EDF Energy To Pay £3m Complaints Penalty

EDF Energy is the latest of the so-called "Big Six" suppliers to be slapped with a penalty for market failures.

The regulator Ofgem said it had agreed to pay £3m to benefit vulnerable customers after its investigation found that the company breached complaint handling rules.

The inquiry was prompted by an increase of more than 30% in the levels of complaints recorded by EDF as it introduced a new IT system in 2011.

Ofgem found that between May 2011 and January 2012, EDF did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with handling rules.

Its technical problems included unacceptably high call waiting times, with many customers deciding to hang up before getting through to a customer services operator.

The company acknowledged its customers were caused significant disruption - and has apologised.

Sarah Harrison, Ofgem's senior partner with responsibility for enforcement, said of EDF: "Their commitment to putting things right and paying £3m to the Citizens Advice 'Energy Best Deal Extra' scheme and the Plymouth Citizen Advice Bureau's Debt Helpline to benefit vulnerable customers is a step in the right direction to rebuilding consumer trust.

"It's now vital for EDF Energy and the industry as a whole to truly put customers first and put adequate resources in place to deal with complaints.

"Following our reforms, it has never been easier for consumers to switch supplier and therefore those unhappy with the service they receive are able to vote with their feet."

Beatrice Bigois, EDF's managing director of customers, said: "Despite our best efforts and extensive planning to manage this transition in 2011 without impacting our customers, we recognise that for a period of time the service to our customers was not up to the standards they deserve.

"We apologise to those customers who were impacted during this period.

"We have co-operated fully with Ofgem and have taken this matter very seriously.

"The £3m package that we are offering will ensure that thousands of vulnerable customers are provided with free, independent advice on debt, as well as information to help them manage their energy consumption and bills."

The penalty against EDF followed similar actions by the regulator which saw SSE and E.ON pay the biggest sums for past failures as a debate rages on whether consumers get a good deal from the wider market.

The Big Six firms, which also include British Gas, Scottish Power and nPower, denied accusations of profiteering after collective profits quadrupled to more than £1bn over three years.

In a bid to rebuild trust the Competition and Markets Authority (CMA) is carrying out a full investigation, which will include an examination of the relationship between the supply businesses and generation arms of the Big Six.

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Current Account Exodus At Troubled Co-op Bank

The troubled Co-op Bank has revealed it lost almost 30,000 current account customers in the first half of its financial year.

The bank, which was forced to raise almost £2bn to plug a capital black hole last year, reported significantly lower losses of £75.8m for the period compared to the same time during 2013 and said its wider financial position was improving despite "deep-rooted" problems remaining.

It shed 13% of its permanent staff, closed 46 branches over the six month period and said it lost 28,199 current account holders, although its net customer number losses has since slowed, it said.

It blamed "negative publicity and significant competitor activity" for the near-2% fall.

Sky News reported on Thursday night that the bank was facing demands from some of its biggest shareholders to accelerate an overhaul of its operations and commercial strategy - as losses were expected to continue for two years.

But in its results statement, chief executive Niall Booker said Co-op Bank had made progress since its rescue from near-collapse - a deal that saw the supposedly ethical bank give up control to US hedge funds.

The bank said its capital position had been strengthened following a £400m capital-raising.

Mr Booker said: "Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank.

"The core bank continues to remain stable. In the first half of the year more people switched into the bank than in the second half of 2013.

"Although we have also seen an increase in the number of people switching out of the bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated.

"Recent trends suggest this net outflow of retail customers has slowed."

The bank's problems have been at the centre of a wider crisis for the Co-operative Group, which reported a £2.5bn loss for 2013 as its exposure to the bank hit earnings.

A report on the bank's near collapse and subsequent rescue, which saw the group's stake reduced to just 20%, pinned the blame on toxic loans inherited from its disastrous merger with the Britannia building society in 2009 amid a series of management and cultural failures.

In May, the Co-op Group's members backed radical plans by the former City minister Lord Myners to sweep away its existing 20-strong board and replace it with a more plc-style structure, staffed by professionally-trained directors.

