Barclays was last night accused of charging struggling firms up to 12 per cent interest on Government-backed crisis loans.
Major banks have also come under fire for telling company directors their personal assets will be seized if their businesses fail.
The Coronavirus Business Interruption Loan Scheme was launched by 40 lenders on Monday as part of Chancellor Rishi Sunak’s £350billion stimulus package.
The Government will cover 80 per cent of any losses on bad loans to protect the banks and encourage them to lend.
Barclays was last night accused of charging struggling firms up to 12 per cent interest on Government-backed crisis loans (stock image)
Under the scheme which is administered by the British Business Bank, small and medium-sized firms can apply to borrow up to £5million for up to six years. The first year is interest free.
However, desperate business owners have complained of being forced to wait hours on the phone as they try to get in touch with banks.
One has alleged that he was quoted an interest rate of up to 12 per cent once the interest-free period was over. Patrick Macnamara, founder of London-based Brankfleet Advisors, finally got through to Barclays after spending more than four hours on the phone.
He claimed he was told that the interest rate after one year would shoot up to between 7 per cent and 12 per cent.
Victory for Mail on overdrafts
Banks faced more pressure to act on overdrafts last night after a first high street lender agreed to temporarily waive fees.
The announcement from Barclays came hours after Money Mail called on banks to scrap interest charges to help households hit by the coronavirus crisis.
Lenders are set to hike their rates to as much as 50 per cent from April 6 – despite the cost of borrowing for banks having fallen to a record low. They have been instructed by their watchdog to offer simpler interest rates to make clear how much overdrafts will cost – but many will pay more as a result.
Barclays announced yesterday that it will waive its 35 per cent interest charges on overdraft borrowing between tomorrow until the end of April to provide ‘crucial’ support at ‘this challenging time’.
Lloyds Banking Group, which includes Halifax and Bank of Scotland, is launching a £300 interest-free overdraft, available until July.
Former pensions minister Baroness Altmann said: ‘Let’s hope others rapidly follow suit.’
The 45-year-old father, who advises companies on takeovers and raising funds, does not employ any staff. But he said a number of lucrative deals have fallen through as the economy has been paralysed by the pandemic.
He said: ‘The Bank of England has just cut interest rates to a record low of 0.1 per cent. These types of rates are preposterous, particularly as these loans are guaranteed. It’s outrageous that they will then come after your assets such as your car if you can’t pay.’
Barclays denied that it was charging such rates, but it refused to disclose the range of deals it was offering, saying that they depended on the individual customer.
The Mail approached other lenders including Natwest, HSBC and Lloyds which also refused to detail their rates.
But Ian Cass of the Forum of Private Business, which represents 30,000 small firms, said his members have reported being offered rates of between 8 per cent and 12 per cent. Labour MP Chris Bryant said: ‘Interest rates are at record lows. This is a phenomenal mark-up from Barclays. We bailed out the banks but it seems banks will be making money hand over fist from these new loans.’
A Barclays spokesman said: ‘The Coronavirus Business Interruption Loan scheme requires Barclays to lend according to normal credit policy terms and conditions, which includes when appropriate, personal guarantees.’
Greedy lenders mustn’t punish our small firms
Alex Brummer’s Analysis
A rampaging pandemic ought to have been a golden chance for the big banks to redeem themselves. After all it was taxpayers who helped save them from extinction in the financial crisis 12 years ago.
But even now as the Government and citizens face a battle to save lives and secure the nation’s future prosperity we learn that some lenders are prepared to impose ruinous terms on SMEs – small and medium-sized enterprises.
Britain’s 5million small businesses are the backbone of the economy and employ most of the workforce. If they go under because of unscrupulous behaviour by the banks, we could face a prolonged rather than short-term recession and more years of hardship.
