Nationwide is planning to expand into the Irish Republic next year, giving the UK’s largest building society access to European funds to help combat the effects of the credit crunch.

The mutual has already approached the Financial Services Authority and the Irish Financial Services Regulatory Authority over the move and expects to begin operating early next year.

A spokesman described the decision as a “prudent strategic move … to further diversify its geographical operations and funding opportunities.” The move will give Nationwide a foothold in the eurozone, which would give it access to some of the European Central Bank’s funding for fin-ancial institutions to help ease the effects of the credit crunch.

The building society has more than 800 branches, controls half of all mortgage lending business and is the second largest savings provider in the UK.

However, Nationwide’s Republic of Ireland customers will not enjoy the same range of products as their UK counterparts. Customers in the Republic will have access to just two products – an instant access savings account and a fixed-rate bond, available by phone, post or online.

A spokesman for Nationwide said: “It is too early to say how the interest rates for these products will compare to the UK market, although they will be competitive for the Irish market.”

There are no immediate plans to open branches in the Republic or offer customers more complex products like mortgages. This also means that Irish customers will not have access to the membership and voting rights that Nationwide’s UK investors enjoy.

“This is a relatively small but growing market and there could be scope for a more wide-ranging product line in the future,” the spokesman said.

Further details of the expansion will be made available after formal applications to the UK and Irish regulators.

News reported by The Independent

A mortgage broker who submitted false mortgage applications to lenders has been banned for life by the Financial Services Authority (FSA).

Omotayo Fawole who ran Oasis Mortgage and Financial Services, in Woolwich in South East London was also fined £100,000 by the city watchdog.

So far this year the regulator has taken similar action against 17 other brokers, mainly in London.

Mr Fawole’s actions were described as “serious and blatant”, the FSA said.

“He poses an immediate risk to lenders, ” added Margaret Cole of the watchdog.

“We have banned a number of mortgage brokers and others this year in connection with mortgage fraud and we will continue to make examples of people who commit mortgage fraud until behaviour changes.”

Tip-offs

The FSA said Mr Fawole had lied by exaggerating his income to obtain a mortgage for both himself and an employee.

The regulator has been worried about mortgage fraud for the past two years, a problem which is now leading to losses at some lenders such as the Bradford & Bingley.

In July the FSA called on more lenders to tip it off about suspect applications and brokers.

So far it has received about 300 tip-offs, but only from 35 of the UK’s 150 lenders.

It now wants the others to be more vigilant.

It has also said it is worried about the potential for fraud against lenders who give mortgages on inflated valuations to buyers of newly built city-centre flats.

News reported by The BBC

The government may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds if it wants to recover from a credit crunch.

The option is one of a number raised by Sir James Crosby as part of a report commissioned by the Treasury that looks at ways to revive the mortgage market.

But such a move would be controversial and could be seen as the partial nationalisation of mortgage finance.

It comes as figures showed new mortgage approvals had fallen to a record low.

‘Gloomy’

Sir James is the deputy chairman of the City watchdog, the Financial Services Authority.

“Without action, the situation in the housing market will be worse than it needs to be” Michael Coogan, Council for Mortgage Lenders

According to the BBC’s business editor Robert Peston, Sir James’s assessment of the health of the British mortgage market is about as gloomy as it is possible to be.

In recent months, the availability of mortgages has been reduced by banks and building societies, and many of them are asking for larger deposits or are lending smaller amounts.

Sir James fears that a long-term mortgage drought would turn the current downturn in house prices and consumer spending into something considerably worse.

The Council for Mortgage Lenders (CML) agreed, urging the Treasury to work “with urgency” to find ways to plug the gap in mortgage funding.

“Without action, the situation in the housing market will be worse than it needs to be,” said CML director general Michael Coogan.

“The housing correction will overshoot, and the knock-on effects on the wider economy will be significant,” he said.

‘Financial stability’

One option for improving the availability of mortgage finance would be for the government to guarantee new better quality mortgage-backed securities, to re-stimulate demand for these securities.

That may be necessary, Sir James said in the report, in view of the government’s objectives of supporting financial stability and operating in the long-run interest of consumers and the economy.

However, he pointed out that the government would need to ensure that any steps it took did not create a “moral hazard”, where there was less of an incentive for participants in the market to behave responsibly.

According to the BBC’s business editor, any such plan where the government guaranteed bonds would essentially be seen as the taxpayer underwriting the mortgage market, and would be immensely controversial.

That is why the Chancellor is studying the proposal, but is not yet ready to commit to it, our correspondent said.

‘Housing bubble’

Send us your commentsThe Liberal Democrat Treasury spokesman, Vince Cable, told the BBC before the publication of the report that he was uneasy with the idea for two reasons.

“First of all this is a straightforward proposal to let the government take the risks for private lending and companies will continue to make their profits from it,” he said.

“Secondly because it could have an effect of simply reflating this housing bubble that is now bursting in a rather painful way and reflate it in a way that prevents first time buyers ever getting on to the ladder.”

The Conservative shadow chief secretary to the Treasury Philip Hammond insisted there is a “need to be very careful before we put any more taxpayers’ money at risk”.

