Managing debt can often be overwhelming and sometimes scary, especially if you haven’t been in this situation before. Thankfully, there's plenty of good advice available to help make things a little more manageable if you are struggling financially. 

Here are some top tips on how you can better manage your debt and take back control of your financial situation: 

Take stock of your outgoings

First you’ll need to make a list of all of your monthly outgoings plus any outstanding debt along with the interest rates on each borrowing. Once you have a list of everything that you pay out for each month, you can then see whether there are any outgoings you don’t really need in order to reduce unnecessary spending. It’s important to be honest about your spending habits and ask yourself if you are paying for any non-essential items that could be cut? 

In addition, look at your utility bills like your phone, TV or broadband accounts. If you’re out of contract, you may be overpaying versus finding a new provider with an introductory offer. Comparison sites, like ours, can be used to find the best deals by comparing prices from dozens of providers at once.

Once you’ve examined your outgoings, you can then look at the list of outstanding debts and use this to determine what borrowing is causing the most financial pain. Start off with the debt with the highest interest rate and work out which will take priority along with a strategy for paying them off. As you’ve already outlined your outgoings, you’ll be able to see how much you have left to pay off outstanding debts.   

Negotiate lower monthly repayments

If you’re struggling to keep up with payments to your creditors, you could try to negotiate reduced monthly repayments or ask to be put on a payment plan. To do this, you’ll need to show them why you can’t afford the current repayments . They’ll usually want to look at your total income, monthly outgoings and essential living costs to see what you’re able to realistically afford. However, this could affect your credit rating, and it may be harder to get credit in future. You also run the risk of paying more back in the long-run due to increased interest rates.

Consider debt consolidation

If you have multiple debts with high-interest rates, it may be worth consolidating your debts. This means that instead of having to make multiple payments each month, you could get one large loan to pay everything off leaving you with just one payment to make each month. Debt consolidation makes managing multiple finances easier. It can help you pay off debts quicker, lowers your monthly payments and means you’ll have fewer bills to manage. 

However, it’s not always the best option. Some come with added costs like origination fees, balance transfer fees on credit cards, closing costs and annual fees. If you have a poor credit score, you may only get loans with high interest rates too, so it could end up costing you more in the long run. When shopping for a lender, it’s important to make sure you understand the contract before you sign up. 

A debt management company will be able to show you what types of consolidation loans are available to you, along with the interest rates. You should seek expert advice before doing this as it may not be the right path for you. Citizens Advice Bureau are on hand if you want impartial, free advice about whether you should choose a debt consolidation loan. 

As long as you keep up repayments, your credit score won’t be affected by having a debt consolidation loan. However, if the overall cost of the new loan makes it more difficult to keep up with all of your repayments, and any are missed, these missed payments will have a negative impact on your credit score. 

Other options to consider include: 

0% interest balance transfer credit cards - These types of credit cards can offer 0% interest repayments for long periods of time, usually between 12 and 24 months. Depending on whether you meet the criteria set by the credit card company, a 0% balance transfer credit card could be a good solution for someone who wants to transfer their existing balance from one card to another to eliminate high interest rates on repayments. The money saved from interest repayments on the previous card can then go towards paying the lump sum off instead. However, you should remember to pay this off before the 0% interest period runs out to ensure you don’t end up in further debt. 

Personal loan - You could obtain a personal loan to pay off debts. This could save you money in the long run as the overall interest rate will be lower and it can help streamline your finances into one lump sum. 

Seek expert help and advice

If you’re finding that managing your debts is becoming overwhelming and you really don’t know where to start, then it might be worth seeking professional support and advice. There are many organisations and charities, including Step Change, National Debtline, Debt Support Trust or Citizens Advice, that can discuss what options are available to help you start tackling your debt. Debt advisors are always available to offer free expert advice over the phone, and can provide a range of budgeting tools and fact sheets on how to deal with debt. Money Helper can point you in the direction of various online, telephone or face-to-face support in your area too. 

Money and your mental health

Mental health problems can make earning and managing money more difficult, while debt can trigger or worsen existing mental health conditions such as anxiety and depression. If your financial issues are having an impact on your mental health, then you may want to consider seeking professional help. Sometimes just highlighting issues with a friend or family member can help as this may make you feel less alone as the other person might be able to offer some advice you hadn’t thought of yourself, (or just help you make an appointment with a debt advisor if necessary). 

Remember: How you tackle your debt is ultimately up to you, but it's always best to address the problem as soon as possible to ensure you don’t fall into further arrears and further financial difficulty. Once you start opening up about your debt, it will become easier to manage and understand. You’ll also start to feel a lot better and more in control of your life and finances.

The post How to take control of your debts during the cost of living crisis appeared first on Money Expert.

