Npower To Pay £3.5m To Vulnerable Customers

Npower has agreed to pay £3.5m to vulnerable customers after an Ofgem investigation found the energy firm breached sales rules.

Regulator Ofgem said the failings of doorstep and telesales staff meant customers were not able to make informed decisions on whether to switch suppliers.

The company remedied the shortcomings by September 2012 but has agreed to make a payment of at least £25 to each of its customers who receive the Warm Home Discount.

Ofgem said npower gained insufficient information about a customer's consumption to enable them to decide whether to switch.

It also failed to ensure that comparisons between the price of npower's supply and that of the customer's current supplier were always based on the tariff that customers were on.

And information on when some consumers would receive their direct debit discount and how direct debit levels would be reviewed was also found to have been inaccurate.

Npower said it would write to customers affected by rule breaches

Sarah Harrison, from Ofgem, said: "npower has done the right thing by stepping forward and recognising that, whilst it was making changes to improve its sales processes, weaknesses remained which affected consumers' ability to compare supplier offers fairly.

"These issues have been fully addressed by npower and Ofgem welcomes the company's actions and its agreement to pay £3.5m to directly benefit vulnerable consumers.

"Ofgem will continue to hold companies to account to ensure rules to protect energy consumers are met and that the market works for consumers in a simpler, clearer and fairer way."

Paul Massara, npower's chief executive, said: "We've worked very closely with Ofgem as they've investigated these previous issues. It's good to draw a line under this, so we can focus on our goal of becoming number one for customer experience by the end of 2015."

Consumer Focus director Adam Scorer said: "Mis-selling is the original sin of energy competition. Npower had misled customers by phone and on the doorstep from 2010.

"Ofgem is right to make sure action is taken and that companies compensate consumers directly."

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Mortgage Misery For Millions If Rates Go Up

By Ed Conway, Economics Editor

Around four million families would not have enough cash to pay their mortgage if interest rates rose to barely half the rate they were before the crisis, according to Bank of England research.

The warning from the Bank comes amid growing speculation that it may begin to consider lifting the cost of borrowing within months.

Research published in the Bank's Quarterly Bulletin sketches out a worrying picture for UK households in the event of an increase in the cost of borrowing.

The Bank's statistics show that if rates rose by 2.5% to a level of 3%, more than half of the eight million families with mortgages would not have enough in their monthly budgets to afford the increased interest payments.

They would be forced to cut their spending or work longer hours.

However, the Bank said that if families' incomes increased by 5% in the coming years, then the proportion of mortgage-holders struggling to manage their payments would be around a third.

Insiders also pointed towards the fact that at present investors only expect interest rates to reach 1.7% by the end of 2016 - significantly lower than the 3% level in the Bank's scenario.

The shock would not be limited to those with mortgages. The Bank's report also found that almost 5% of small businesses in the UK faced a 50% or greater chance of defaulting if interest rates rose by four percentage points.

However, the report also found that for many families the current debt burden decreased over the past year.

The proportion of mortgagors struggling to pay for their accommodation remained relatively unchanged; the share of households worried about their debt levels dropped from 46% to 39%.

The most strain over the past year was felt by those who rent their home. The Bank's research shows that the number of renters who face credit card and unsecured loan interest bills of more than a fifth of their incomes has risen from 800,000 to 1.1 million this year.

The worry is that the households most exposed to debt problems are those who are renting, are unable to rely on the capital value of their home, and who have had to take out large loans to sustain their lifestyles.

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Ban Payday Loan Ads On Kids' TV, MPs Say

Payday lenders should be banned from advertising on children's television to stop young people believing that getting money is "easy", MPs have urged.

The Business, Innovation and Skills Committee (BIS) recommended stopping advertising on programming aimed at children after hearing fears that the next generation is being "groomed" towards borrowing money.

Recommendations by MPs also included tackling nuisance emails and texts to people who are "at their lowest ebb", forcing lenders to contribute cash towards debt advice and improving the way they share information.

Wonga says it does not advertise on children's TV channels

The committee heard evidence from consumer campaigners who warned that "cartoon puppets" used on payday lenders' adverts suggested that taking out a loan can be fun.

Martin Lewis, founder of consumer website MoneySavingExpert.com, said: "From our own research, we know children ask their parents to get a payday loan to buy them toys.

"Whilst parents have the power to say no, it's evidence that kids see this dangerous type of niche borrowing as part of everyday life."

Wonga, one of Britain's most high-profile payday lenders, is well known for its TV ads featuring a trio of elderly puppet characters named Betty, Joyce and Earl who explain the process of taking out a short-term cash loan to viewers.

But a Wonga spokeswoman said: "The idea that Wonga advertises on children's TV channels or programmes is a myth.