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Draghi: ECB Ready To Spur On Euro Economy

The boss of the European Central Bank (ECB) has revealed it is ready to do more to boost a shaky recovery in Europe.

But Mario Draghi warned EU member governments they must still join in efforts to reduce unemployment, which remains stubbornly high.

Mr Draghi said: "I am confident that the package of measures we announced in June will indeed provide the intended boost to demand, and we stand ready to adjust our policy stance further."

So far the ECB has cut interest rates, offered cheap loans to banks and is weighing up asset purchases to help stimulate the 18-member eurozone.

The ECB has already pumped unprecedented amounts of liquidity into the banking system back in 2011 and 2012, but instead of lending the money on to businesses banks tended to park the cash with the ECB instead.

In June, the ECB created a negative interest rate to encourage banks to lend more.

Mr Draghi also said certain longstanding practices in some countries are helping to keep unemployment high.

He said freer wage adjustments and workforce levels would encourage companies to hire.

Mr Draghi made the comments as part of his speech at the US Federal Reserve conference in Jackson Hole, Wyoming.

Meanwhile, US shares eased on Friday after the Jackson Hole speech by Fed boss Janet Yellen left investors unsure on the possibility of a rate rise in coming months.

She said the financial crash complicated the Fed's ability to assess the US job market and made it harder to determine when to adjust interest rates.

Ms Yellen's remarks failed to offer strong signs that indicate she is moving away from the view of support through ultra-low interest rates.

The timing of a Fed rate increase remains unclear, though many economists foresee an increase by mid-2015.

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Housebuilder Persimmon Profit Jumps 57%

Housebuilder Persimmon has seen its pre-tax profit jump by 57% in the first half of the year.

The company said underlying profit reached £212.9m in the six months to the end of June.

Revenue in the period was also up 33% to £1.2bn and it said sale completions in the six months were up 28%.

It sold 6,408 new homes with an average selling price up 4.3% at £186,970.

The results cover the months when there was a flurry of increased activity in the housing market.

It bought 14,251 building plots in the period, pushing its portfolio of consented land sites to 82,250.

Sharp price rises were only slowed late in the period, when the fear of rate rises and new mortgage affordability rules were brought in.

Group chief executive Jeff Fairburn told Sky News: "We see good confidence in the market so we are seeing good visitor levels.

"Certainly the mortgage market is very supportive at the moment and Help to Buy, as a message, is certainly bringing confidence to buyers - particularly first-time buyers - and enabling them to buy new homes.

"So we're pleased to see the additional demand and we're keen to step up our production to meet that."

The company said it has now built a cash stockpile of £326m, up from £48m in the same period last year.

The results come a day after Bovis Homes said its pre-tax profit for the first six months of the year was up 166%, to £49.4m, on the back of a record number of completions.

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Inflation Drops More Than Expected In July

The two measures of UK inflation have dropped more than expected, in the year until the end of July.

According to official data, the Retail Prices Index (RPI) stood at 2.5% and the Consumer Prices Index (CPI) was 1.6%.

Economists had expected a CPI rate of around 1.8%, after official figures showed a June rate of 1.9%.

Inflation has now been below the Bank of England (BoE) 2% target for seven straight months - the first time this has occurred since 2005.

The RPI, which unlike the other measure includes housing costs, was recorded in June at 2.6%.

The Office for National Statistics (ONS), said the biggest contributor to the slowing annual inflation rate was discounting on the high street for clothing and footwear.

Food and non-alcoholic drinks also fell year-on-year, and the CPI was also eased by falling spirits and wine prices.

The data comes as commuters learned they would face a 3.5% increase in rail fares next year, which are used to calculate increases.

The further drop to the CPI eases pressure on the BoE to hike the 0.5% base rate, which has been at its historic low for the last five year.

Meanwhile, the ONS said UK house prices increased by 10.2% in the year to June, reaching a new high average price of £265,000.

House prices in the capital, however, shot up by 19.3% in the year to June.

More follows...

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Ukraine: 15 Bodies Found After Refugee Attack

Fifteen bodies have been recovered from the site of a rocket strike on a refugee convoy in Ukraine, a military spokesman has said.