While it’s important to plan for the future, we understand it can be hard, financially, to put these plans into place, especially with the cost of living on the continual rise.

We’ve pulled together five simple tips on how you can plan for the future and get a life insurance policy, without breaking the bank: 

1. Be aware of additional extras

You should double-check your quote for any additional extras. Some insurance companies attempt to sell add-ons and can hide them quite well. Many of these add-ons can be useful but it’s worth looking into first before you opt in, as it may make your life insurance plan a lot more expensive than you really need. 

2. Check any workplace benefits 

You may not even need to purchase life insurance as some employers will offer a ‘death in service’ benefit. This means that a nominated family member receives a lump sum, in the event of your death while working for said company. If you are entitled to this, it won’t be as much as you’d get from a life insurance pay out, so do be aware of this. However, it may be enough to cover everything you need, so it’s worth double checking with your employer before taking any policies out.  

3. It’s all about your lifestyle 

Lots of insurance companies base premiums on how healthy your lifestyle is. This can include everything from whether you smoke and drink to how much exercise you do. These questions will be asked when looking for a quote. 

If you’re a smoker and drink more units of alcohol than you should, then it’s likely your policy will be more expensive than someone who doesn’t drink or smoke, for example. If you want to save on your life insurance, it would be worth quitting smoking, cutting down on your alcohol intake and increasing the amount of exercise you do. 

4. When should you take out life insurance?

Death is a very difficult topic to talk about too, and many of us leave decisions on life insurance plans until it’s too late, or too expensive to take out. The sooner you take out a life insurance plan, the cheaper it will be in the long run and the larger the payout will be. 

This is because the longer your insurance company expects you to live, the lower the chances of them paying out. By putting it off, you could be costing yourself and your family lots of money. To save on your plan, you should start thinking about buying one in your 20s and 30s. It can be as simple as putting away ten pounds a month or giving up a takeaway coffee or two each month to put money aside for your future.

5. Be savvy when looking for a plan

The first thing you need to do when looking for a life insurance policy is shop around and see if you can find any deals to help save some money. It may be worth using a price comparison website, like ours, to compare a range of quotes so you can quickly see all the premiums available, and make an informed decision on what’s best for you. 

Life insurance isn’t subject to income tax but it can be affected by inheritance tax. You can sidestep this by having your insurance policy ‘in trust’. This is really simple to do and can be done by anyone who wants to make sure their life insurance isn’t costing more than it needs to. 

By choosing the right policy, you’ll guarantee financial stability for your family in the future. 

For more information and more ways to save on your life insurance policy please read our guide on life insurance here which includes lots of great tips.

*1 Life Insurance survey statistics 

The post Top five ways to save money on your Life Insurance policy appeared first on Money Expert.

Factors such as rampant inflation, supply chain problems, and the aftermath of a global pandemic have all contributed to the current crisis. Essential items such as food, energy, and clothing have become more expensive, putting severe pressure on UK household budgets. However, whilst it’s clear that the entire country is having to cope with these financial pressures, are some parts of the UK struggling to cope more than others? To find this out, we conducted a study to determine the towns and cities across the country where residents are likely to be struggling the most.

In order to get the answer to the above conundrum, we explored three key research points for each major UK town and city. This included trend data from the following data sets: 

• Decreases/Increases in average salary

• Changes in rental payments

• Online searches relating to food banks

The data we gathered helped us to determine the UK towns and cities that have been struggling to cope the most with the ongoing cost of living crisis. Below you can see illustrated on a map the areas that, according to the data, have been hardest hit as each location appeared in more than one top 20 list from the data sets.

Has Lincoln been hit the hardest by the cost of living crisis? 

Lincoln, the historic cathedral city known for its rich history and which often scores highly in ‘happiest places to live’ indexes, is perhaps not the first place you would think would be struggling the most with the cost of living. However, our research identified Lincoln as the only location to feature in the top 20 of all three of our data sets, which focused on rental values, average salaries and demand for food banks. 

Lincoln experienced the most significant surge in average rental costs, which soared by 53.37% between January 2022 and January 2023 (based on two-bed properties). This suggests that like the rest of the UK, demand for housing is far outstripping supply, exacerbated by higher interest rates which is making owning a property more expensive for landlords. 

The city also featured among the areas with the lowest average annual salary increase. just 3.44%. This is of course well below the headline rate of inflation which is still over 10%.

Our research also revealed a worrying 143% increase in the number of people searching for food bank related queries in Lincoln, according to search volume data collected from Google’s keyword planner. This trend demonstrates a growing demand for food banks in the area, potentially indicating that many more people are now experiencing food insecurity or struggling to afford food.

Lincoln wasn’t alone, so how did other towns and cities perform? 

