Irish Financial Review

Ulster Bank to offer compensation

Ulster Bank chief executive Jim Brown is reported as being in talks with the Financial Regulator about how to apply compensation to customers affected by the recent technical problems at the bank. Details of the compensation scheme are expected to be announced shortly.

Ulster Bank to offer compensation

Ulster Bank is set to offer compensation to customers affected by recent technical problems

Mr Brown estimated that it would take several more weeks to finally clear a backlog of transactions built-up during the technical fault.

Most Ulster Bank customer accounts are now up-to-date, although a “small percentage” of outstanding transactions were still being processed.

Ulster Bank has promised to refund all fees and charges that had been incurred by its customers or those of other banks as a result of the computer glitch that occurred last month, including overdraft fees and interest, late payment fees and interest on mortgages, loans and credit cards, and interest wrongly charged on late payments.

Customers would also be awarded all the interest on missing savings or current account payments, including interest on cash customers withdrew from savings accounts when wages were not paid on time.

Credit ratings would also be protected, the banks said.

Cost of Mortgages Fall – Central Bank

New research from the Central Bank shows that interest rates on mortgages have fallen.

Mortgage costs have fallen while loans and credit cards have risen

The weighted average interest rate on outstanding mortgage loans with an original maturity over five years (which accounted for 99 per cent of outstanding mortgage loans) was 2.98 per cent at end-May 2012. This was 2 basis points lower than at end-April 2012 and 44 basis points below the rate reported at end-September 2011. This means that many mortgage holders here now pay some of the lowest mortgage rates in the Eurozone.

Central Bank statistics also show that the cost of credit cards and overdrafts have gone up slightly. The average interest rate on cards, one-year loans and overdrafts charged to households rose slightly in May to 8.68pc.

Overdraft rates range from just under 10% to almost 16% between various banks. In addition,  surcharge interest of up to 12pc is charged for an unauthorised overdraft.

The Central Bank said the interest on loans to buy items such as cars were also up, at an average of 5.88pc.

The ECB cut rates to a new historic low this month.

Earlier this month, the European Central Bank cut its benchmark lending rate to a new historic low of just .75%. AIB has already announced that it will not pass on the latest rate reduction to its Standard Variable Rate (SVR) customers. EBS (now part of AIB), Bank of Ireland, National Irish Bank, KBC Bank, Irish Nationwide (now part of IBRC) — are still considering whether to pass on the latest cut to variable customers. Permanent TSB and Ulster Bank have both announced that they will pass on the latest rate cut. Bank of Scotland, which includes Halifax said it will pass on the full value of the latest rate cut. However, it is not expected that Bank of Scotland/Halifax have many SVR customers to begin with as they  was the first bank to introduce tracker mortgages as a way of building market share in the early 2000’s. .

Deposit interest mixed

Central Bank statistics also shows that the interest being paid on short-term deposits have fallen while interest paid on longer term deposits (18 months and greater) have risen slightly.

Many banks have recently been forcing more customers to keep higher balances with their bank as a means of avoiding fees and charges. They have also been structuring their services that reward only those that can lock away funds for longer periods of time.

VISA and Mastercard in Record Settlement

Visa and Mastercard make $7.25bn fees dispute settlement

VISA and Mastercard in record settlement

Visa and Mastercard and major US banks have agreed to a $7.25bn (£4.65bn) settlement to retailers over card fees.

The seven-year case over firms colluding to fix the fees that merchants pay to process credit and debit-card transactions.

The settlement is estimated to be the biggest of its kind in US history.

It involves a $6bn payment to merchants and an agreement to reduce swipe fees for eight months, valued at $1.2bn.

An additional $525 million has been set aside to pay to the stores which sued individually, including grocery chains Kroger and Safeway and the Rite Aid pharmacy chain.

Previous settlements

The settlement involves credit card giants Visa and Mastercard, as well as major issuing US banks including JPMorgan Chase, Bank of America and Citibank.

Visa and Mastercard have already paid a combined $3bn to settle a lawsuit over their “honour all cards” policies, which tied acceptance of credit to debit cards.

The US Department of Justice also brought and settled a civil suit against the two firms in 2010 over policies that prevented stores from offering their customers cheaper forms of payments.

However, that settlement left in place credit card company rules that stop stores from charging customers more when they use certain payment cards.

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