The Corona Business Interruption Loan Scheme unveiled by Chancellor Rishi Sunak (pictured) last week promised to haul SMEs back from the brink as the virus brought the economy to a screeching halt
The Corona Business Interruption Loan Scheme unveiled by Chancellor Rishi Sunak last week promised to haul SMEs back from the brink as the virus brought the economy to a screeching halt.
Now we learn that in spite of the Government’s promise to guarantee up to 80 per cent of billions of pounds of loans made to the sector the banks are being far from forthcoming in advancing credit. Applicants are being kept hanging on the line for hours when they are trying to save businesses and keep staff in work.
Even worse, Barclays, HSBC and Lloyds are still demanding that directors put personal and business assets on the line as additional security for the loans.
Only Royal Bank of Scotland-NatWest, in which the state has a 62.4 per cent stake, is looking to play fair.
Barclays is allegedly telling some customers that when the interest rate holiday ends, after a year, they will demand as much as a 7-12 per cent return. Barclays denies this but it comes when the Bank of England has cut its base rate to a record low of 0.1 per cent.
The idea that the banks would seek to punish firms that survive coronavirus is enough to take the breath away. When the finance system was hours from catastrophe in 2008 Gordon Brown’s government and the Bank of England came through with a colossal bailout. This included pouring hundreds of billions of pounds into the money markets and guaranteeing million of mortgages.
Taxpayers picked up the bill for the banks’ recklessness and lived through gruelling austerity in which incomes were squeezed and public services slashed.
The bankers again seem to be losing their ethical compasses – they usually only do the right thing when shamed into it.
Barclays, for example, has been forced to climb down on withdrawing services from customers at Post Office counters. And it was only in the past 24 hours that it waived heavy overdraft charges for hard-pressed families until the end of next month.
The Johnson government has moved heaven and earth to try to keep firms alive and ensure that growth and employment can eventually return.
That cannot happen if the banks insist on playing hard ball with small businesses, consumers and large corporates. By imposing harsh terms on SME borrowers they betray the broader public interest.
Lenders cash in on coronavirus: HSBC, First Direct and M&S Bank increase overdraft charges up to 39.9% amid crisis while Halifax and Lloyds are set to do same next month
Consumers in Britain face repaying more on personal loans and overdrafts after banks raised the cost as people struggle financially amid the coronavirus pandemic.
Rates on three-year loans have gone up since December, with some of the cheapest offers withdrawn in recent days following a surge in applications.
And overdraft rates will quadruple in some cases from 9.99 per cent to 39.9 per cent in changes brought in before the crisis took hold, reported The Times.
HSBC raised overdraft charges to 39.9 per cent on March 14, up from 9.9 per cent (file image)
Overdraft rates at Halifax (file picture) are set to rise to 39.9 per cent at the start of April
HSBC raised its overdraft charges to 39.9 per cent on March 14, up from 9.9 per cent for premium arranged overdrafts and 19.9 per cent for standard ones.
However HSBC told MailOnline that from this Wednesday it is introducing a temporary three-month £300 interest free buffer on overdrafts, the equivalent of the weekly National Living Wage, for customers with bank account and Advance accounts – an increase on the £25 buffer which recently came into effect.
First Direct and M&S Bank also raised overdraft fees to 39.9 per cent, while rates at Halifax and Lloyds are set to rise to the same figure at the start of April.
However, Lloyds insisted to MailOnline that all of its customers will pay less interest under its new model, with 10 per cent of people paying more overall only due to changes to fee-free buffers – and even then with an average increase of only £1.89 per month.
Meanwhile Nationwide and NatWest already charge 39.9 per cent and 39.5 per cent respectively, according to data from financial analysis company Moneyfacts.