Whilst Lincoln came in at number one in the top 20 list of the hardest places to live during the cost of living crisis, other towns and cities throughout the UK also performed poorly as outlined in our research. 

Sharp Rises in Rental Costs

Average rental costs for a two bedroom property also increased in other areas around the UK too. Whilst York didn’t feature in every top 20 list of our study, the city did see average rents rise by a whopping 52.89% between January 2022 and January 2023. Other locations that saw rental costs increase over the same period include Edinburgh at 43.58% and Slough at 40.95%. 

Money Expert Says: Five ways that could help you reduce your rental payments

The UK’s private rental sector is experiencing high demand for properties in many areas of the country, resulting in higher rental costs and a more competitive market due to the lack of homes available. Whilst this may make it difficult for tenants to negotiate a reduction in rent payments, there are a number of ways that could persuade landlords to reduce any proposed increase. 

Here’s five ways that could help you negotiate a reduction in the proposed increase in your rental repayments with your landlord or property management company: 

1. Research current market rates: Before negotiating, it always pays to do your research of the current market rents for similar properties in your local area. This will give you an idea of what you should be paying for your rental property.

2. Highlight your positive renting history: If you have been a reliable and responsible tenant, highlight this to your landlord or property management company. This shows that you’re trustworthy, reliable and worth keeping on as a long term tenant. 

3. Look at property improvements: If the property you currently rent has any flaws that are cosmetic, or poor insulation that might bump up your energy bills, consider bringing these up with your landlord or property management company. They could be used to make your case for a reduction in the proposed rental increase. 

4. Negotiate additional perks: If the landlord is unwilling to reduce the proposed rental increase, try to negotiate additional perks such as free parking or utilities. These perks can help to offset the cost of the rental.

5. Be prepared to walk away: If the landlord is unwilling to negotiate or if you feel that the rental rise is unfair, be prepared to walk away. Make sure you have a new property lined up BEFORE you make the decision to walk away, as you may find it difficult to find a property to rent in a highly competitive rental market. 

Average Salaries Decreasing

Whilst UK salaries overall have increased over the past 12 months (albeit at a below inflationary level) the city of Gloucester actually saw the largest downturn, decreasing by 6.63% compared to 12 months ago. In addition the West Sussex town of Crawley also fared poorly, with a 5.19% decrease in the average salary during the same period. Perhaps even more remarkably London, which is often associated with big business, high salaries and exorbitant bonuses actually saw average salaries decrease by 3.15% over the last 12 months.

Money Expert Says: How to Negotiate a Pay Rise 

1. It’s your right to ask: You’re well within your rights to ask for a pay rise from your employer, particularly if you’ve been with the company for a while or you feel like you’re underpaid in relation to your current job role. Being transparent with your employer helps open up the conversation and helps you explain why you feel you deserve a salary review. 

2. Show your value to your employer: Provide evidence on everything that you’ve accomplished during your time at the company, focusing on achievements and targets, but also things such as taking on more responsibility and training. Take your line manager or boss through your examples and explain how they’ve impacted the business in a positive way. 

3. Timing is everything: Performance reviews, annual reviews or towards the end of the financial year are usually the best times for employees to ask and negotiate a pay rise. This is because many businesses will be assessing performance, results and making budgetary forecasts for the coming year.

4. Has your work added value?: When negotiating, it’s important you demonstrate how you’re an asset to the company, and why they should recognise and reward your efforts. Provide specific examples of your work or strategies that you’ve implemented, and how this has provided a return on investment. Key examples could be whether your work has encouraged repeat business, directly resulted in an increase in sales or if you’ve saved the company money.

5. Do your research: It’s worth looking into the average salary that your particular job title attracts, which can be found on job sites such as LinkedIn and Glassdoor. Having this knowledge at hand will give you leverage to negotiate a pay rise, but also shows that you’re tuned into the current state of the UK job market. 

Demand for Food Banks Spikes

The impact from the cost of living crisis has meant that an increasing number of UK households have been forced to rely on local food banks in order to feed themselves and their families. This was reflected in our research, which found that Ipswich topped the top list of major UK cities and towns with a staggering year on year increase in searches for food bank related queries of 333%. This was followed by Cardiff, which saw a sharp rise of 256%, and High Wycombe and Barnsley, which both saw food bank related searches increase by 200% each. 

The northern and southern regions of the UK tallied eight towns and cities each in the top 20 list for food bank searches, with Wales seeing only one and the Midlands having just three entries in the list. 

Money Expert Says: How can you obtain help and support from a food bank? 

If you or anyone you know is struggling to pay for food, a food bank could be a short term solution. Here’s how to sign up to a local food bank for help and support: 

1. Referrals: UK residents can access food banks by obtaining a referral from a professional such as a doctor, social worker, or job centre advisor. Referrals may also be obtained from charities, community organisations, or faith groups.