‘Liquidity scheme’

This is one of a number of other options outlined in the interim report, which also includes industry-led initiatives to facilitate the development of a “gold-standard” for mortgage-backed securities.

The Council for Mortgage Lenders said it disagreed with a government led approach and instead favoured an expansion of the Bank of England’s Special Liquidity Scheme to encourage banks to issue more bonds and stimulate mortgage lending.

“It is right for the market to help itself and to heal its own problems,” the CML’s director general Michael Coogan told Radio 4′s World at One programme.

“It is not for the government to bail everyone out every time. We are looking for an approach that will provide short-term assistance to kick-start the mortgage market.”

Sir James Crosby said he would work with interested parties over the summer months and produce his recommendations “as soon as possible thereafter”.

News reported by The BBC

Morgan Stanley’s decision to take a short position in HBOS, whose £4bn rights issue it had underwritten, was cleared by City regulators yesterday.

The Financial Services Authority is satisfied that the decision to take the short position was made by the investment bank’s trading desk entirely separately from the underwriting department, which had inside information about the performance of the issue. Morgan Stanley is said to have kept the watchdog informed of its intentions throughout the process.

The investment bank surprised the market on Monday by declaring a 2.35 per cent short position in HBOS taken out on Friday, the day the rights issue closed.

HBOS’s shares had traded below the 275p rights price all morning but they jumped soon after the offer closed at 11am as short sellers started covering their positions. Better-than-expected results from Citigroup in the US added to demand for the shares as long investors sought exposure to the banking sector. The shares continued to rise, closing up 5 per cent at 282p.

Morgan Stanley’s trading desk decided to sell shares it did not own to satisfy the demand, which might have evaporated by Monday if there had been bad news on the financial sector. The bank’s trading desk also knew that Morgan Stanley was going to be on the hook for a large chunk of the £2.6bn of unsold HBOS stock.

The episode would not have come to light if the FSA had not introduced new rules forcing holders of short positions of more than 0.25 per cent in companies conducting rights issues to disclose their bets.

It was widely believed in the market that the issue had received a low take-up because HBOS shares had traded below the rights price in the crucial few days before the closing date. Barclays had revealed earlier on Friday that its offer of £4bn to existing shareholders had received a take-up of only 19 per cent.

The bank had not shorted HBOS’s shares at any time during the rights issue process, despite being allowed to do so, though it shorted other banks as proxies to hedge its exposure.

Dresdner Kleinwort, the other underwriter of HBOS’s rights issue, has not declared a short position in the bank

HBOS shares fell 1.3 per cent yesterday, in line with the sector, to close at 261p.

>News reported by The Independent

Banks have been given another six months grace to put off dealing with customers who want their overdraft charges refunded.

The Financial Services Authority (FSA) has extended a decision which it first put in place a year ago.

The FSA said it had done this to help the courts decide the fairness of bank overdraft fees.

Bank charge campaigners said they were not surprised, but argued the situation was grossly unfair to customers.

‘Unhappy’

“It’s about time that there was some reciprocal obligation on the banks to stop their enforcement procedures” Marc Gander, Consumer Action Group

It is thought that tens of thousands of bank customers have had their complaints put on hold pending a resolution on the legality of overdraft charges.

Marc Gander, of the Consumer Action Group (CAG), said banks should be stopped from continuing to levy overdraft fees on customers who had lodged complaints.

“It’s about time that there was some reciprocal obligation on the banks to stop their enforcement procedures,” he said.

“They should be stopped from defaulting people on disputed sums and instructing debt collection agencies on a matter which the banks are likely to lose,” he added.

However, the consumers’ association Which?, which has also been campaigning on the issue, described the waiver as a necessary evil.

“Scrapping it won’t get people their money back – only the banks can do that by conceding defeat and paying up instead of continuing to string out the process,” said Louise Hanson of Which?

Hardship

The FSA explained that it was extending the suspension of its normal rules, which require banks to deal with complaints promptly, because the High Court has still not decided if bank overdraft charges are unfair or not.

Banks “will not be required to handle complaints relating to unauthorised overdraft charges within the time limits set out in the dispute resolution manual,” the FSA said.

The regulator also pointed out that it had made its guidance to banks on dealing with hardship cases more explicit.

Defining hardship as an income “insufficient to cover reasonable living expenses and meet financial commitments as they become due,” it said that banks might deal with customers in this situation by waiving charges in the future, or not enforcing past ones if the debt itself consisted of previous overdraft fees.

Despite this, another bank campaigner, Martin Lewis, said the waiver extension was a “kick in the teeth”.

“It’s nearly a year since the FSA first kiboshed reclaiming, and people are still sitting on their hands, unable to try to reclaim money,” he said.

“How long are people expected to wait? Another six months? Until it goes to the Court of Appeal? The House of Lords? The European Court?” he asked.

More hearings

The FSA says it will review the waiver again before it expires at the end of next January.

Meanwhile the general stay on new cases being dealt with in the county courts and with the Financial Services Ombudsman (FSO) is also still in operation.

A second round of High Court hearings involving the banks and the Office of Fair Trading (OFT), which may finally decide if bank charges are fair or not, is expected to start before the end of the year before Mr Justice Andrew Smith.