The firm also found that the major banks have put rates on three-year loans of £5,000 up from 7.6 per cent to 7.8 per cent on average since December.
|Provider||Account/Option Name||Old arranged overdraft charges||New arranged overdraft charges|
|Interest rate (EAR)||Interest free amount||Usage fee||Total cost for £50 over 7 days||Total cost for £500 over 30 days||With effect from||Interest Free Amount||Interest Rate (EAR)||Total cost for £50 over 7 days||Total cost for £500 over 30 days|
|Barclays Bank||Bank Account||0.00%||£0.75||per day*||£5.25||£22.50||22/03/2020||35.00%||£0.29||£12.49|
|first direct||1st Account||15.90%||£250.00||£0.00||£0.00||£3.05||14/03/2020||£250.00||39.90%||£0.00||£7.00|
|Halifax||Reward Current Account||0.00%||£0.01||per £6 OD per day*||£0.56||£24.90||06/04/2020||39.90%||£0.33||£13.99|
|Lloyds Bank / Bank of Scotland||Classic||0.00%||£0.01||per £6 OD per day*||£0.56||£24.90||06/04/2020||39.90%||£0.33||£13.99|
|M&S Bank||M&S Current Account||15.90%||£100.00||£0.00||£0.00||£4.88||14/03/2020||£250.00||39.90%||£0.00||£7.00|
|Metro Bank||Current Account||15.00%||£0.00||£0.13||£5.78||25/04/2020||34.00%||£0.28||£12.18|
|Monzo Bank||Monzo Current Account||0.00%||£0.50||per day||£3.50||£15.00||01/04/2020||19.00%||£0.17||£7.20|
|Nationwide BS||FlexDirect||0.00%||£0.50||per day||£3.50||£15.00||11/11/2019||39.90%||£0.33||£13.99|
|NatWest / Royal Bank of Scotland||Select Account||19.89%||£6.00||per month||£6.18||£13.51||02/04/2020||39.49%||£0.32||£13.87|
|Santander||123 Current Account||0.00%||£1.00||per day*||£7.00||£30.00||06/04/2020||39.90%||£0.33||£13.99|
|Starling Bank||Current Account||15.00%||£0.00||£0.13||£5.78||01/04/2020||15.00%||£0.13||£5.78|
|The Co-operative Bank||Current Account||18.90%||£0.00||£0.17||£7.17||04/04/2020||35.90%||£0.30||£12.77|
|TSB||Classic Plus||19.84%||£35.00||£6.00||per month||£6.05||£12.97||02/04/2020||39.90%||£0.33||£13.99|
|Virgin Money / Clydesdale Bank / Yorkshire Bank||Virgin Money Current Account^||12.50%||£6.00||per month||£6.11||£10.86||12/12/2019||19.90%||£0.18||£7.52|
|*Temporary three-month £300 interest free buffer on overdrafts|
Homeowners have been flocking to mortgage brokers for advice following the Bank of England’s emergency interest rate cut to a record low of 0.1 per cent.
But most big banks have not yet passed on mortgage rate cuts to borrowers, although many will be applying for a three-month mortgage holiday.
This comes after those suffering financially during the coronavirus outbreak were told they could suspend mortgage repayments for up to three months.
Since the first cut from 0.75 to 0.25 per cent, only Virgin Money and HSBC said it would reduce standard rates – by the full combined cut of 0.65 percentage points from April 2.
|Average loan rates||Mar-19||Dec-19||Mar-20|
|All lenders £5,000 over three years||6.80%||7.00%||7.10%|
|High street providers £5,000 over three years||8.20%||7.60%||7.80%|
|Other providers £5,000 over three years||5.90%||6.60%||6.70%|
Former pensions minister Baroness Altmann said: ‘I hope that banks will reconsider the egregious overdraft charges, to help their customers weather the storm.’
She told the Times: ‘The self-employed, those who are away from work due to illness or isolation, or those waiting for benefit payments, will all need help.
‘If they are charged such huge rates then banks might be considered to be taking unfair advantage of the situation.’
A spokesman for UK Finance, the bank trade body, said: ‘All providers are ready to offer support to their customers impacted by Covid-19.’