2. Visiting a Food Bank: Once a referral has been obtained, residents can collect a food parcel from the food bank's distribution centre or through a delivery service, depending on the specific arrangements of the food bank.

3. What’s in a Food Parcel?: Food parcels typically contain a selection of non-perishable items such as tinned food, pasta, rice, and cereal, as well as fresh items such as bread, fruit, and vegetables, where possible.

4. Additional Support: Some food banks may also offer additional support, such as advice on managing finances, access to debt counselling, or signposting to other relevant services.
   
   

5. Independent Food Banks: There’s at least 1172 independent food banks operating throughout the UK and are run by local churches, charities or volunteers from the local area. You can find your nearest independent food bank online, on social media or in the local paper, and you can usually visit them to get a food parcel for free without a referral. Taking away the need for a referral has meant that these food banks are often busier than food banks funded by local authorities, so be mindful of this if you need to use one. 

Expert Analysis

When analysing the research conducted for our cost of living study, a spokesperson from Money Expert said: 

"The cost of living crisis continues to be a major concern for many UK households. Higher rents are forcing people to spend a larger proportion of their income towards housing, leaving them with less to spend on other necessities. Lower salaries in certain areas make it difficult to save money for emergencies, which is when we start seeing households having to rely on food banks.” 

“Without significant changes, this cycle will continue to perpetuate, leaving many families struggling to make ends meet. Whether we see positive changes ultimately depends on the actions taken by governments to help address the root causes of the cost of living crisis - an acute housing shortage, low pay and soaring inflation.” 

“Whilst there is some support already in place to help with household bills such as the Energy Bills Support Scheme, which is set to end on the 31st March. There are a number of useful ways of managing money that homeowners can look at to provide themselves with temporary financial relief, but also help to save more in the long run.” 

“Using a comparison site is essential for homeowners to find the best deal for expenses such as utility bills, insurance and mortgages, as it scours the best deals for your requirements. When it comes to renewals for products like insurance, never accept the offer until you’ve done your research on a comparison site, as you’re likely to find a cheaper deal elsewhere. If you find that you’re struggling to pay for your energy bills, it’s worth speaking to your supplier to find out what help is available or whether the tariff you’re on is the right one for your needs.” 

“However, while there may be short-term solutions, long-term systemic change is necessary to truly improve the situation for those affected, such as more energy efficient homes and fairer salaries in line with inflation.”

The post The Cost of Living Crisis: Which UK Towns and Cities have been most affected? appeared first on Money Expert.

Almost two thirds of drivers with dashcams have used footage as part of their claim, and just under 33% of these said the footage helped them prove they were not at fault. Some insurers offer up to 20% discount for those who install dashcams. However, we could see these figures jump in the coming years as over one in two people (54%) agree it should be a legal requirement to have one. 44% expect it will be made a legal requirement in the next few years.

Dashcams aim to catch collisions, vandals, and the thing many of us are guilty of…road rage incidents. Although road rage normally presents itself in the form of a few choice words and hand gestures, it can be a more serious matter. A 2018 report from the Department of Transport revealed that over the previous three years, more than 5,280 people were either seriously injured or killed because of angry driving and road rage.

There is a brighter side to the dashcam’s role and its impact on our driving. One in five people said that they felt installing a dashcam made them a better driver. 48% of people said it was because they felt the dashcam made them feel more alert and 44% said it made them a more confident driver. This could simply be because there is now a tiny digital witness to our own road rage outbursts or because it saves us money. Either way, dashcams appear to be catching on, and catching us in the act.

The post Press Release: 20% use dashcams to save on car insurance appeared first on Money Expert.

The report shows the staggering rate at which both rental costs and hose prices have been increasing in recent years, making it not just more difficult for the younger generation to buy their first home, but increasing the interim costs before they do.

The figures from ARLA apply to first time buyers looking to purchase their property this year, for those starting to rent now, they can expect to have paid an average of £64,400 by the time they come the buy their first home.

The figures were generated for ARLA by the Centre for Economics and Business Research and are based on the average person leaving their family home aged 18, and renting until the age of 31 and the £52,900 figure is a national average ñ the figure for London goes up to £68,300, while in the cheaper north-east, it is lower at £31,300.

London and the south-east (with an average of £55,900) are the only areas where their figure is above the average for the UK.

ARLA 's managing director, David Cox said: "Rents are becoming alarmingly unaffordable due to the lack of available housing" adding that "the north-south divide we 're currently seeing in the UK is a clear illustration of this."

Speaking about the capital, he said: "the London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the south-east of England, as Londoners relocate to avoid high rental costs."