"We have a strict, long-standing policy not to advertise in this way."

The Consumer Finance Association (CFA), whose members include The Money Shop, Quick Quid and Cash Converters, also said its members do not advertise on children's TV channels.

Committee chairman Adrian Bailey said: "It is worrying that our children are being exposed to such an extent to adverts that can present payday loans as a fun, easy and appropriate way to access finance.

"Children's programmes are simply not an acceptable place for payday loan adverts."

The rapid expansion of the payday firms and a rocketing number of calls for help being made to charities by people drowning in debt are "not unrelated", he said.

The committee called for a levy paid by payday firms, under regulatory requirements, to be ringfenced by the Money Advice Service. This money could be used to boost the provision of debt advice to struggling borrowers.

The estimated size of the payday loan sector has doubled over a five-year period to be worth around £2.2bn.

Payday lenders have come under intense criticism this year, with the Office of Fair Trading (OFT) referring them to the Competition Commission for a report due out in 2014.

The Government announced plans last month to place a cap on the total cost of a payday loan.

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National Grid To Ask Firms To Ration Power Use

Businesses may be asked to switch off their electrical equipment next winter in exchange for payment.

The National Grid says it could pay firms to cut their energy use on winter evenings in 2014 to help it cope with greater demand for energy use than it can provide.

The move, which has echoes of the blackouts in the early 1970s, comes amid warnings from the regulator Ofgem about the risk to the country from power shortages by the middle of the decade.

Ofgem says National Grid would offer businesses the chance to reduce their electricity use between 4pm and 8pm on weekdays in return for a payment.

The amount of money they are given would depend on how much they are prepared to accept in negotiations with the National Grid.

Britain's electricity network provider has not decided if it will definitely implement the scheme as it is too early to determine if it has enough energy supply for next winter.

A spokesman said it will make the decision in the new year.

The measure is one of two being being considered to help it cope with the possibility of tighter electricity supplies next winter.

The other gives National Grid the ability to agree contracts with power stations to provide extra reserve power.

Mothballed gas-fired plant and other generators would compete for these contracts.

A spokesman for National Grid said: "We welcome Ofgem's approval of the two new balancing services which are sensible measures to have in place for the next few winters with tighter margins.

"These services are an insurance policy and will be used as a last resort if electricity margins tighten."

Ofgem chief executive, Andrew Wright, said: "Our latest assessment on security of electricity supplies published this summer showed that electricity margins are set to tighten more quickly than previously expected in the middle of the decade.

"This is mainly because older coal power stations will close sooner.

"Britain has one of the most reliable power systems in the world, but with margins tightening there can be no room for industry complacency on security of supply.

"Therefore we have approved these new tools to act as an extra insurance policy that is available for National Grid to protect consumers' power supplies."

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Festive Decorations Firm Calls In Administrator

By Mark Kleinman, City Editor

The company which puts up Christmas decorations in major UK shopping centres including Bluewater and Lakeside will on Friday fall into administration after axing its entire 190-strong workforce.

Sky News has learnt that Fuzzwire, which has contracts with many of the largest British property companies, is to call in FRP Advisory, the professional services firm, to oversee the administration.

Around 65 of the jobs at Yorkshire-based Fuzzwire were full-time, with the remainder split between part-time roles and about 80 self-employed contractors, many of whom are former military personnel responsible for the precarious task of erecting and dismantling the decorations.

The redundancies were made earlier this week by directors of Fuzzwire, insiders said.

Fuzzwire was formed from the merger of the sector's two major players, Centre Design and LDJ Design and Display, but is understood to have experienced difficult trading and cashflow problems in recent months.

The company also has contracts with malls such as Newcastle's Metro Centre and Canary Wharf in London.

Fuzzwire's contracts have already been transferred to MK Illuminations, an Austrian-owned company, reassuring shopping centre-owners that the decorative displays currently in place will be removed in the new year.

It is unclear whether MK Illuminations will hire the same contractors to undertake the work.

Andrew Sheridan, a partner at FRP, said in a statement issued to Sky News: "The assignment of Fuzzwire's UK contracts was made in order to safeguard the sound management of the Christmas decorations already in place and to ensure a smooth operational framework is in place to allow for their removal seamlessly to timetable in the new year and to ensure there is a continuing relationship for reinstallation of decorations at a range of shopping malls at future seasonal periods in 2014 and beyond."

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Christmas Debts 'Won't Be Cleared Until June'

The average family is going to take on debts this Christmas that will take until June to pay off, it has been claimed.

The Trades Union Congress has carried out research that shows that the typical family will add £685 to its borrowing by the time the festive season is over.

That will take a family on an average income 24 weeks to pay off, the labour organisation claims.

