Banking turmoil - what's going on?
What with the inter-bank interest rate-fixing scandal at Barclays and computer glitches at RBS/NatWest, it's little wonder many bank customers don't know which way to turn.
Worryingly, turmoil in the banking industry appears far from over, but where might it end and what does it mean for customers? We take a look...
What is happening at Barclays?
Barclays has been fined £290m after some of its derivatives traders were found to have attempted to rig its Libor rate. Libor stands for London Inter-Bank Offered Rate. It is effectively the rate at which banks lend to each other, and therefore also affects what businesses and individuals pay to borrow money.
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Barclays submitted inaccurate Libor rates between 2005 and 2008. In some cases this was due to traders trying to fix the rate for their own gain. On other occasions the bank submitted a lower rate so it did not appear to have higher funding costs. The reason this is important is because during the credit crunch and financial crisis, it made Barclays appear to be in a stronger financial position than it actually was.
The scandal has forced Barclays' chief executive, Bob Diamond and chairman, Marcus Agius to resign - but it's far from over following accusations by Diamond that Paul Tucker, the deputy governor of the Bank of England encouraged the bank to cut the price of the Libor interest rate.
Mr Tucker has made a request to attend a hearing with the Treasury Select Committee as soon as possible to give his side of the story.
What does all this mean for bank customers?
So what does all this mean for us? Most mortgages track the lender's standard variable rate (SVR) or the base rate, so are not directly affected by Libor pricing. Only mortgages which are available from private banks - as well as commercial loans and mortgages from a couple of specialist lenders - track Libor and are therefore directly affected by its pricing. However, most of us are still affected indirectly by the Libor rate.
Mark Harris, chief executive of mortgage broker SPF Private Clients explained: "When banks increase their [rates], they cite the reason as Libor; the cost of their own borrowing is more expensive, so they have to pass this cost onto borrowers."
At one point, Barclays traders were pushing the Libor rate up to boost their profits which could have resulted in mortgage rates being higher than they should have been. But many of the episodes involved setting Libor lower than it should have been too, which means in theory, borrowers will have actually been better off.
However, Bob Diamond has denied that mortgage holders would have been affected. He said: "The interventions in question were typically on the short-term one and three-month (Libor) rates relevant to the wholesale markets and not the longer-term rates used to set, for example, retail mortgages."
Are any other banks involved in rate-fixing?
That's the million-dollar question. A number of banks are currently being investigated by the Financial Services Authority (FSA) for manipulating Libor, including Royal Bank of Scotland, Lloyds, UBS and Citigroup, so this scandal seems far from over.
Speaking in front of a Treasury Select Committee on Wednesday, Bob Diamond said that this week the focus has been on Barclays because they were the first, implying that there were many more names in the frame.
Is any of this in any way linked to computer problems at RBS?
No, the problems at RBS are completely unrelated. RBS's technical glitches began when the bank installed a software update which caused its systems to freeze, preventing payments going in and out of accounts. It affected customers of NatWest, RBS and Ulster Bank.
On Wednesday RBS admitted that the problems had resulted in some mortgage and loan repayments mistakenly being debited twice from customers' accounts.
If you've been affected then you should visit your nearest branch as soon as possible. There are also three numbers to call for help: 08457 77 77 66; 0161 931 9959; or 0800 656 9639.
Should I switch bank accounts?
Everyone should regularly review their current account and savings to ensure that their money is working as hard as possible for them, regardless of who they bank with.
If you aren't happy with your bank's actions then you may want to consider moving to an alternative provider, but always make sure you compare lots of different accounts to find the right one to suit your individual requirements.
Kevin Mountford, head of banking at MoneySupermarket said: "The recent problems in the banking sector are prompting some consumers to vote with their feet and look to switch providers, with MoneySupermarket seeing a 25% uplift in the number of searches to the current account channel.
"While switching accounts can be a good thing, consumers need to make sure they are moving for the right reasons. If you are unhappy with your bank, then jumping ship may not necessarily be the answer, especially if the deal you are on is a good one. Instead try and make the most of the products you have by being savvier and not paying over the odds in fees and charges."
Don't think about ditching your account altogether, either. Mr Mountford said: "Many people will struggle to get paid if they don't have a bank account as most companies use bank transfers rather than cheque or cash in hand. For other products such as credit cards, mortgages or loans, moving your debt will most likely cost you money in some shape or form such as balance transfer fees, so customers should read the small print carefully, before making any decisions based solely on recent banking news."
To learn more about switching bank accounts, read Mark Hooson's article, 'Switch to a better bank account'.
Finally, what does this latest round of quantitative easing mean for me?
Quantitative easing is effectively the creating of new money to stimulate the economy. On Thursday the Bank of England pumped in another £50billion into the economy in an attempt to boost growth, but this is bad news for savers and those retiring now.
Because the money going into the economy has focused on buying gilts, this has forced up prices and so lowered their interest rates. As annuity rates are linked to gilt yields, the pension income people can get from their pension savings has fallen sharply.
But while savers continue to suffer, borrowers should benefit from the current economic situation, especially mortgage holders, as any fall in gilt yields will make it possible for to borrow at exceptionally low rates for longer than might otherwise have been the case.