The problem, he said, is one that is only likely to get worse, as the various factors contributing to unaffordability intensify, especially with an interest rate hike on the horizon.

Mr Cox said: "as house price affordability worsens and interest rates start rising, more pressure will be put on renting with weekly rent likely to rise, so home ownership will remain out of reach for many."

Jeremy Leaf, who used to head the Royal Institute of Chartered Surveyors, also warned that the stamp duty changes coming into force in April may actually have an adverse effect on exactly that which they were designed to solve.

"If landlords do exit the buy-let sector en masse post-April as higher stamp duty and less beneficial tax breaks come into force, rents will only rise because there will be fewer properties for tenants to choose from."

Overall, across the UK, rent prices increased by 2.5% over the course of 2015, with England leading the charge with an average increase of 2.7%. Within England, London unsurprisingly saw the largest increase, of 3.9%.

Highlighting the increasing unaffordability of rent, tenant evictions hit record levels last year, with 42,728 households being kicked out of their rented accommodation due to problems paying their rent.

The post Average First-Time Buyer Will Have Paid Over £50k in Rent appeared first on Money Expert.

According to the statistics agency Eurostat, the last three months of 2015 saw them grow 0.3% faster than in the three before. The combined growth of all 28 EU member states also went up by 0.3% in the fourth quarter- this took overall GDP growth for 2015 to a rate of 1.8%.

Last year saw growth in the eurozone slow down, which has prompted many people to begin questioning whether or not more action should be taken in order to help stimulate these economies by the ECB.

An economist at ABN Amro, Nick Kounis, said:

"We continue to think that further monetary easing is required, with further policy rate cuts on the cards from March onwards,"

Eurostat revealed on Friday that the total level of industrial production had also fallen by 1% in December compared with November, this occurred for both the EU and the eurozone. The EU and the eurozone experienced year on year falls of 0.8% and 1.3% respectively.

The largest contraction in the eurozone was in Greece; the economy shrunk by 0.6% in the final quarter, which was actually better than had previously been expected. However the third quarter shrank by more than had been previously thought, changed from 0.9% to 1.4%.

Andrew Walker, an economics correspondent for the BBC, commented on the figures:

Several eurozone governments following austerity policies have faced protests on the streets and at the ballot box.

But could it have been a little easier?

That is where Germany comes in. There certainly is a view that Germany has in effect made it harder than it need have been.

How so? Germany surely is the seat of eurozone financial prudence and virtue? Well, there is a case that those features of Germany are a problem for the others.

Germany saw its economy expand by a total of 1.7% in 2015, posting a 0.3% rise in the last three months of the year. The statistical agency in Germany said that the rate of government spending was "markedly up" while the rate of household consumption was also up. This news came after unexpectedly poor production figures for December.

Thomas Gitzel, chief economist at VP Bank group, said that "slow and steady was the retrospective motto for 2015" and said that whilst fourth quarter growth was "not exhilarating" it was not a reason to be concerned.

This latest set of figures is likely to be of interest to both sides of the EU referendum campaigns. The referendum is looking likely to be held in June or July and economic performance is one of the most hotly contested points on both sides of the argument. The "In" campaign have constantly argued that the British economy benefits hugely from being a member of the European Union, while the "Out" campaign have stated that the UK could better protect its interests if it were free from the economic shackles of the EU.

George Osborne spoke about the referendum in a recent speech and rebuffed recent comments made by the RBS chief, which suggested that the uncertainty surrounding Britain 's membership was damaging the banking sector and businesses at large.

"I don't think uncertainty about future EU membership is harming the UK economy, because the most recent numbers this week show we're creating jobs and employment is at a record high and we're getting a lot of investment. Do I think getting this relationship right for Britain, with the European Union, is important to our economic future? Yes I do, and what the Prime Minister was saying, and what we're saying as a government, is let's reform that relationship, let's allow the Eurozone to pursue, if they want, that ever greater political union. Britain doesn't want to be part of it, but within a reformed EU and with proper protections for countries like Britain that aren't in the Euro, we can have that European Union."

He continued to highlight the fact that the UK is not part of the eurozone and that this makes it ever more vital to find the correct relationship with the EU so that it can be exempt from ever closer political union.

"We've got to get this question right, we've got to get the reforms right, you know, our argument is reform the European Union, make sure that Britain is more comfortable inside the European Union by protecting, as I say, countries without the Euro, making sure we're not we're not part of ever-closer union, making sure we don't have welfare tourism, achieve those sorts of things and make Europe itself more competitive, and then it will be actually a big boost to investment, and that's exactly what the negotiation is all about at the moment."