Earlier this year he ruled that the OFT had jurisdiction in the matter, and he has recently been asked to rule if fees levied under previous bank terms and conditions can also similarly be assessed by the OFT.

But any appeals on the issue of the OFT’s jurisdiction, or the fairness of the fees themselves, could drag out the issue far into next year

News reported by The BBC

Close Brothers, the UK merchant bank, has pledged to appeal after the financial regulator slapped it with a record £4m fine for alleged market abuse at one of its subsidiaries.

The Financial Services Authority (FSA) handed down its highest ever censure for a regulated company to Winterflood Securities, Close’s market making arm, over share dealing in a company listed on London’s Alternative Investment Market in 2004. Two Winterflood traders have also been named in the FSA’s preliminary judgement, and have been handed fines of £200,000 each.

Close yesterday referred the regulator’s decision to the Financial Services and Markets Tribunal (FSMT), an independent body that oversees the FSA’s decisions. “With the support of Close Brothers, Winterflood has vigorously contested the FSA’s allegation and, after careful consideration and on legal advice, has exercised its right to refer the FSA decision to the FSMT,” the financial services group said.

Should the FSMT overturn the decision, the FSA’s enforcement division, run by Margaret Cole, can appeal to reinstate the original ruling. Should the independent body reject the motion, the FSA can take the case to the Court of Appeal, a spokeswoman for the regulator said today.

The fine relates to dealings in Fundamental-e Investments, a computer components company listed on AIM. Winterflood acted as a market maker for the stock and “executed the majority of the relevant trades” under investigation by the FSA, Close said. The FSA alleged that Winterflood “failed to have appropriate regard to warning signs and failed to ask questions about the propriety of the third-party trades in Fundamental-e executed by Winterflood, and thereby committed market abuse”. The regulator alleged that Wins and its traders unwittingly committed market abuse rather than deliberately.

The FSA started investigating Fundamental-e in July 2004 over fears the stock had been ramped after the shares spiked from just under 4p at the start of the year to almost 12p, before dropping 32 per cent in a day. Today Fundamental-e is worth less than a penny.

The case focuses on the involvement of a small stockbroker called SP Bell. The group was too small for Winterflood to normally deal with so Pershing Securities, the clearing and settlement business, acted as a middleman to trade in Fundamental-e stock. SP Bell fell into administration that year and it emerged that it had invested £10m of its clients’ money in Fundamental-e without their authorisation. The head of SP Bell, Simon Eagle, turned out to be the chairman of Fundamental-e as well and his father was the computer group’s largest shareholder.

The clients then refused to pay for the shares, which were left on Pershing’s books. After the scandal erupted, Pershing sued Wins saying it had been left out of pocket by the dealings and Wins should have checked the trades were authorised. The companies settled out of court in 2006.

News reported by The Independent

Three brokers have been banned in a week by the Financial Services Authority as it continues a crackdown.

Sadia Nasir, a director at London Mortgage and Financial Services, was the first broker to be banned and fined for submitting fraudulent applications.

Robin Knox, director at Darlington firm Mortgage and Property Services Limited, was banned and fined over the way the company recommended sub-prime loans.

A former shares broker has also banned in the past week.

Thirteen mortgage brokers have now been banned by the FSA this year which is conducting a high-profile clampdown.

‘Serious and blatant’

Ms Nasir’s firm traded as House of Finance.

“Perpetrators will increasingly find themselves facing bans, heavier fines and having to disgorge illicit fines” Margaret Cole, FSA

The FSA said that she submitted seven mortgage applications containing false information about her employment and earnings which were supported by falsified documents.

In four cases she entered her own bank account details on clients’ mortgage applications and the FSA said she withheld information from its investigators.

“Ms Nasir’s actions were particularly serious and blatant, and she poses an immediate risk to lenders,” said Margaret Cole, director of enforcement at the FSA.

As well as banning Ms Nasir, the watchdog fined her £129,000 – which it hoped would act as a deterrent and claw back any illicit profits.

Ms Cole said the case was an example of how the FSA would “intensify” its crackdown on mortgage fraud.

“Perpetrators will increasingly find themselves facing bans, heavier fines and having to disgorge illicit fines,” she said.

‘Unsuitable advice’

In an unrelated case, mortgage broker Robin Knox, who is based in the North East of England, was banned after the FSA found he had exposed 500 customers to the risk of receiving unsuitable advice.

Mr Knox, managing director of Mortgage and Property Services Limited, was also fined £17,500.

The FSA said the firm’s advisers recommended unsuitable mortgage contracts to customers, such as sub-prime deals when mainstream mortgages were available.

Mr Knox also failed to ensure that the levels of fees were made clear to customers.

“We are continuing to find instances where mortgage brokers are unwilling or unable to maintain the standards we require,” said Jonathan Phelan, of the FSA.

The watchdog has also taken action against a former shares broker for selling high-risk shares to customers without their consent and using “unacceptable” sales tactics.

Baljit Somal, who was employed by Square Mile Securities Limited from October 2002 to September 2007, was banned and fined £16,000.

News reported by BBC