News: No fall in mobile charges as watchdog holds back

Inter-network charges stay at 6p a minute; HSBC cuts rates; smart meters to lower energy bills; row over payments to advisers

Expected cuts in the high cost of mobile phone calls made to rival networks have been shelved until early 2007.

Expected cuts in the high cost of mobile phone calls made to rival networks have been shelved until early 2007.

The telecoms industry regulator, Ofcom, ruled last week that mobile operators would not yet be required to reduce their "termination" charges.

Under the current rules, operators are allowed to charge around 6p a minute to connect calls from other mobile or landline networks. This is then added to the overall cost of the call.

But consumer bodies, including the Telecommunications Users Association, have argued that the charge is too high and should be closer to 3p.

It had been expected that, at the end of the current price cap, in March 2006, Ofcom would insist on a reduction. However, explaining its decision to extend the 6p price control, introduced last year, the watchdog said it was maintaining a balance between the needs of the industry and consumer protection.

Ofcom argued that the steps it has already taken to force operators to cut call costs have saved consumers nearly £1bn a year.

Overall charges have generally fallen during the past three years, but the cost of calling a different mobile network, or ringing a mobile from a landline, is still expensive.

Ofcom has tussled with the operators over call charges since the late 1990s. After an inquiry by the Competition Commission and an appeal to the High Court, the watchdog finally managed to impose price controls last June.

At present, T-Mobile and Orange levy a 6.3p-per-minute termination fee, while Vodafone and O ₂ charge 5.63p.

Blow for savers

Customers at one of Britain's biggest high-street banks have been hit with rate cuts of up to 0.25 per cent on savings accounts.

HSBC's move came three days ahead of the Bank of England's decision to keep interest rates at 4.75 per cent for the 10th month in a row. Customers with instant access savings accounts saw the full 0.25 per cent lopped off their rates; anyone with up to £10,000 put by will now earn only 1.5 per cent.

Interest for those with more than £5,000 in a children's high-interest savings account has been notched down by 0.15 per cent to 2.85 per cent; and holders of mini cash individual savings accounts (ISAs), with between £3,000 and £9,000 stashed away, suffered a cut from 4.51 to 4.27 per cent.

HSBC said the reductions for savers were a result of its decision to offer cheap personal loans and mortgages.

"Although the base rate may not have moved since August 2004, the first half of 2005 has seen a number of providers slash their rates," said Rachel Thrussell from financial analyst Moneyfacts. These include Sainsbury's Bank - cutting rates by up to 0.75 per cent in February - and Birmingham Midshires, which lopped 0.35 per cent off some of its products last month.

HSBC does offer one of the highest-paying savings accounts - its "regular saver" returning 8 per cent - but strings are attached. You need to hold your current account with the bank - on which you will earn only 0.1 per cent for balances in credit - while facing hefty overdraft rates and charges if you go into the red.

Meter revolution

Displays that reveal the actual live cost and power use on gas and electricity meters could soon be widely available to help households monitor their consumption, potentially leading to lower bills.

Early versions of "smart meters" are already available on the Continent but they tend to be expensive and have yet to take off. However, after a debate last week in the European Parliament, they look likely to form part of a draft EU directive. The plans are still at an early stage but, if adopted, they could result in the replacement of every one of the UK's 32 million power meters.

Studies at Heriot-Watt University have recently suggested that the introduction of such a scheme could reduce bills by between 5 and 15 per cent.

Consumer body Energy-watch welcomed the proposals - approved in a first reading by European MPs - and claimed the power industry would benefit through being able to read customers' bills remotely.

Commission chaos

Rows about the role of commission payments by financial services companies to independent financial advisers (IFAs), in return for selling their products, have broken out just days after the implementation of a new financial advice regime.

In response to proposals by the Association of British Insurers, the Association of IFAs rejected the call for an overhaul of the current system.

Trevor Matthews, the head of life and pension business at insurer Standard Life, suggested that upfront commission payments should be abolished. Instead, rewards for the adviser should be aligned to the performance of the investment sold, he said.

Lack of confidence in IFAs, and the investment industry as a whole, sparked the arrival of a new regime called "depolarisation" on 1 June. This was meant to give savers more choice.

But there are concerns that consumer suspicion - of IFA bias towards providers paying the highest commission - has not been fully addressed.