A Lloyds Banking Group spokesman said: ‘Being there for our customers when they need us is our priority. We are making some temporary changes over the coming weeks, and will be providing individual support to customers who need extra help.’
Lloyds Bank, Halifax, Bank of Scotland and MBNA customers will face no fees for missed payments on credit cards, loans and mortgages, payment holidays on mortgages and loans, and emergency access to fixed term savings during the outbreak.
Tracie Pearce, HSBC UK’s Director of Retail Banking, said: ‘The recent changes to our overdraft structure meant that seven in ten customers who went into the red would see no change in cost or it would cost less, with those using an unarranged overdraft, who are potentially the most vulnerable, benefitting most from these changes.
‘With this temporary buffer for the first £300, up to nine in ten customers who use an overdraft will see no additional cost, based on our previous structure.
An M&S Bank spokesman said: ‘From 14 March, the interest-free overdraft amount on the M&S Current Account increased from £100 – £250 and going forward the interest rate charged on any overdraft facility above £250 will be charged at 39.9% EAR.
‘In addition, new M&S Current Account customers will also select the overdraft amount that meets their individual needs, rather than receiving an automatic £500 overdraft, the first £250 of any overdraft amount will be interest-free.’
Will my bank be open during the lockdown? What the High St giants will do for customers needing branches during the coronavirus lockdown
- Bank branches have been put on an exempt list along with supermarkets
- 3,000 have closed since the start of 2015 as people bank online more
- Lloyds said demand for physical business was already lower than usual
- We have asked the six biggest names whether they are keeping branches open
Banks across Britain are allowed to stay open during the coronavirus pandemic, with the Government last night putting branches on the exception list.
That means that during the time that the UK is on lockdown, banks are able to remain open but most are putting place social distancing measures and may close some branches.
This is Money has contacted all of the banking giants to reveal what they are doing for customers and branches as of Tuesday 24 March 2020.
This is Money asked the UK’s biggest banks what their plans were on branch openings – most will be keeping the majority of branches open but they may have shorter hours and will all operate social distancing measures
Banks told This is Money that they would remain open as much as possible, but that social distancing measures may lead to people having to wait outside.
Lloyds said that demand for physical banking was down and it expected that would remain the case. It has closed some of its Lloyds and Halifax branches.
Other banks, including HSBC, RBS / NatWest and building society Nationwide said opening hours would be reduced.
Customers are advised to check on their individual branch before attempting to go there.
The Bank of England has told banks and building societies to keep branches open wherever possible, according to Reuters.
A Bank of England spokesman said: ‘Our current advice to banks and building societies is that they should keep branches and contact centers open, where possible, as they are deemed essential for civil and commercial functions.’
NatWest and its stablemate RBS said branches would remain open for ‘as long as possible’, but some ‘have had their opening hours impacted’.
Branch closures have slashed the network
In the last five years, the bank branch network has dwindled, partially due to the push to online banking, with many customers now choosing that method to perform everyday tasks.
This means banks have closed branches en-masse. Between the start of 2015 and summer 2019, 34 per cent of all branches were closed, amounting to some 3,303 closures, according to consumer group Which?.
RBS closed 74 per cent of its branches. HSBC and NatWest closed nearly half, with Barclays, Lloyds and Santander shuttering around a third.
At the other end of the scale, Nationwide Building Society has kept 96 per cent of its branches open.
However, many still rely on branches across the country to access money and make payments – perhaps as they don’t have online facilities, or simply don’t want to be pushed into internet banking.
However, it did not say any had closed, and said it would let customers know if opening hours changed on its website and in its mobile app.
It asked customers not to come into a branch unless it was necessary, and said it had brought in social distancing, potentially resulting in longer queues although this should not mean longer waits as the line is simply spread out further.
It said in a statement: ‘Our intention is to keep branches open from Monday to Friday, for as long as possible during the day, in line with the relevant public health guidance and subject to colleagues being able to come to work.
