Npower to pay £3.5m for misleading customers over switching

Power company breached sales rules on doorstep and over phone, regulator Ofgem says

Npower will pay at least £25 to each of its current customers who receive warm home discount payments. Photograph: Outers Magazine/Demotix/Corbis

Npower has agreed to pay £3.5m to help vulnerable customers as a punishment for misleading consumers considering switching their energy provider.

The power company breached sales rules on the doorstep and over the phone up until September 2012, the regulator Ofgem said.

The regulator said npower did not get enough information from potential customers so they could make an informed decision about switching. It also failed to make sure comparisons between npower's rates and the customer's provider were accurate and gave inaccurate information on direct debits.

Ofgem's ruling came as energy suppliers face political pressure and public uproar over rising prices. Accusations of shoddy sales practices have bedevilled the industry for years.

As punishment for its failings, Npower will set up a fund to pay at least £25 to each of its customers who receive warm home discount payments. Any money not paid out will be paid into npower's fund for homeowners with cold-related illnesses who cannot afford necessary heating repairs and equipment.

Ofgem's senior enforcement partner, Sarah Harrison, 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.

"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."

Ofgem's investigation covered the period between 2010 and 2012. The regulator said npower had corrected its sales practices.

In a further sign of the hostile environment for energy suppliers, the British Gas executive who led a botched attempt to talk to customers via Twitter has quit. Bert Pijls, British Gas's residential customer services managing director, has left the Centrica-owned business to return to the Netherlands after a reorganisation.

In October, Pijls invited questions from customers using the hashtag #AskBG but was bombarded by hostile comments such as: "Which items of furniture do you, in your humble opinion, think people should burn first this winter?"

Deutsche Bank to pay $1.9bn to settle US law suit over mortgages

Deutsche Bank's offices in London Photograph: Luke Macgregor/REUTERS

Deutsche Bank will pay $1.9bn to settle a law suit with the US Federal Housing Finance Agency over mortgage-backed securities, part of the bank's efforts to resolve a long list of legal issues.

The suit was Deutsche's single largest mortgage-litigation case, covering allegations that the bank did not adequately disclose information about residential mortgage-backed securities sold to US taxpayer-owned mortgage financiers Fannie Mae and Freddie Mac between 2005 and 2007.

The FHFA has sued 17 banks in the case and has already settled with JP Morgan and UBS. The banks being pursued by the agency include Barclays and Royal Bank of Scotland.

Deutsche Bank said in a statement on Friday it had exited the businesses at the heart of the housing suit and had improved its controls. Germany's biggest bank also said it was working to resolve the raft of other legal and regulatory problems.

"Today's agreement marks another step in our efforts to resolve the bank's legacy issues, and we intend to make further progress in this regard throughout 2014," co-chief executives Juergen Fitschen and Anshu Jain said.

Deutsche Bank said the payment had already been taken into account in its existing litigation reserves and that no additional reserves will be taken for the settlement.

Earlier this month, the European commission slapped Deutsche Bank with a 725m euro penalty in a probe into the rigging of benchmark inter-bank interest rates. US and UK regulators have yet to fine Deutsche in the case.

BlackBerry on the brink as new boss tries to reinvent smartphone firm

With losses at £2.7bn, interim chief executive John Chen must find a new way forward

A model with the BlackBerry Z10 smartphone at its 2013 launch in Jakarta, Indonesia. Photograph: Mast Irham/EPA

This month Bloomberg Businessweek magazine's cover showed a range of archaeological objects – a flint arrowhead, a skull – and a BlackBerryhandset. The label? "Relic".

On Friday BlackBerry's interim chief executive John Chen outlined a new strategy for the Canadian company in which he acknowledged that making smartphones was a thing of the past. Instead, the company will focus on intangible services such as offering cyber-security for businesses and not making physical handsets.

Making smartphones has not been a good business for anyone who isn't Apple and Samsung recently, as they have squeezed the profits out of the rest of the industry. BlackBerry has been crushed. On Friday it announced a loss of $4.4bn (£2.7bn) on revenues of just $1.2bn; only a tax rebate of $624m saved its net figures from being worse.

Those three months to the end of November marked a turning point: for the first time, BlackBerry now gets more money – 53% of revenues – from selling "services" such as sending data including email and web pages, than it does from selling handsets, which generated 40%. Software made up the other 7%.

