Where does one go for financial advice nowadays? More and more, it seems that decent impartial financial advice isn’t easy to come by – after all, as impartial as people claim to be, quite often you can’t confirm this yourself.

Because of this, the best way to get properly impartial advice is to make as many enquiries as possible yourself. Your bank might tell you that they have a great deal on a loan or a credit card, but you might find that by making enquiries elsewhere, you could get a far better rate or deal on what you want, which is where services like price comparison sites can really play to your advantage.

Just by tapping in a few details and hitting that button, you can view details on a huge number of deals on the product you’re looking for, ranked to be as close as possible to the parameters you set in the first place, and many of which you can apply for directly.

Of course, this is all well and good, but who do you turn to if you don’t know what you want? Well, the advice given to you by your bank can normally steer you in the right direction, just don’t assume that they will be able to offer you the best deal – often they will be able to, due to a special “existing customer rate” or similar (This is often true for loans, as your bank has a greater knowledge over your financial dealings), but quite often it can be worth shopping around – especially in the case of cash ISAs at the moment, where some banks are offering just .05% interest rates and standard savers often offering little over 3% – Which, when you consider that, according to moneysupermarket.com: “A higher rate taxpayer needs an account paying at least 6.17% in order to earn a positive return [on their savings], while someone in the basic taxband needs to be earning at least 4.62%” Means that at the moment, finding the best place for your money is even more important than ever.

There is a lot to be said for carefully considering your financial position, learning about the different options available and then choosing the one most appropriate to you. True enough, this may not be the quickest way, but do you really want to rush into what could be a very important financial decision? moneysupermarket.com can make this decision easier, offering not only detailed price comparison, but a wealth of other information that can help you decide on what product and what type of account is right for you.

The UK’s Yorkshire and Chelsea building societies are said to be in “advanced talks” over a potential merger.

The Chelsea is the fifth and the Yorkshire is the second largest building society in the UK.

If a deal is reached, it would rival the Nationwide as big mutually owned mortgage and savings institution.

In August, Chelsea revealed a half-year loss of £26m after it had assigned £41m to cover to mortgage frauds.

The Chelsea has 35 branches and 700,000 members, while the Yorkshire has almost t three times as many members at 2 million and over four times as many branches, with 143.

The Chelsea building society announced, “the board of Chelsea has been undertaking a detailed review of the society’s activities, operations, financial position and corporate structure”.

“As part of this, Chelsea has considered the potential benefits to members and other stakeholders of a merger and this has culminated in discussions with the Yorkshire.”

The talks of a deal are being seen as a rescue package for Chelsea. New chairman Stuart Bernau has been analysing the business and viability over its independence.

In 2008, it reported a loss of £39m which was the highest recorded loss by a building society. £44m was written off due to huge investments in two failed Icelandic banks.

Another £15m was written off by the Chelsea after buying a mortgage broker in 2007 whose business collapsed during the credit crunch.

Building societies differ from banks and stock-market companies, as they are owned by their members, and struggle to regain reserves if they suffer heavy losses.

The Chelsea went on to reveal that “for a merger to proceed, the boards of both societies would need to be satisfied that it will be in the benefit of each society’s members”.

“The merger would also be subject to approval by each society’s members and the FSA.”

It has yet to be revealed if a merger would provide a windfall to the members of both societies. A spokeswoman for the Chelsea said that such details were yet to be discussed.

Several takeovers of building societies have been made since autumn 2008 in an attempt to save them from problems brought on by the global financial crisis.

In September last year, the Nationwide began its takeover process of both the Cheshire and the Derbyshire, then the Yorkshire made a move for the Barnsley building society, with the Skipton taking control of the Scarborough.

The most important factor when choosing to manage your personal finances effectively is time. A greater time investment will almost always result in a greater financial return.

Therefore the sooner you start to manage your finances, the greater return and financial ease you will feel in the future. Many people fail to plan ahead, which results in struggling to juggle finances at a later point in life.

Money management should focus on four primary questions:

1.       What financial goals would you like to achieve?

2.       When can you expect to achieve them?

3.       What finances do you currently have?

4.       What level of risk would you make to achieve these targets?

Choosing somewhere to live is an essential in everybody’s lives, and therefore, buying a house will be the biggest financial purchase that people will make. The financial investment into a home will affect all your other finances.