The convoy of buses and cars was understood to have been evacuating civilians from the towns of Svitlivka and Khrashchuvate, which lie along the main road leading from besieged Luhansk and the Russian border. 

"By 7pm last night we retrieved 15 bodies. The search continued into the night and is continuing today," said the military spokesman, Andriy Lysenko.

Alexander Zakharchenko: 'Not a single convoy of refugees was shot at'

Ukrainian government forces have blamed Monday's attack on pro-Russian separatists. The rebels have denied responsibility. At least one rebel leader denied an attack had accounted.

The convoy had been in an area of fierce fighting when it came under fire from rebel Grad and mortar launchers, according to a Ukrainian government spokesman.

"The force of the blow on the convoy was so strong that people were burned alive in the vehicles - they weren't able to get themselves out," military spokesman Anatoly Proshin told Ukrainian news channel 112.ua.

The rebel leader of the self-styled Donetsk People's Republic, Alexander Zakharchenko, said: "Not a single convoy of refugees was shot at in the Luhansk region."

The US condemned the attack, but said it was unable to confirm who was responsible.

The road where the attack occured could soon be used by the Red Cross

UN Secretary General Ban Ki-moon was deeply disturbed by the attack.

"He urges all sides to respect the rules governing the status of internally displaced persons and refugees and to allow safe passage to anyone attempting to leave areas of active military operations," said his spokesperson, Stéphane Dujarric.

The road where the attack occurred is likely to be used by a convoy of Russian aid if Ukraine allows it to enter the country.

The International Red Cross - which will take responsibility for the aid convoy inside Ukraine - has demanded security guarantees from all sides, which have yet to be agreed on.

More than 2,100 people have been killed in four months of conflict inside Ukraine. The UN estimates more than 285,000 people have fled fighting in the east.

Fierce fighting continued around Luhansk over the weekend.

Meanwhile, Russia is said to be working on further retaliatory measures in the event Western nations implement fresh sanctions over the Ukraine crisis, according to Russian President Vladimir Putin's spokesman Dmitry Peskov.

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Lastminute Owner Eyes Sale Of UK Dotcom Icon

By Mark Kleinman, City Editor

Lastminute.com, one of the icons of the original dotcom boom, is being put up for sale nearly a decade after its takeover by an American technology giant.

Sky News has learnt that Sabre Holdings, which is listed in New York, is exploring plans to offload Lastminute.

Sabre has appointed bankers at Houlihan Lokey, an advisory firm, to oversee an auction, and has already begun sounding out potential buyers.

A sale of Lastminute could still be aborted if the terms of a deal are not sufficiently attractive to Sabre, but sources said on Saturday that the US company was prepared to accept a substantial loss on the roughly £600m it paid in 2005.

Prospective buyers could include private equity firms or rival online travel groups such as Expedia.

Sabre has itself listed on the public markets, floating on Nasdaq in April with a valuation of nearly $4bn.

It has four main divisions, with Lastminute operating as a subsidiary of Travelocity, Sabre's group of travel e-commerce businesses.

Lastminute was one of the darlings of the early UK internet industry, floating in 2000 two years after being founded by Brent Hoberman and Martha - now Baroness - Lane Fox.

However, Lastminute's performance has been underwhelming, despite it continuing to spend substantial sums on marketing and advertising.

Its biggest market shares are in the UK and France but it has struggled to make an impact elsewhere in Europe.

Analysts say that Travelocity failed to integrate Lastminute effectively or to build the network of hotels or other partners to which it has access during a period when some rivals have expanded aggressively.

Mr Hoberman has also criticised Sabre's exploitation of the Lastminute brand, calling it "an under-utilized asset" last year.

A Sabre spokeswoman said in a statement: "We are always reviewing options to make our technology company as successful, relevant and innovative as possible.

"If we have news to share, we commit to doing so quickly and transparently."

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Wall Street Giants Swoop On Sub-Prime Lender

By Mark Kleinman, City Editor

Two giants of Wall Street are in advanced talks to acquire Kensington, one of the UK's biggest sub-prime mortgage lenders.

Sky News has learnt that divisions of Blackstone and TPG, the US-based private equity groups, are close to securing a takeover of Kensington, which is owned by the Anglo-South African financial services provider Investec.