But that has come as the company's revenues have shrunk to levels smaller than at any time since May 2007, and the number of phones shipped, 1.9m, is the smallest since December 2006. BlackBerry, whose founders laughed at the iPhone's lack of a keyboard, is out of the smartphone race. In future Foxconn, which makes the iPhone, will co-design and manufacture BlackBerrys too, and hold the stock. BlackBerry will effectively become a reseller of its own phones.

"The smartphone business is brutal," says Kevin Restivo, global smartphone analyst at the research company IDC. "It's one where the big players – Samsung, Apple, and a few Chinese companies – are going to have success, and the others are scratching for crumbs."

Andy Perkins, an analyst at Société Générale, told Bloomberg: "At some point it becomes uneconomic to make handsets in such small quantities."

Chen is a turnaround artist. He was brought in to the software company Sybase, where he executed a successful reorganisation. Since taking over 45 days ago (following the ejection by the board of former chief executive Thorsten Heins) he has overseen a number of departures of existing senior executives, and hired some former colleagues. The obvious conclusion is that he is reshaping BlackBerry as a services and software company.

Unlike other struggling smartphone makers, BlackBerry can fall back on tens of millions of customers in large businesses, who rely on the security of its products. Chan said that 80% of Blackberry users were business customers. That could be anywhere up to 50 million users worldwide, offering a substantial base for rebuilding any corporation, even the struggling BlackBerry.

But the data also confirmed that BB10, the operating system launched in January by Heins, has been a flop. Since March, BlackBerry's customers have bought a total of around 17m phones, but only 5.6m have been BB10 devices.

The new products have fared poorly with consumers and the large businesses that rely on BlackBerry. Consumers have been turned off because the BB10 functions differently from the old BB7 model, while businesses have backed away because BB10 devices can't be hooked up to the older BlackBerry Enterprise Server (BES) systems so many big customers use.

So while consumers have dumped them in favour of other makes, BlackBerry-using businesses have taken one of two paths: either sourcing old BB7 handsets to keep their existing users happy, or abandoning BlackBerry altogether. Even Goldman Sachs, once a BlackBerry fortress, has begun letting some executives use iPhones for email, a move that would have been unthinkable a few years ago.

Chen has an answer to both. For consumers, BlackBerry will try to somehow make money from the millions of people who have downloaded the BBM messaging software and installed it on to iPhones and Android phones. "Revenues might come from a per-user per-month model, or rolling out advertising," he said on Friday. "We're a long way from knowing how to do it."

For businesses he will offer "mobile device management" software that will be able to control not just BlackBerrys, but also iPhones and Android phones. But there are plenty of rivals there, and it's not a big business – worth only about $560m (£343m) this year globally for all vendors, and growing at 12% annually, according to ABI Research. Even if a reshaped BlackBerry captures more than half of that, it would still look tiny compared to what it was.

That means, says IDC's Restivo, that "BlackBerry's not out of the woods yet." He explains: "First and foremost, Chen needs to figure out how to make money from products that have a significant customer base and are growing. The handset business isn't growing. And how they're going to generate significant revenue from BES and BBM, and create a company driven by those two parallel paths – right now, the path isn't clear."

Christmas sales: shops put last-minute hope in discounts

Sale signs dominate aisles in Christmas run up that is test of retailers' profit skills

Pre-Christmas sales have overtaken the high street. Photograph: Alamy

The music is festive, the decorations are sparkling but who are the tills ringing for this Christmas?

At one of the UK's largest shopping centres, Bluewater in Kent, there is certainly a steady stream of shoppers bustling around the mall even on a mid-week afternoon less than a week before the big day.

But it's the red and white signs promoting sales discounts at clothing retailers which immediately catch the eye.

Stores from Spain's Mango to French Connection, House of Fraser, Forever 21 and jeweller H Samuel are all shouting about discounts of up to 50%, while Topshop, Marks & Spencer, Evans, River Island and Miss Selfridge are offering up to 30% off.

Next day at Wimbledon's Centre Court shopping centre, Gap has upped the ante, offering discounts of up to 60% while Debenhams is advertising what it calls a "sale preview." It is behaving as if Boxing Day is already here.