Making big decisions on your lifestyle will affect your financial goals. If you consider a luxury holiday to be one of life’s essentials, you will have less money left over for savings and investments.

When do you want to retire? What expenses do you currently have? Deciding what your priorities are will help to determine what money you will have left.

It is worth assessing your current liabilities, as these expenditures and assets could be reduced or sold and free up money for the future.

Calculate how much spare money you have so that you can form an investment plan. Investments can vary dramatically. Some are high risk for higher reward or loss, and some are low risk for a steady growth on investment. It’s up to the individual to decide what level of risk you are prepared to make.

Once these considerations have been made and your plan is in places, it’s important to assess the decisions you’ve made and how they affect you on a day to day basis. You plan may be too restrictive, leaving you with not enough money to live on, or perhaps you could make greater short term sacrifices to benefit you in the long term.

A small amount of time spent on your current finances can be highly rewarding for your future.

The US economy saw its first growth in over a year, rising to an annual rate of 3.5% between July and September.

Experts believe that a major spending plan by the US government which featured a scrappage scheme to encourage the car sales market has been the main cause of the upturn.

Some economists believe that there could be more setbacks lurking ahead, despite the official statistics showing that the recession is over.

A spokesman at the White House announced that recent economic progression was “a welcome milestone” but it would take more time for a full recovery to be recognised.

The US economy had risen 0.9% in relation to the previous three months, whereas the UK economy remained in recession, unexpectedly dropping 0.4%.

Hugh Pym, the chief economics correspondent for the BBC, revealed that the growth rate of 3.5% was greater than the 3.3% predicted by most experts.

He continued:”The sheer scale of the stimulus in the US has made a big difference, it was much bigger in percentage terms than that in the UK.”

“That the US, the powerhouse of the world economy is growing once again, is good news for the global economy has a whole.”

The last time the US economy grew was in the second quarter of 2008, by an annual rate of 2,4%.

The National Bureau of Economic Research will reveal the full extent of the US economic climb from recession when it analyses all the factors.

Some factors were significantly responsible for helping US economy during the third quarter, according to the Commerce Department.

The spending on durable manufactured products rocketed up at an annual rate of 22.3% which was the highest quarterly figure since 2001 and was spearheaded by the ‘Cash for Clunkers’ scheme helping new car sales.

Consumer spending increased on housing products by 23.4%, the greatest quarterly surge in 23 years, and came as a result of an improving housing market.

The big increase is considered by many to be due to the government’s $8,000 tax credit provided to first-time house buyers.

Government spending increased by 7.9% as stimulus spending spread and exports saw their biggest rise since 1996, rising by 21.4%.

Brian Bethune, an economist for HIS Global Insight stated that “it’s good to have the economy growing again.”

“But we don’t think that rate of growth is sustainable because it is distorted by all the government stimulus.”

“The challenge here is to get organic growth - growth that isn’t helped by fiscal steroids.”

However, unemployment is at a rate of 9.8% and a sharp fall came in September in the car sales industry as a result of the popular car scrappage scheme coming to an end in August.

Dean Baker, co-director of the Centre of Economic Policy Research believes that “you can say that the recession is over, but it sure won’t feel like that.”

“There is a lot of downward momentum that isn’t going to go.”

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

Whilst the general financial atmosphere is improving and optimism growing, it is too soon to announce that we are in the process of recovery, according to experts at Ernst and Young Item Club.

The influential professional services firm expects some growth towards the end of 2009, but this growth should begin to struggle, with 1% expected growth for 2010.

They also predicted that customers repaying debt will grow slower than first anticipated and impending tax rises will follow the election.

BT Business research predicted a more optimistic outlook, declaring that small businesses are positive about the forthcoming year.

In September, BT Business conducted a survey of over 7000 small businesses and found that 75% believed their business would see an upturn in 2010, with 61% confident about their business’ prospects.

Professor Peter Spencer, Chief Economist from the Item Club, issued a wake-up-call to all those getting carried away with the optimism of recovery.

He warned, “there could still be substantial pain to come for corporates and consumers.”

“For a sustainable recovery the UK economy needs world trade to pick up and there is still not much sign of that happening.”

One of the factors holding back growth is that the VAT rate will return to 17.5% from its current level of 15% on 1 January, a change which may see consumers making purchases before the New Year.