The chancellor then spoke about whether or not he felt that market analysts were correct to downgrade their forecasts for UK economic growth. He said that the UK 's economy was in a particularly strong position and that this had even been recognised by the International Monetary Fund in recent times. However he did say that the world economy was currently in a dangerous position and that this prevented a risk to countries that were as "open" as the United Kingdom.

"The IMF had their latest forecast this week, and they did downgrade the world economy, but they didn't downgrade the UK, and they kept the UK forecasts where they are, and along with the United States, we're set to be one of the fastest growing of the advanced economies, but clearly we're a big, open trading nation, we're probably the most open of all of the big G7 economies, and so you do look with some concern at what's going on in global markets, and it does present something of a dangerous cocktail out there."

David Cameron also commented on the upcoming EU referendum:

"I want to secure the future of Britain in a reformed European Union. I believe that is the best outcome for Britain and the best outcome for Europe. Now, some people ask me, ëWell, why are you holding a referendum? ' Let me explain why I believe this referendum is so crucial. For years Britain has been drifting away from the European Union.

The increased unpopularity of the EU in the UK has been well-documented and the Telegraph recently announced the results of its commissioned YouGov poll, which showed that the "Out" vote had reached an all-time high lead.

"The European Union has become increasingly unpopular in Britain. And added to that, the succession of politicians, after treaty after treaty after treaty has passed, have promised referendums, but never actually delivered them. And I think it 's absolutely essential to have full and proper democratic support for what Britain 's place should be in Europe and that 's why we 're holding the referendum."

It is as of yet unknown when the referendum will take place but many observers are now beginning to think that June is the most likely date for it to be held. It is thought that the "In" campaign would favour this option as it avoids the risk of a further summer migrant crisis, which could tip the balance.

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Sir John Vickers, who lead the ICB (Independent Commission on Banking), stated:

"The Bank of England proposal is less strong than what the ICB recommended." He went on to say that he didn 't "think the ICB overdid it".

Specifically, Vickers pointed to suggestions that had been made regarding the action which should be taken to ensure that the banks have enough capital at their disposal. The vast majority of this capital comes from the banks ' shareholders, who put their money at risk in return for a share in the profits.

However this year has seen many banks ' lose share price value.

Sir John said:

" The Bank of England might want to reflect on the turmoil we've seen in banking shares. That's a very important lesson that you have to get the basics right,"

There has been an ongoing debate in the financial sector between the banks and the regulators over the amount of capital that it is reasonable to expect the banks to have. The main aim of the regulators is to make sure that the banks do not require another bailout of the scale that was seen during the last financial crisis.

Sir John believes that there is a need for a larger amount of capital because nobody knows just how large the next hit to the system will be.

He goes onto say that shares are the best form of capital because they represent a high quality, tried and tested method.

"A good way to think about it is as an insurance policy," he said. "You do have to pay a premium to insure your house and you hope nothing bad will happen. But if it does, you are much better off in paying that premium, and for full coverage."

"If banks run out of capital, all sorts of havoc could ensue. We want to be in a position where there's enough of a buffer to take any losses that might occur."

"Other types of capital - CoCos, for example - and new forms of loss-absorbent bank debt are welcome but untested. Equity capital is the best shock absorber - even if you haven't got a clue what's going to hit you, it works."

He went on to say:

"The financial crash of 2008 exposed the Big Shortage - of bank capital. Some banks that had lent out, say, 40 times their shareholders' capital couldn't absorb their losses when loans went bad. Hence the taxpayer bailouts and further economic damage from bank lending seizing up.

The clear lesson is that banks, especially major banks providing core retail services, need much bigger safety buffers - more capital relative to loan exposures. Important progress has been made internationally and in the UK on this front, but a key policy question remains open: how big a safety buffer should major British banks have?

On 29 January, the Bank of England set out for consultation its proposed answer. The BoE expects that it would increase capital requirements, relative to banks' exposures, by about 5%. Well worth having, but not ambitious. So on bank safety buffers, the BoE's answer to the question "Are we nearly there yet?" is "Yes"."

The post Sir John Vickers: Bank of England Regulation Not Strong Enough appeared first on Money Expert.

Ross McEwan, the head of RBS, was talking in an interview with BBC programme "Newsnight". In this interview said that the level of uncertainty that is being caused by the EU referendum could "slow down banking" in this country.

He went on to say that he wanted the referendum to be held as early as possible and thought that June would be the best outcome given the current timeline.

He also spoke about whether or not he thought it was likely that the Bank of England would be raising its base interest rates any time soon. He said that he did not expect an interest rate rise until 2017 at the earliest.

Last week the Bank of England released minutes from the most recent meeting on interest rates. The meeting is held by all the members of the interest rates setting committee, which then votes upon whether or not to change the base rate.