Last Christmas, one in six families borrowed money to pay for food, drinks and presents, with households borrowing an average of £654 per adult (Men £1,000, women £547).

Using average weekly earnings and savings data the TUC estimated that it took average-income earners 20 weeks to pay off this debt.

This year, consumer debt has increased by 4.9 per cent. The TUC's calculations estimate that it will take four more weeks for an average-income earner to pay back the extra debt burden they will take on.

If a minimum wage worker were to borrow the same sum it would take them an entire year working full-time to pay it off.

The TUC says the findings underline how ordinary people are not benefiting from the recovery and are instead facing a bigger struggle to pay off their debts.

The study has emerged on the day when the Bank of England has warned of the scale of the debt burden weighing on British families.

According to the TUC, British workers are currently suffering the longest real-wage squeeze since the 1870s, with inflation rising faster than wages for the last 42 months.

It says the government needs to make fairer pay rewards a priority.

Nicola Smith, head of economic and social affairs at the TUC, told Sky News: "It's to do with the fact that is an expensive time of the year for everybody, and with wages hardly having kept up with prices for the last four years, with family incomes under historic pressure, just meeting the basic costs of Christmas is going to mean a lot more people having to rely on credit."

She said the problem was that most growth in the economy was being provided by consumption and because pay was not keeping up with prices, the extra money people had to spend on buying goods was coming from borrowing.

"People are having to borrow to make up the extra spending that is driving growth in the economy," she said. "It's really worrying that that does not provide us with a sustainable basis for a recovery going forward."

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BlackBerry: £2.7bn Loss As Revenue Plunges

BlackBerry has reported a loss of £2.7bn ($4.4bn) in its third quarter, as its market share has continued to slide.

The makers of mobile phones and other electrical products also said that its revenue dropped by 56% in the same period.

BlackBerry, which at its peak was the third biggest manufacturer in the market, has been struggling to compete as Apple, Samsung and other smartphone makers have come to dominate the market.

The results are the Canadian firm's first under new chairman and interim chief executive John Chen.

Mr Chen said: "The most immediate challenge for the company is how to transition the devices operations to a more profitable business model."

The shares of BlackBerry, which was previously known as Research In Motion, tumbled more than 7% in pre-market trading.

During the quarter, which ended November 30, 2013, BlackBerry sold 1.9 million mobile phones, compared to 3.7 million in the previous quarter.

The launch of the BlackBerry 10 has failed to turn around fortunes

This year's launch of BlackBerry 10, its revamped operating system, and fancier devices - the touchscreen Z10 and Q10 for keyboard loyalists - was supposed to rejuvenate the brand and lure customers.

But the much-delayed phones failed to turn the company around and have led to a billion-dollar loss last quarter and a multibillion-dollar loss in the third quarter.

BlackBerry also announced it is entering a five-year partnership with Foxconn, the world's largest manufacturer of electronic products.

Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory of them.

BlackBerry reported revenue of £730m ($1.2bn), down 56% in the same quarter last year.

Its adjusted loss from continuing operations was £216m ($354m), or 67 cents per share.

Analysts polled by FactSet, on average, expect a loss of 43 cents per share on revenue of £1.02bn ($1.66bn).

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UK GDP: Economy Growing Faster Than Expected

Britain's economy has grown faster than expected, despite fears there is underlying fragility.

The Office for National Statistics said British gross domestic product (GDP) grew by 0.8% in the third quarter, confirming previous estimates.

Annual GDP grew by an upwardly-revised 1.9% in the third quarter or three months up to the end of September, compared with output a year earlier, the ONS added on Friday. The prior estimate had stood at 1.5%.

At 0.8%, the quarter-on-quarter rate marked the fastest pace for more than three years.

The data came at the end of a week in which Britain announced a larger-than-expected drop in unemployment.

Also on Friday, the ONS said the government's public sector net borrowing requirement, excluding taxpayers' money used to rescue banks, rose to £16.5bn in November compared with £15.6bn a year earlier.

Ahead of the data, Standard and Poor's confirmed its top AAA credit rating for Britain, noting the government's commitment to reducing its budget deficit even if the deep austerity measures continue to slash public sector jobs.

Offsetting these losses has been a pick-up in jobs created by the private sector.

But the growth data comes as a jittery retail sector slashed prices ahead of Christmas, suggesting it fears the public's ability to spend is being restricted by wages that have yet to rise.

Howard Archer, chief European & UK economist at consultants IHS Global Insight, said: "Markedly rising employment and a robust housing market will likely underpin consumer spending over the coming months.

"If the recovery is to be sustained at a healthy pace, it really does need a marked, extended pick up in business investment and for exports to improve markedly."

