Money digest: today’s need-to-know financial news | 4 May 2016

Yesterday we reported that the ‘bank of mum and dad’ is now the equivalent of a top ten mortgage lender in the UK. Today comes the news that one of Britain’s biggest lenders has launched a new ‘bank of mum and dad‘ deal for people with wealthy parents. The new mortgages from Barclays have reduced the deposit homebuyers need from 5 per cent to 0 per cent of the purchase price, as long as their parents agree to save at least 10 per cent in a special savings account. This marks a return to what some commentators view as the dark days of the 100 per cent mortgage, common before the last housing crash. Russell Quirk, founder and chief executive of online estate agent Emoov notes that lenders such as Northen Rock offered 125 per cent mortgages ahead of the financial crisis, and advises caution. ‘There is a potential issue here. It’s not the 100 per cent mortgage but where this goes next. It really is the affordability issue and where it can potentially go wrong very quickly if we do see interest rates rise.’ Under the terms of the Barclays’ deal, the cash is held in the parents’ name and then returned to them after three years with 2 per cent annual interest added, provided that their child keeps up with the mortgage payments. The average first-time buyer deposit has soared in recent years and now exceeds £28,000 according to Your Move data, creating a major barrier preventing millions of young people from getting on the property ladder. From October, broadband providers must make sure adverts for their products are very clear about costs and contract lengths, the Advertising Standards Authority has ruled. ASA research suggests many people find it difficult to make sense of current adverts. More than 80 per cent were unable to calculate the total cost of a broadband contract when asked to do so, the ASA found. TalkTalk has said it will scrap separate line rental charges. In a study of how people reacted to current adverts, conducted with regulator Ofcom, only 23 per cent of participants could correctly identify the total cost per month after their first viewing. Twenty-two per cent were still not able to identify this figure after a second viewing, said the ASA. Meanwhile, the glory days for Britain’s challenger banks could be over as the small lenders’ niche markets become more congested and they have to compete harder for customers, according to a new study from KPMG. The Telegraph reports that new banks set up to challenge the big lenders and shake up the market have boomed since the financial crisis, taking advantage of popular discontent with the giants of the industry, as well as a gap in the market as those incumbent banks cut back. But now Britain’s big banks are returning to growth and regulators and politicians are less inclined to treat challenger banks more leniently

Businesses should take more responsibility to ensure their customers do not become victims of scams, according to a consumer group. The Government should ensure firms protect people from sophisticated tricks, such as emails claiming to be from banks, Which? has said. These businesses should be obliged to compensate customers if protection falls short, it added. The government set up a fraud taskforce in February.

At the launch, Home Secretary Theresa May said: ‘The scale and volume of financial activity also brings serious risks of economic crime and real opportunities for criminals to defraud hardworking taxpayers of their savings and earnings.’ The Daily Mail reports that shops are scaling back their loyalty card schemes so brutally that you now need to spend thousands to get anything worthwhile from them. Although nearly 46.5 million of us have at least one loyalty card in our wallets, retailers have decided they aren’t the best way to keep customers coming back. Many are cutting everyday prices instead.

Nectar upset loyal customers in April last year by halving the value of the points you get for shopping at Sainsbury’s. Now Tesco has announced it’s scrapping the popular Clubcard Boost events, which let customers double the value of their points in-store on particular days or weeks during the year.

The newspaper also says that buy-to-let investors will have to stump up an extra £10,000 to get a mortgage under a crackdown on dangerous debts. Banks and building societies will demand the extra cash from as early as September as part of a last-ditch attempt to stop the buy-to-let boom spiralling out of control. The Prudential Regulation Authority is concerned that some landlords are overstretching themselves and will face difficulties when interest rates rise, so is forcing lenders to run stricter tests to see whether an investor can afford the loan.