The committee voted unanimously, 9-0, for no change to the base rate of interest. Ian McCafferty had been the only one to continuously vote for an increase since August but this time he too voted to keep interest rates at the same record-low that they have been at for years.

Mark Carney, the governor of the Bank of England, said that the decision was an easy one to make given the current economic climate.

"The decision was whether or not to raise interest rates. It was an easy decision not to raise interest rates, now is not the time to be raising interest rates because we haven 't had, in my judgement and the judgement of everyone else on the monetary committee, we haven 't had sufficient build in domestic cost growth. The economy is using up some slack but there 's still a bit more to be done there."

Mr McEwan went on to say that he had seen absolutely no "economic data that suggests we 'd be better off in the short to medium term".

The referendum must take place by 2017 at the very latest but many expect it to be held this year. McEwan added that he thinks that the level of uncertainty surrounding the UK 's membership of the EU was making it difficult for businesses to perform to their fullest potential.

"The issue we've got is the uncertainty which slows businesses down, which will over time slow down banking so it's... really good that the government is trying to have the vote very quickly."

Going on to discuss his views on interest rates, the Royal Bank of Scotland boss said that he does not expect to see an interest rates rise any time soon.

"We're going to have lower interest rates for a lot longer than was anticipatedÖ I don't think we'll have rate rises for all this year and possibly all of 2017 as well.

"We just have to get used to an environment where we have low interest rates for a long period of time."

The recent report that the Bank of England released also downgraded their predictions for the level of wage growth that they are now expecting to see. The Bank of England now say that they think the level of average weekly earning will go up by 3% this year. This is 0.75% lower than the level of 3.75% that they previously predicted three months ago.

Kamal Ahmed is the economics editor at the BBC, he says that it will take as long as 2018 before the Bank starts to see the wage growth that they are hoping for.

"The Bank said that persistent low inflation, increases in population and therefore labour supply and changes in taxes meant that it was unlikely that incomes would increase at the rate suggested last autumn.

It said that wage growth had "eased significantly more" than anticipated.

It will be 2018 before average weekly earnings are increasing at the rate experienced before the financial crisis, the Inflation Report suggested.

Nearly a decade after the start of the financial crisis, the feelgood factor is still pretty muted."

McEwan also discussed the performance of RBS, saying that he thinks that the bank has managed to turn things around under his leadership. However, he also said it was likely that this year would mark the eighth consecutive year of losses for the bank.

The bank has been forced to put away sizeable amounts of cash in order to pay for fines regarding mis-selling Payment Protection Insurance and mis-selling mortgage backed securities.

When compared with the other banks in the city, RBS shares have fallen by nearly 45% in just one year. The public still hold a 73% stake in the company after it needed to be bailed out to the tune of £45bn back in 2008.

When he was asked whether or not he thought that the public would ever get that money back he replied: "At this rate noÖ We'd love to get that money back to the public because it's the public's money.

"But at the time, if they hadn't saved RBS then a lot of the financial services in the UK would have probably collapsed."

Whilst Mr McEwan made it clear that he feels like his, or rather, the public 's bank has turned a corner. This sentiment was not echoed by a recent survey that was performed by Which? consumer group. The survey asked 20,000 people in the time between September and January whether or not they were satisfied with the level of service which they received from their bank. The survey covered current accounts, savings accounts, credit cards and mortgages.

The results of the survey were not good for RBS, who were placed rock bottom of this list. The results also showed NatWest, who are owned by the Royal Bank of Scotland, as second worst. The bottom ten banks included Barclays, Bank of Scotland and Clydesdale, all of whom are part of the Lloyds Banking Group; Lloyds itself came tenth from last.

The survey said that RBS trailed First Direct (in first place) by around 21 percentage points, which only goes to show the uphill task being faced by the government owned institution. Which? published this survey as part of its ongoing effort to get the Competition and Markets Authority to reshape its investigation into the financial sector.

Richard Lloyd, director of Which?, said:

"It 's high time the industry put its customers first, and the competition inquiry needs to ensure banks are held to account for the way they treat them. The big players in this market need to get on the front foot and improve services instead of waiting to be forced into action."

The investigation was due to be reported in May but has already been delayed well beyond that deadline. The chairman of the banking investigation, Alisdair Smith, has said:

"A number of new suggestions have been made, including proposals aimed at achieving better outcomes for current account customers with overdrafts".

These survey results pose a big disappoint to Ross McEwan who has tried to win back support from the bank 's customers. In recent times he has tried to make things easier for customers by scrapping "teaser rates" and 0% credit transfers. There have also been a series of high profile IT failures, including one that happened on New Year 's day which meant people could not use their debit cards in shops.

The head of personal banking and business banking operations at RBS and NatWest, Les Matheson, said:

"While we are disappointed in these results, we are determined to do more and are working with Which? to support its campaign, including raising awareness and education of products, not just for our customers but across the banking industry."

