Mortgage rip-off; Foxtons; Richard Branson: Business news in brief Thursday 20 October

FCA could order compensation for home loans rip-off; Foxtons sales fall: Virgin receives 15,000 applications for train driver job

Financial Conduct Authority (Reuters)

Mortgage customers could receive compensation over arrears

Thousands of mortgage customers could be in line for compensation after lenders automatically lumped their arrears balances in with their monthly mortgage payments.

The Financial Conduct Authority (FCA) said the automatic inclusion of arrears balances in customers' mortgage payments lacks transparency and can lead to harm. It can take a customer longer to pay off their debt and can lead to inappropriate fees being charged.

The watchdog said through its work with an industry group representing around two-thirds of the market, it has identified around 750,000 affected customers.

Effectively, firms doing this are collecting the arrears over the remaining mortgage term through a higher monthly payment - as well as continuing to pursue the arrears through their collections processes treating them as immediately payable, the FCA said.

The Bank of England's recent cut in the base rate to 0.25 per cent means the number of borrowers affected may now be greater as the rate change would have prompted some lenders to recalculate some customers' mortgage payments. A rate change can be a trigger point at which customers' arrears balances are automatically bundled into their monthly payments.

The FCA expects lenders to have identified those customers affected by June 2017.

Its work indicates the financial impact on the majority of affected customers may have been relatively small with estimated compensation, where appropriate, likely to be in the low hundreds of pounds per person. In some cases, putting the situation right may not involve paying redress to customers.

But in other situations, for example if the customer was hit with high credit costs such as needing to service a payday loan or a credit card debt because of the situation they were put in by their mortgage lender, they may be entitled to compensation.

PA

Foxtons revenue falls amid reduced activity in London market

Foxtons is seen as a barometer for the London market (Getty)

Foxtons has pinned a fall in revenue on reduced activity in the London property market, months after the estate agent said it was reviewing its expansion plans in light of uncertainty surrounding the EU referendum.

Income from property sales fell 34 per cent to £12.2m in the three months to September 30, with total turnover at the London-focused firm falling 13.7 per cent to £37.5m. Foxtons said the numbers reflect a “continuation of reduced activity in the London property sales market”.

Revenue from lettings came in broadly flat at £22.8m.

In July, boss Nic Budden said uncertainty surrounding the EU referendum had led to slow residential property markets in London during the first half of the year.

But Mr Budden struck an optimistic tone on Wednesday.

He said: “The long-term fundamentals of the London property market remain very attractive and represent a huge opportunity for growth with nearly £3bn in total sales and lettings commissions on 2015 volumes.

“We have built Foxtons to withstand sales market cycles with our lettings revenue comprising over half the business.”

Foxtons said it was committed to opening two more branches in the first quarter of 2017 in outer London, having warned in the month following the Brexit vote that it “may slow the pace of expansion in response to market conditions”.

AP

Americans work 25% more than Europeans, study finds

People work at dusk on various floors of the modern office development at 20 Cannon Street near St Paul's Cathedral (Oli Scarff/Getty Images)

Americans are addicted to their jobs. US workers not only put in more hours than workers do almost anywhere else. They’re also increasingly retiring later and taking fewer vacation days.

A new study tries to measure precisely how much more Americans work than Europeans do overall. The answer: The average person in Europe works 19 per cent less than the average person in the U.S. That’s about 258 fewer hours per year, or about an hour less each weekday. Another way to look at it: US workers put in almost 25 per cent more hours than Europeans.

Hours worked vary a lot by country, according to the unpublished working paper (PDF) by economists Alexander Bick of Arizona State University, Bettina Bruggemann of McMaster University in Ontario, and Nicola Fuchs-Schundeln of Goethe University Frankfurt. Swiss work habits are most similar to Americans', while Italians are the least likely to be at work, putting in 29 per cent fewer hours per year than Americans do.

The study was designed to make it easier to compare countries to each other, by capturing the overall hours per person, not just for people with jobs. That incorporates not just the length of the typical workweek but also retirement, vacation, unemployment, and other time spent out of the workforce.

The study's detailed data could help researchers figure out why Americans toil so much longer than Europeans and which factors most influence productivity.

Bloomberg

Hotel Chocolat profits sweetened by demand for ‘hedonistic chocolate’

Consumer demand for “hedonistic chocolate” has helped drive up sales and profits at Hotel Chocolat, with the firm gearing up for its best ever Christmas.