The sale of Kensington has not yet been finalised and could yet fall apart, but insiders said a deal was likely to be announced this week.

If completed, it will involve the business being taken over by Blackstone's Tactical Opportunities unit and TPG's TSSP special situations and credit platform.

Blackstone are thought to have seen off three other bidders

The two firms are understood to see significant opportunities to grow Kensington's business and are expected to make substantial amounts of capital available for it to do so.

They are said to have lined up a new management team to take the helm once the deal completes.

Investec's £283m takeover of Kensington in the summer of 2007 proved to be an ill-timed foray into the market for sub-prime mortgage lending, coming just as financial markets began to seize up.

Kensington was previously a publicly-listed company whose former chief executives include John Maltby, who is now leading an investment consortium which is buying a stake in 315 Royal Bank of Scotland branches.

Investec, which is the main sponsor of the England cricket team, signalled its intention to sell Kensington in February.

Blackstone and TPG are understood to have seen off competition from at least three other bidders for the business, one of which was said to be Lonestar, a specialist US property investor.

"With the ongoing recovery in mortgage lending and wholesale funding markets we believe that Kensington is now well placed to continue growing and that this growth potential may be better realised under different ownership," Stephen Koseff, chief executive of Investec, said at the start of the auction process.

Analysts say the bank should recoup the majority of its initial outlay, with Kensington's recent performance aided by the strength of the UK housing market.

The auction of Kensington, which is being handled by Fenchurch Advisory, comes amid increasing signs of an overheating housing market in London and the south-east.

Some of the UK's biggest banks have imposed fresh limits on mortgage lending in the capital in recent months.

Blackstone, TPG and Investec declined to comment.

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Nationwide Profit Rockets In Housing Surge

High street lender Nationwide has seen underlying profit more than double in the three months to the end of June.

First quarter profit for the building society reached £263m, up 117% on the same period last year.

Statutory profit was up 141%, to £253m in the quarter.

The mutual said its share of current accounts - against the four big high street banks - rose slightly to 6.4% from 6.2%.

And while deposits increased by £1.5bn to £132bn, gross mortgage lending fell to 9%, to £5.8bn from £6.4bn.

The results come as Bovis Homes said its pre-tax profit for the first six months of the year were up 166%, to £49.4m, on the back of a record number of completions.

The company has focused its construction areas in the south of England in recent years and said the average sale price was around £212,500.

Bovis said it now expects to see a significant increase in 2014 full-year profit, provided stability remained in the market.

Meanwhile the brakes are increasingly being applied to sellers' asking prices, according to a property website.

Rightmove said the fear of increasing loan rates and the new mortgage affordability tests imposed on lenders in late April have squeezed expectations.

It said prices this month have fallen 2.9% month-on-month to an average of £262,401 across England and Wales.

It was the biggest August dip in more than a decade of recording asking price results.

Rightmove director Miles Shipside said: "New seller asking prices are good lead indicators of the current mood of the market.

"And those who have put their property up for sale in the last month are obviously aware that potential buyers are thinner on the ground at this time of year and need to be tempted to act by cheaper prices."

London was the biggest faller, seeing asking prices drop 5.9% to an average of £552,783 compared to July.

The capital's asking prices were still 10.3% higher than they were in the same period last year, it said.

Asking prices in the North saw the only increase month-on-month, up 0.5% to an average of £149,354.

In Wales, prices eased 2% month-on-month, to a typical value of £173,176.

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UK Growth Hits Fastest Annual Pace Since 2007

The annual rate of UK economic growth has been revised upwards to 3.2% - its fastest pace since the end of 2007.

The announcement was made by the Office for National Statistics (ONS) as it confirmed GDP growth of 0.8% in the second quarter of the year.

While that figure represented no change on its original estimate, the ONS said it had measured a stronger performance in the construction sector than previously calculated in its wider revisions.

It confirmed that the service sector - which makes up more than 75% of GDP - remained the main driver of Britain's economy between April and June, expanding by 1%.

Much of this has been attributed to consumer spending despite huge pressure on budgets because of weak wage growth - a situation that had been tipped to ease during 2014 but has worsened again in recent months.