As stores were limbering up for the biggest shopping weekend of the year, with spending expected to hit £12bn over the four days ending on Monday night, it's clear many retailers have been forced to discount to persuade reluctant shoppers to part with their cash.

Many shopping centres and major stores are opening for longer hours over this weekend and early next week to accommodate the rush as more than 15 million people, nearly a third of the country's adult population, plan to  go Christmas shopping this Saturday, according to Barclaycard. They are forecast to spend an average of £196 each on last minute gifts, food, drink and other festive fare.

Westfield's shopping centres in London are open until midnight on Monday, while the Bullring in Birmingham is open till 10pm the same day and Manchester's Trafford Centre till 11pm. Marks & Spencer, which confirmed plans to extend its 30% discounts to all clothing for a one-off special this Saturday, will open 22 stores from 5am on Monday while 231 stores will trade until 10pm or later that day.

Total spending over the Christmas period is expected to be slightly up on last year, by 2.8% according to analysis of the latest card spending data by Barclaycard. But highly expensive gifts including gaming consoles and tablet computers have been soaking up shoppers' tight budgets, leaving less room for other items.

At both Bluewater and Wimbledon's Centre Court the depth of discounting on show gives a hint as to how stores are performing, but there are more clues in the widespread nature of the bargains on offer. In Evans and Dorothy Perkins in Bluewater, where there is so much stock it appears to be popping off the rails, there are discounts throughout. French Connection may have subtle black sale signage, but its discounts are widespread and quite deep. There's no such discretion at Hobbs and Laura Ashley, where a sea of red tickets mark piles of stock of all kinds suggesting both chains were over-enthusiastic in their hopes for this season.

Department store House of Fraser has also slapped up red signs in nearly every department. It seems trading is tough and margins are under pressure at the debt-laden department store, which doesn't bode well for its efforts to get either a sale or a stockmarket flotation off the ground in the new year.

In contrast, at young fashion chain Warehouse, which is advertising price cuts of up to 50%, there are just a couple of rails of discounted stock at the back of the store - mostly jackets, partywear and handbags.

It's also clear that some key types of product are suffering more than others.

Most of the footwear retailers, and many of the fashion chain's in-store shoe departments, are heavily on sale. Jones store is on half price sale, while rivals Kurt Geiger and Dune are also discounting widely and heavily.

Coats are also widely discounted, even at John Lewis, where discounts are generally much harder to find.

Cold-weather clothing appears not to have done well this year in relatively mild weather. Even Marks & Spencer's top-selling cashmere sweaters are on offer at 30% discount.

Some clothing stores stand out because they have not been forced to discount despite the weather and budget pressures. Zara and its fellow Inditex brand Massimo Dutti are free from red signage as are several of the more premium boutique brands including Reiss, Jigsaw, and Ted Baker.

JD Sports has just a small selection of bargains while Next is, as usual, saving its red pen until after Christmas and has clearly planned for a difficult season with no sign of overstocking.

Matt Walton, a retail analyst at Verdict Research, says he's not surprised that such brands have held out: "We predict that premium lifestyle clothing brands will do well this Christmas. Their strong brands give some extra value when it comes to gifts."

But the discounting across Bluewater is extensive. There are toys at up to 50% off in Disney, The Entertainer and Early Learning stores. Film and music store HMV has a variety of offers, and the piles of stock creeping into the aisles suggest the retailer is hoping to make the most of panic-stricken shoppers looking for a last-minute prezzie for Dadbuys.

"This is the one time of year when shoppers are looking for physical entertainment products. They don't want to give a gift card and with Christmas nearly here they want something," said Walton.

Most surprising of all is that even electricals chain Currys PC World is offering deals on some tablet computers and digital SLR cameras, suggesting there's heavy competition even for must-have products.

Louise Howarth, a senior retail analyst at Planet Retail, says the Currys deals look well organised, although they may be a reaction to Amazon which the chain tries to closely match on price.

She says: "Not all of these stores have been forced to discount, it is clear some are planned. You may see stickers in the window but they are creating an illusion of offers."

Howarth believes that the high-profile rise of US discount day Black Friday in the UK this year has helped create a promotional atmosphere and not all stores were ready for that.

"People were encouraged to think about discounts earlier. Black Friday put people in that mindset and as we've got closer to Christmas the potential for discounts even on electricals has to be there."