The growth rate will be hailed as good news for the Chancellor amid sustained concerns over the pressure on living standards from families' static incomes.

A Treasury spokesperson said: "Today's data show that the recovery has been stronger than previously thought and that the government's long-term economic plan is working.

"But risks remain and the job is not done, so the government will go on taking the difficult decisions needed to deliver a responsible recovery for all."

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Christmas Shoppers To Spend £12bn In Four Days

By Emma Birchley, Sky News Reporter

Shoppers are expected to spend £12bn in just four days as they make the most of slashed prices and promotions, according to retail forecasters.

The deals are being offered as a fierce battle for sales rages both on the high street and online.

Alan Dadswell relies on Christmas to keep his shop Toys 'N' Tuck in Southend-on-Sea going and he says discounts are crucial.

He said: "To get people to spend the money they have got to feel they are getting a bargain and we have got to give them a bargain. We have to hunt with our suppliers to do good deals to get people in to the store."

A sluggish autumn has put added pressure on retailers.

But with 74% of shops offering deals, 13 million people are expected to shop on the high street on the last Saturday before Christmas.

It will help that many people finished work for Christmas on Friday.

Offering discounts at Toys 'N' Tuck in Southend-on-Sea is crucial

But Diane Wehrle, from the shop footfall monitors Springboard, says shoppers are getting increasingly canny.

She said: "Tactics definitely come into it. Shoppers are becoming much more savvy than they used to be. They understand that retailers are slashing prices. They understand they are doing one-off specials and they wait for them.

"So they perhaps go window shopping before the Christmas trading period starts, look out for what they want to buy and then buy them when they are on offer."

Lizzy Clarke, armed with bags of gifts in Southend, has made the most of the offers.

"They've got some great deals ... 75% off in some stores and I've just bought some jumpers that cost me £30 last week and this week have cost me £7," she said.

But Rob Antoniazz, who is unconvinced, said: "The decent items in good shops are never up for sale because the demand is there to buy them."

Tesco's distribution centre in Erith, Kent, has gone into overdrive

Half of the money being spent in the four days to the end of Monday will be on food, with £900m going towards online groceries.

Tesco has sold twice as many turkeys over the internet than last year. At its distribution centre in Erith, Kent, staff are working around the clock preparing orders.

Simon Belsham, the managing director of Online Grocery for the chain, said: "This is a really busy time of year for us. It really reflects that customers are looking for more and more convenient ways to shop for their Christmas presents and Christmas food."

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Tobacco Boss Quits Helm Of Silk Cut-Maker

By Mark Kleinman, City Editor

The executive who orchestrated Japan's biggest-ever takeover of a British company has quit his role at the helm of the manufacturer of Benson & Hedges and Silk Cut.

Sky News has learnt that Pierre de Labouchere, the president and chief executive of Japan Tobacco International (JTI), resigned with immediate effect.

The departure of Mr de Labouchere, who led Japan Tobacco's £7.5bn acquisition of Gallaher International in 2007, surprised analysts, who said they expected that the exit of such a senior executive would have been the subject of a public announcement.

JTI accounts for over half of its parent's global earnings and through its ownership of Gallaher's brands, which also included Mayfair, it now jostles with Imperial Tobacco for leadership of the UK cigarette market. British American Tobacco has a vast international presence but a comparatively small share of the UK market.

Mr de Labouchere has been replaced by Tom McCoy, previously the chief operating officer.

In a statement issued on Friday, a JTI spokesman said: "I confirm that Mr. Pierre de Labouchere has decided to resign from his position as President and Chief Executive Officer of JTI as of December 18th.

"Mr Thomas A McCoy has been appointed President and Chief Executive Officer of JTI. He brings in-depth knowledge of the business and a wealth of experience to this new responsibility. His 14 years with JTI have generated a proven track record of success in leading the international tobacco business at JTI."

JTI declined to comment on the reasons behind Mr de Labouchere's sudden departure but insiders said that another senior executive responsible for the company's mergers and acquisitions activity had also quit in recent days, suggesting some kind of strategic disagreement.

Mr de Labouchere, one of the most senior Frenchmen in a major Japanese company, led the takeover of Gallaher having previously been president of JR Reynolds' international operations, which were acquired by JTI in 1999.

JTI's UK operation is run directly by Jorge da Motta, who took over earlier this year.

He warned on his appointment that "the most challenging dynamic for the UK business is the high tax regime and the corresponding high level of non-UK duty paid cigarettes at a time when the Government is consulting on plain packaging".

"This makes the threat to legitimate businesses both small and large significant and dangerous," he added.

Headquartered in Geneva, JTI recorded sales of $11.8bn (£7.2bn) in 2012. The company has operations in more than 120 countries and about 25,000 employees.

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