The luxury chocolate chain said sales rose 12 per cent to £91.1m in the year to June 26, with pre-tax profits rising from £2.9m to £8.2m.

The group, which listed on the London Stock Exchange's Alternative Investment Market in May, added that sweet treats made with less sugar were also proving popular.

“We see an increasing trend that consumers want uncompromisingly delicious and hedonistic chocolate that's also made with responsible amounts of sugar,” Hotel Chocolat said.

PA

Morgan Stanley's earnings jump, helped by trading

The immediate impact of Brexit will likely be felt through the financial channel with volatility in exchange rate and capital-market flows (Reuters)

Morgan Stanley said its earnings soared 62 per cent in the third quarter, thanks to big gains in bond trading.

The New York-based investment bank said Wednesday it earned $1.52bn after payments to preferred shareholders, up from $939m in the same period a year earlier. Earnings per share, excluding an accounting adjustment, were 81 cents versus 34 cents a year earlier.

The results beat forecasts. Analysts surveyed by FactSet expected the bank to earn 63 cents per share.

Like its major competitor Goldman Sachs, Morgan Stanley had a strong quarter on its trading desks, particularly bond trading. Overall revenue from trading jumped to $4.6bn from $3.5bn, excluding an accounting adjustment.

Bond sales and trading revenue jumped to $1.5bn, nearly triple the $583m figure from a year earlier. Stock trading revenue edged up to $1.9bn from $1.8bn.

AP

Facebook adds food ordering feature

Picture: (Stephen Lam/Getty Images)

Facebook said users in the United States would be able to order food through the Facebook pages of restaurants starting on Wednesday as part of its efforts to connect users and businesses.

Users will also be able to get quotes from businesses, buy movie tickets and book appointments at spas and salons, Facebook said in a blog post. It did not say whether it planned to roll out the changes worldwide.

Earlier this month, Facebook launched “Marketplace”, a platform that allows people to buy and sell items locally.

Facebook, which has about 1.7bn monthly active users, also said on Wednesday it would add a “recommendations” feature that will allow users to share recommendations on such things as places to eat.

Reuters

15,000 people apply for 78 Virgin Trains driver jobs

Sir Richard Branson (Rex)

More than 15,000 people have applied for just 78 jobs driving Britain’s newest intercity expresses, according to Richard Branson’s Virgin Trains, which is seeking to fill the posts.

Each of the positions, which are based in London and Edinburgh, received an average of almost 200 applications, spurred by the opportunity to drive the 65 high-speed Hitachi Ltd. trains set to commence operations on Britain’s East Coast main line from 2018, Virgin said Wednesday in a statement.

Training for the first successful applicants will start in January and include airline-style simulator sessions, the company said. Named Azumas — after the Japanese for ‘east’ — by Virgin, the trains will operate services once the preserve of historic steam locomotives Flying Scotsman and Mallard.

Bloomberg

Reckitt Benckiser's sales lose their sparkle

Nurofen - one of Reckitt's flagship products (Rex Features)

Reckitt Benckiser Group reported weaker than expected sales on Wednesday, blaming various issues including a “failed” new Scholl footcare product and becoming the third European consumer goods maker in a week to talk of tough conditions.

The British company joins Unilever and foods group Danone in posting disappointing third-quarter sales amid weakening consumer demand and slowing emerging markets that had more than compensated for growth stalling in European and North American markets.

But Reckitt, whose brands include Durex condoms, Vanish detergents and Mucinex cold medicine, also had its own special problems like disappointing sales for a new Scholl “Wet & Dry” footcare gadget and a boycott of its products in South Korea following a safety scandal involving a water sterilising product.

Reuters

Shell selling 16 assets worth more than $500m

Royal Dutch Shell is currently offering 16 assets each worth more than $500m (£406.2m) for sale as part of its vast $30bn three-year asset sales programme, the oil and gas company's head of upstream Andy Brown said on Wednesday.

The Anglo-Dutch company launched the programme to reduce its debt following the acquisition of BG Group earlier this year. Uncertainty over the future oil price has led to a sharp slowdown in deal making in the sector in recent years.

“There are 16 assets currently in the market that are above $500m in value,” Brown told the Oil and Money conference in London.

Reuters