‘A number of our branches have had their opening hours impacted due to resource challenges in recent weeks but overall we continue to have high levels of availability’.
Britain’s biggest current account provider has ‘temporarily’ closed 157 Lloyds branches and another 99 Halifax branches.
Its website said other branches will ‘continue’ to open, but told customers only to visit if they are not showing any symptoms of coronavirus.
It has yet to list any other restrictions on branch access however, suggesting those whose local branch is open can go in if they want, provided they do not have the virus.
Its former stablemate TSB meanwhile has temporarily closed a fifth of its branches, and brought in reduced opening hours for a number of others.
HSBC has not confirmed which branches have been closed due to coronavirus, but said its branches ‘are on reduced hours or closed at the moment’.
It said these reduced hours ‘vary branch by branch as they have to react to localised issues’, so customers must check their local branch is operating using its branch finder. This is Money has asked it for a full list of closures.
It also said its phone lines are now open from 8am to 8pm, except for calls relating to lost and stolen cards the line for which is open 24/7.
It said: ‘We’re receiving far more calls than usual, so our wait times are longer. Please only call us if it’s urgent, so we can help those most in need.’
Barclays said on its website: ‘If we temporarily close a branch, we’ll send a text message to anyone who uses it regularly.’
How FSCS protects your savings
The Financial Services Compensation Scheme protects savings and current account balances of up to £85,000 per person in each individually UK licensed bank or building society.
For joint accounts the protection level is £170,000.
Some bank brands share licences, so it is important to check this. If in doubt ask your bank.
The Financial Conduct Authority’s financial services register also shows which banks share a licence. If the banks have the same firm reference number, they share the same licence.
To find out how much of your money in your bank, building society or credit union is protected, use FSCS’s protection checker.
Set up by parliament and funded by the financial services industry, FSCS is independent and free to use.
It has said it has not made any decisions on branch closures, but some may temporarily close due to staff being unavailable.
This would be updated on its branch finder and posters would be displayed outside.
It encouraged those wanting to pay in cheques to use its app rather than visit a branch; and use a debit card to pay rather than cash.
Like HSBC, it said its phone lines were busier than usual and told customers to ‘call only if they have an immediate financial problem that can’t wait.’
Britain’s biggest building society has cut its branch opening hours to 10am – 2pm on weekdays for 450 branches and 9am – 12pm on Saturdays, while it will close 50.
While it previously trialled opening early for elderly and vulnerable people, it has axed that following new Government guidelines.
Face-to-face interviews in branches will be stopped with only counter services provided, and those with pre-booked appointments contacted to arrange alternative ways of communicating.
It said there will be a two-metre distance rule between staff and customers, while the number of people in branches will be restricted.
Its director of branches Mandy Beech said: ‘We remain open and we will try to keep as many of our branches open while we are able to.
‘However, where possible we would ask people, particularly those at higher risk, to use online or mobile banking services and to speak to us if they have any needs or concerns.
‘We thank our members for their patience as we know this is an extremely challenging time for many.’
Santander is cutting its branch opening hours to 10am – 4pm on weekdays and closing them on Saturdays.
It is closing ‘a number of’ branches but said the large majority remain open. All 50 of its university branches will be shut.
Like Nationwide, customers with face-to-face appointments are being contacted and offered online or telephone appointments instead.
It said in a statement: ‘We are closely following Government advice on social distancing and are limiting the number of customers in our branches at one time where necessary.
‘We have posters up across all our branch network advising customers to keep a safe distance from one another and where needed, colleagues are also actively reminding customers to keep their distance.
‘As such, this may mean that when branches are busy, some customers may need to wait outside until sufficient space is available, however, colleagues have been encouraged to serve vulnerable and elderly customers first where possible.
‘We would urge customers to use mobile or online banking wherever possible in order to allow our branch teams to focus on those customers who may need extra support to manage their accounts. We apologise for any inconvenience caused.’