The ONS confirmed on Wednesday that wages shrank at an annual rate of 0.2% in the second quarter while the main measure of inflation rose to 1.9%, meaning the gap between wages and price rises was widening further.

The Bank of England has now made the weak pay issue a core factor in its discussions over the timing of an interest rate rise.

The UK's resilient GDP growth is in sharp contrast to economic fortunes in the euro area.

It was confirmed on Thursday that Germany's GDP was in decline and French growth was stagnating.

Chief UK economist at Citigroup, Michael Saunders, told Sky News he was not overly concerned that the woes being experienced by the country's biggest trading partners would damage the UK's recovery.

He said the suro had been "in economic terms, something of a zombie for a number of years now" and backed calls from France for the European Central Bank (ECB) to provide stimulus.

"The ECB will eventually get around to QE (quantitative easing) - five years too late - I think they're going to do it in the next couple of quarters and that will give some boost but it really is a sad story of multiple policy failures in the euro area," he said.

"Even if it gets a bit better I don't think it will get a lot better in the euro area."

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New Rules To Boost Home-Based Businesses

Entrepreneurs will have more freedom to begin a business from home under new measures to be announced by the Government.

They include legislation which will make it simpler to run a company from a rented property and new guidance on business rates.

There will also be updates to planning guidance to make it clear that planning permission will not normally be required to run a home-based business.

Business minister Matthew Hancock said: "It's this spirit of personal endeavour and self-determination that is driving our economic recovery.

"But home businesses don't just fire up the economic engines and create jobs, they turn dormitory towns into living communities, they keep our streets safer, and by driving down car emissions, cleaner too.

"We'll give people the confidence they need to run a business from a rented home, making sure that the majority of home businesses are exempt from business rates and our aspiring entrepreneurs have the information they need to start up and grow."

Under the measures a new model tenancy agreement will be made available to landlords.

The law will also be changed so landlords can be confident that agreeing to a business within their property will not undermine their tenancy agreement.

Liz Peace, chief executive of the British Property Federation, said it firmly supported the removal of "unnecessary barriers" to setting up at home.

"At least some of the kitchen table businesses of today will expand and become the commercial property space-seekers of tomorrow," she said.

"We therefore have an interest in ensuring that the law and our sector is adapting to modern business practice and supporting UK entrepreneurs at every stage of their business development."

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Lastminute Owner Eyes Sale Of UK Dotcom Icon

By Mark Kleinman, City Editor

Lastminute.com, one of the icons of the original dotcom boom, is being put up for sale nearly a decade after its takeover by an American technology giant.

Sky News has learnt that Sabre Holdings, which is listed in New York, is exploring plans to offload Lastminute.

Sabre has appointed bankers at Houlihan Lokey, an advisory firm, to oversee an auction, and has already begun sounding out potential buyers.

A sale of Lastminute could still be aborted if the terms of a deal are not sufficiently attractive to Sabre, but sources said on Saturday that the US company was prepared to accept a substantial loss on the roughly £600m it paid in 2005.

Prospective buyers could include private equity firms or rival online travel groups such as Expedia.

Sabre has itself listed on the public markets, floating on Nasdaq in April with a valuation of nearly $4bn.

It has four main divisions, with Lastminute operating as a subsidiary of Travelocity, Sabre's group of travel e-commerce businesses.

Lastminute was one of the darlings of the early UK internet industry, floating in 2000 two years after being founded by Brent Hoberman and Martha - now Baroness - Lane Fox.

However, Lastminute's performance has been underwhelming, despite it continuing to spend substantial sums on marketing and advertising.

Its biggest market shares are in the UK and France but it has struggled to make an impact elsewhere in Europe.

Analysts say that Travelocity failed to integrate Lastminute effectively or to build the network of hotels or other partners to which it has access during a period when some rivals have expanded aggressively.

Mr Hoberman has also criticised Sabre's exploitation of the Lastminute brand, calling it "an under-utilized asset" last year.

A Sabre spokeswoman said in a statement: "We are always reviewing options to make our technology company as successful, relevant and innovative as possible.

"If we have news to share, we commit to doing so quickly and transparently."

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