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The chief executive of HSBC, Stuart Gulliver, said that:

"Having our headquarters in the UK and our significant business in Asia Pacific delivers the best of both worlds to our stakeholders."

Following a board meeting in London, the announcement of the decision was made. The bank has currently held its headquarters in London since 1992, where it moved following the takeover of Midland Bank. This news arrives against the backdrop of a week 's break from trading in China due to holiday season. The global markets have continued in tumultuous fashion as fears around the stability of the banking sector persist.

The largest bank in Britain said that it will now put an end to its policy of reviewing HQ locations every three years. The bank did not reveal all considered locations but commented to say:

"In the later stages of the review, the analysis was narrowed down to the group 's home markets, the UK and Hong Kong, both of which are considered by the board to be world-class financial centres with high quality regulatory regimes capable of hosting a global systemically important bank such as HSBC."

HSBC is one of the largest companies on the FTSE 100 and is the largest bank in the UK but times haven 't been great for them recently. Their share prices are currently floating around levels last seen in 2009- immediately after the economic crash. Their chief executive last week said that the bank was currently facing a "very challenging operating environment". He said this as the bank revealed that they were back-tracking on the announced pay freeze that was only revealed two weeks ago.

The review that was conducted by the bank was started back in April, around the same time that the bank issued a warning over the possibility of the United Kingdom leaving the European Union. That review and the statement over the EU provoked many months of fierce political debate, at the end of which the Conservatives took power.

In the time that followed, George Osborne 's rhetoric and policies towards the banks have changed significantly. He initially stated that he would crack down on the way that banks went about their business in order to make them more accountable for irresponsible trading. He also said that he was to reverse the burden of proof with regards to bankers but that has now reverted to normal practice.

The chancellor also changed the way in which banks are taxed. He initially brought in a bank levy on banks ' balance sheets. This system would have hit HSBC harder than any other bank. This has now been cut back and a new corporation tax level is seen as hitting the smaller banks the hardest. Economic experts have worked out that these changes mean that HSBC will now pay roughly £300 million as opposed to before where they would have had to have paid £1 billion.

The bank had also been facing serious questions about the tax practices of its Swiss arm, in the aftermath of many media investigations.

The bank commented to say:

"The UK is an important and globally connected economy. It has an internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs. London is one of the world 's leading international financial centres and home to a large pool of highly skilled international talent. It remains therefore ideally positioned to be the home base for a global financial institution such as HSBC."

The bank also noted the significant steps that the UK has taken to offer the renminbi, the Chinese currency, more exposure on the world markets. HSBC 's strong presence in China means that it is keen to see this happen.

The Treasury said:

" HSBC 's decision to keep the HQ in the UK is a vote of confidence in the government 's economic plan, and a boost to our goal of making the UK a great place to do more business with China and the rest of Asia."

"This is a relief for the chancellor," said Gregor Irwin, a former Treasury official and now chief economist at Global Counsel, a London-based consultancy. "It would have led to questions about his judgment had they left."

"My aim, and what I 'm working to achieve, is making Britain the best place to be a global firm," Osborne said in Davos, which was hosting the annual meeting of the World Economic Forum. "For five years we 've unashamedly backed business, large and small."

If HSBC had left the UK, voters would have been left wondering: "whether the government got the balance right between conservative regulation and raising money from the sector, while allowing the banks to be internationally competitive and operate profitably," said Irwin, who also once worked at the Bank of England. "As it is, it will be a mishap that has been avoided."

Henny Sender of the Financial Times says that there are a number of combining reasons that led to HSBC 's recent decision:

"For a start, the regulatory risk has soared as local and foreign investors have lost their faith in the government and regulators ' ability to manage the markets and the currency. That matters to HSBC because if it had shifted back to Hong Kong, the People 's Bank of China would have been in effect its regulator and certainly its lender of last resort."

"Now though, the opportunity seems both smaller and less seductive. Growth is slowing, albeit off a huge base. The sources of growth are also changing; in future China will be more domestically driven. There will be less business for a foreign bank ó and Beijing will always regard HSBC as a foreign bank."

"Moreover, this is no time to be aggressively expanding in China. Mr Gulliver is an astute risk manager, who was running Asian markets during the Asian financial crisis from Hong Kong. For more than two years he has been bracing for a slowdown in China, reducing his counterparty risk with smaller financial institutions and dealing only with the most blue-chip borrowers. Although the announcement of the decision to stay in London spoke of the "particular emphasis" HSBC is putting on investing further in the Pearl River Delta", it neglected to say that most of that is in financing HSBC 's Hong Kong corporate clients as they go across the border."

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