Virgin is first UK bank to charge compulsory fee for current accounts

Published on Saturday 13 March 2010 14:19

VIRGIN is to start charging current account customers a monthly fee when it launches its banking service later this year.

The bank is the first to charge a compulsory upfront fee regardless of the amount deposited in a current account. Virgin said the fee would replace high overdraft charges. Jayne-Anne Gadhia, Virgin Money's chief executive, said: "We want to live up to Virgin's ethos of making sure people aren't ripped off, that they know what they're paying for with no hidden charges."

Virgin plans to enter the banking market following the acquisition of regional bank Church House Trust in January. It will open two branches, in London and Edinburgh, by the end of the year.

Elsewhere, the Financial Services Authority warned that customers may have been mis-sold packaged current accounts where they include additional benefits such as insurance.

In its annual Financial Risk Outlook, the FSA advised that some firms, such as banks, are selling inappropriate policies and products to restore profits after the recession.

The regulator claims insurance add-ons do not always provide an adequate level of cover. It suggested that, in some cases, consumers may be better off purchasing products individually or not at all.

The FSA issued a general warning that financial services firms "must not increase margins in ways that result in unfair treatment of consumers".

China funds open

MARTIN Currie has opened its Chinese equities fund to investors.

The fund charges an initial 5 per cent and then 1.5 per cent for annual management in the retail "A" share class or 1 per cent for the institutional "B" share class.

Portfolio manager James Chong argues that "by investing in China today, investors can harness a hugely powerful shift in the global economy."

Martin Currie opened its first office in Shanghai in 1997 and has 2.9 billion invested in China.

Pensions bail-out

SEVEN more schemes entered the Pension Protection Fund in February.

The transfers mean a further 2,500 people will receive compensation for the bail-out fund. The latest schemes taken over by PPF include Gaskell's, the Motor Industry's and Pittards' closed scheme.

There are now 120 schemes in the PPF amounting to 36,799 people receiving, or eligible to receive compensation.

The PPF paid out around 8 million in February. Since launch in 2005, the PPF has paid out 128 million.

Mortgage payback

LLOYDS is to allow all variable-rate mortgage customers to overpay their mortgage by up to 20 per cent with no financial penalty.

Research from Opinion Matters, revealed that around one in four consumers are already choosing to overpay their mortgage with almost half hoping to reduce the term of their deal. Overpaying a 100,000 mortgage with a rate of 3.5 per cent by 50 per month will shorten the mortgage's term by three and a half years.

Stephen Noakes, commercial director of mortgages at Lloyds Banking Group, said; "With mortgage rates at an historic low, there has never been a better time for the majority of people to overpay their mortgage. Not only can it help customers shave interest off their mortgage, it also means less of a payment shock should interest rates begin to move back up."

The scheme will last for one year until 31 March next year.

Elsewhere, HSBC has launched a two-year discount-mortgage at 1.99 per cent with a 999 booking fee. The deal is available to customers with a 40 per cent deposit. Borrowers with a smaller deposit can opt for the 70 per cent loan-to-value option at 2.94 per cent with a 499 fee.

Finally, Santander has cut rates on its four-year fixed-rate mortgages by up to 0.4 per cent.

Its range includes two fee-free deals requiring a 25 per cent deposit at 4.99 per cent for homebuyers or 5.29 per cent for remortgagers.

Santander has also reduced the fee on its two-year tracker at 4.74 per cent by 500 to 495.

The product is available with a 15 per cent deposit.