Several other factors which will hold back growth lie on the horizon. An increase in national insurance contributions, the new 50p tax rate, the termination of the car scrappage scheme, tighter government spending and the return of stamp duty on housing are all due to hit the country.

Judging whether the recovery is happening, on the way or unlikely is difficult to forcast.

Professor Spencer went on to tell the BBC that the recent economic data has been “very mixed,” adding, “the stock market is absolutely rampant, industrial surveys all back in positive territory, but it’s yet to show through in hard data for output and things like that.”

“And when it comes to lagging indicators like unemployment, I’m afraid it’s going to be ‘feel bad’ for quite some time to come.”

On Friday, the official statistics for the Gross Domestic Product (GDP) are released, with many expecting no economic growth at all.

GDP is a measurement of the services and goods produced in a country, and since the first quarter of 2008, the UK GDP has been in negative figures.

The Bank of England has focused on quantitative easing, an act of pushing money into the economy. Professor Spencer feels that this has been of little success, with the little improvement on bank lending, going on to complain that “instead, the banks appear to have used much of the money to rebuild reserves and improve liquidity.”

Robin Hood

Banks are not ‘Robin Hood in reverse’ when it comes to overdraft charges, the House of Lords has been told as seven banks and one Building Society petition he Office of Fair Trading regarding the regulation of their overdraft fees.

Jonathan Sumption QC says that banks aren’t taxing the overdrawn to help others but that overdraft fees involve a large element of cross-subsidy.

The result of the appeal of the OFT will decide if millions of bank customers are able to reclaim their past bank charges back or not.

According to Mr Sumption, current consumer contract regulations, the OFT does not have the power to regulate overdraft fees, and that these fees are required, but shouldn’t necessarily be fair.

Overdraft Charges ‘Fundamental’

In previous court battles, judges have upheld that the OFT has the right to make its opinion heard on the fairness of banking charges under the 1999 Consumer Contract Regulations. But Mr Sumption says this is wrong, and that in both cases the problem had been over-refined and overcomplicated the interpretation of the Regulations.

He also points out that the Regulations were not designed to mediate price control or the services offered. And therefore they do not apply to the main subject matter of a contract or the price being charged for it.

He said: “The overdraft charges are too fundamental to the bargain to be declared unfair.”

According to Mr Sumption, people who exceed their overdraft and have to pay charges are paying back the cost of providing a current account to those who are always in the black. Therefore the charges exceed the cost of dealing with an overdrawn customer because “the revenue stream is essential to the whole of the current account structure.”

OFT Raising The Stakes

Apparently cross-subsidies are also common in the banking industries like France, Canada and the US., and that they are common in their charging structures. He also compares them to mobile phone tariffs and airline ticket prices which people do not object to.

One of the Law Lords assigned to the case asked if bank charges included a surcharge to subsidise those who did not go overdrawn. Another suggests overdrawn customers be taxed for the benefit of others.

Mr Sumption said that banks were not operating a Robin Hood-like operation in reverse, saying that if the OFT were to succeed it might render all past overdraft payments unenforceable possibly leading to “restitution.”

“The OFT has significantly raised the stakes. The issues are of considerable importance to consumers and the future of retail banking.”

What Do You Think?

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A watchdog is accusing banking staff of giving out confusing and inconsistent information to customers about the clearing time of cheques.

The Banking Code Standards Board said that many staffs’ training appears to have been ineffective as they seemed to be confident about the information they were giving even though it was wrong.

The board also says that the results of their research are even worse than when they carried out a similar survey just last year.

A cheque is deemed as having completely cleared after six days, but the mystery shopper survey conducted showed that two-thirds of bank and building society staff did not know that a cheque could not bounce after this six day period.

Interest must be credited no more than two days after a cheque has been paid in and the money must be available to be drawn out after no more than four days according to rules set down in November 2007.

42% of banking staff seemed to be aware of the first rule mentioned above, and 50% were aware of the second according to the survey.

However, the board said that the combined results were “significantly worse” than the results from last year.

Chief executive of the board, Robert Skinner, said: “It is clearly disappointing that, despite the concerns raised in our last report, we have found customer facing staff, in the majority of cases, unable to provide clear and accurate information to customers on the cheque clearing cycle.

