carney, said he will be putting growth at the heart of his approach to the job and is willing to see higher inflation for longer in order to support the economy.
Mr Carney hinted strongly at a new approach during his speech, when he said that central bankers should be prepared to take aggressive measures to help economies achieve what he called an "escape velocity".
He added that these include the use of unconventional measures and he would suggest keeping interest rates lower for longer while considering further quantitative easing, which is the indirect provision of monetary stimulus via the financial system.
Although he was speaking generally rather than specifically about the UK, Mr Carney's comments will be seen as evidence that he is preparing a substantial change of direction when he takes up his new post this summer.
While suggesting that he might act quickly, perhaps with a pledge to hold interest rates low for a prolonged period, he said: "Monetary policy can be more nimble than fiscal policy."
Meanwhile, the atmosphere at Davos on the final day was guardedly optimistic, as the collapse of the Euro now looks much less likely, while a hard landing in China, or debt crisis in the US, also look more distant.
The optimism has translated to the stock markets especially in the US, with the S&P 500 closing above 1,500 points on Friday for the first time since 2007,and the FT's "all-world" index is the highest it has been in 20 months.
There was also that good news from the European Central Bank this week, as it announced that a large proportion of the emergency lending it had offered to European banks just over a year ago was being repaid early.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 4 views ) | permalink |
( 3 / 614 )Figures from the Office for National Statistics (ONS) show today that the UK economy shrank by 0.3 per cent in the last three months of 2012, fuelling fears that the economy could re-enter recession.
According to the ONS the fall in output was largely due to a drop in mining and quarrying, after maintenance delays at the UK's largest North Sea oil field; with the sector’s output falling by 10.2 per cent, the biggest decline since records began in 1997.
If oil and gas extraction were excluded from the overall gross domestic product (GDP) calculations, then the data would have shown that the economy shrank by only 0.1 per cent in the fourth quarter.
The figures were worse than expected and could put pressure on the government to consider a "Plan B" that would stimulate demand, although the Chancellor has insisted as recently as yesterday (January 24th) that he will not reconsider his austerity measures programme.
However, the prospect of a triple-dip recession, which will become official should the economy contract again in the first quarter of 2013, is expected to further dent the confidence of consumers and companies, hitting high street spending and business investment.
The contraction in GDP in the last three months of 2012 followed a near 1 per cent rise in GDP in the third quarter when the economy had been boosted by the London Olympics.
The economy remains 3.5 per cent below its peak in 2007 and is not expected to regain its previous level for at least another two years, making it the longest recovery in 100 years while in the words of the ONS, the underlying picture was flat over 2012, with the economy working well below its potential.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 603 )
Random Entry