“Our review did not indicate that large numbers of customers are being financially disadvantaged as a result but the industry clearly has work to do in improving the knowledge of front line staff.”

The research was done at the beginning of the year. Ten banks and nine building societies were surveyed, with a total of 164 branches being visited personally, and 110 telephone calls being made

What Do You Think?

Whose fault is this lack of knowledge? Have you ever encountered similar problems in the past? We would love to know your thoughts and opinions on this. Leave your comments here.

It has been a year since the launch of same day bank transfers, but it has been suggested that this is not actually faster after nearly half of eligible payments were found to take three days or more to be processed.

Since May 2008 around £45 billion has been found not to have gone the Faster Payment System as many banks and large building societies have made little progress with the faster clearing service.

According to the group running the service, the system is working, but customers leaving their banks in frustration are doing the “right thing”.

However, it has been revealed by the BBC that nearly half of payments eligible for same day transfer are not making it through the system and are taking three or more days to clear.

Upper Limits Causing Trouble

Seven of the thirteen founding members of the scheme are still in fact only offering a partial service or no service at all, including banks such as Abbey, Lloyds and Nationwide.

Though Abbey claims it has been focused on the merger of its technology with its new parent country and is hoping to operate a 35% capacity by June.

Lloyds also did initially offer an online same day transfer, but has withdrawn it, claiming it will be running again after December 2009.

One of the main reasons for the system not working to full capacity is that many banks have imposed an upper limit on the value that can be transferred by the system.

For example, Nationwide only offers next day payments for amounts of £10 or less which is possibly why only 1% of its transfers are being processed this way. Alliance and Leicester, Lloyds and Halifax also have a very low threshold compared to the industrial limit of £10,000.

Frustrated

Less progress has been made on sending other types of payments through the system. For example, the majority of the founding thirteen members don’t allow customers to settle credit card bills next day, including HSBC and HBOS.

Also standing orders which are typically set up to donate to charity, are also not permitted as Faster Payments by nearly half of the founding members.

APACS is the industrial body that represents the banks involved in the payments. Their spokesperson Sandra Quinn said: “Our main target in the first year was to make sure that it worked. It’s robust. It works everyday.

“But we are getting frustrated… those customers who have walked away, actually they’ve done the right thing.”

However, some banks do provide a full service, including RBS, Natwest and Barclays.

What Do You Think?

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Nearly a million people are still waiting for their claims to return their bank overdraft charges have been frozen since July 2007.

Figures obtained from the Financial Services Authority showed that around 973,000 complaints are still on hold, nearly 27,000 of these stayed in UK courts.

The information has been obtained through a consumer campaign group called Legal Beagles. Nick Spooner from the group said: “I am surprised – it’s huge. It’s far more than I thought.”

The number of claims being made reached a peak in the summer of 2007 at which point the authorities and the banking industry looked for a solution. They eventually decided to start a High Court test case to decide if bank charges were fair and legal.

For now, the FSA and the FOS have put new claims on hold the judiciary also allows county court judges to stay any newly lodged cases. But the whole system is taking longer than was initially planned.

‘It’s Far More than I Thought.’

Banks have so far failed to overturn the OFT’s jurisdiction over the matter after a High Court and Appeal Court and now intend to appeal to the House of Lords later this year.

Their case is based on challenging the present High Court and Appeal Court rulings that under the 1999 Unfair Terms in Consumer Contracts regulations, the OFT can decide if their overdraft fees are or aren’t fair.

The second stage of the proceedings is unlikely to begin before next year, and will decide the fairness of the banks’ charges.

The OFT itself is also conducting an investigation, the results of which are unlikely to be concluded by the end of the year, which means that some claimants might have to wait a total of up to three years before they can pursue their frozen claims.

Are Charges Legal?

According to Mr Spooner: “most of the claimants would have been aware at the time they complained that their complaints would have been automatically put on hold.

“Surely the figure must represent the highest number of consumer complaints about a single issue?”

The banks have not yet admitted how many claims it settled before it put cases on hold, but estimates based on information from the banks’ annual reports for 2007 suggest that during the course of the year banks paid out £784 million to around 378,000 customers.

Many of these claims were made by customers going to their local county court with banks settling and paying up instead of risking a judge deciding that the charges are illegal.

What Do You Think?

We would love to know your views. Leave your comments here.