For City analysts that means that retailers' profits are likely to have taken a battering. M&S and Debenhams have seen their shares fall this week, while there will be worries that some private retailers will have been weakened. "Retailers may get the sales but their profit margins will have seen an impact. That's key for investors and they will be watching it closely," she says.

How the iPad stole Christmas

Money's tight, the weather's mild and shoppers have become savvier than ever in hanging on for a bargain. All of these things are making life tough for retailers this year, but they are also battling against the draw of electronic gifts, from tablet computers to the new PlayStation and XBox consoles. These expensive items are the equivalent of several more traditional gifts, meaning many families are buying a single gadget for relatives. This year's must-have is an iPad - the fanciest iPad Air costs north of £600, but it's possible to buy a mini iPad and similar tablets for around £320. If you want to know why clothing, toy and bike retailers have fought for sales this Christmas, take a look at how many gifts could be bought for the price of an average tablet computer. The iPad is stealing Christmas for many retailers.

EU loses AAA rating in S&P downgrade

Credit rating agency's decision to knock EU rating down to AA+, saying countries' combined creditworthiness has declined, draws ire 

Olli Rehn, European commissioner for economic and monetary affairs, said: 'The commission disagrees with S&P that member states' obligations to the budget in a stress scenario are questionable.' Photograph: Geert Vanden Wijngaert/AP

Credit rating agency Standard & Poor's incited the ire of European Unionofficials on Friday when it snatched away the region's top AAA rating, citing tensions between member states and a deterioration in their overall financial health.

Downgrading the EU to AA+, the agency said the 28 countries' combined creditworthiness had declined – but officials and leaders shot back with an assertion that the region had barely any outstanding debt relative to GDP.

Olli Rehn, the European commissioner for economic and monetary affairs, said: "The commission disagrees with S&P that member states' obligations to the budget in a stress scenario are questionable. All member states have always, and also throughout the financial crisis, provided their expected contributions to the budget in full and in time."

S&P, which recently cut its ratings on the Netherlands and France, said the wider region faced growing risks and "cohesion among EU members has lessened".

"EU budgetary negotiations have become more contentious, signalling what we consider to be rising risks to the support of the EU from some member states," the agency said.

There was more upbeat news for the eurozone, however, with European commission data showing consumer confidence had picked up to a 29-month high this month.

Howard Archer at IHS Global Insight commented: "Hopefully, the renewed and appreciable strengthening in consumer confidence in December and the help to purchasing power coming from muted inflation across the eurozone (just 0.9% in November) will increasingly underpin consumer spending and help eurozone economic recovery to gradually gain traction over the coming months.

Vince Cable warns Tory leaders against stoking anti-immigration panic

Business secretary tells Andrew Marr the reaction to Ukip threat is creating a dangerous attitude to towards migrants from the EU

Vince Cable on the Andrew Marr Show: 'All the evidence is that [EU migrants] put more into the economy in tax than they take out in benefits.' Photograph: Jeff Overs/BBC/PA

The business secretary, Vince Cable, has accused the Conservatives of creating an anti-immigration panic in a doomed and damaging attempt to ward off the UK Independence party. He said the Tories were stoking an atmosphere similar to that created by Enoch Powell with his "rivers of blood" speech in the 1960s.

Cable confirmed the Liberal Democrats would not be supporting a cap on EU migrants coming to Britain, saying the policy was "not only illegal but impossible to implement".

He was echoing Nick Clegg, who has pledged to block any fresh attempts to curb immigration from the EU, insisting "this is where we draw the line".

Clegg dismissed as "pointless" Home Office proposals for a 75,000 cap on EU migrants and claimed without freedom of movement the NHS would "fall over".

The issue is certain to be one of the dividing lines between the parties at the next general election, and David Cameron will need to work hard to show he would be able to construct a viable coalition in the EU for a policy of national caps on immigration from within it.

Anna Soubry, Conservative public health minister, said she was not opposed to the Cameron plan but warned newspapers against creating fear of "stranger danger" in difficult economic times. She said some newspaper headlines on immigration made her stomach churn, adding that the majority of migrants came to Britain to work and often do work that UK nationals reject.

Speaking on the BBC's Andrew Marr Show, Cable said: "The Conservatives are in a bit of a panic here because of Ukip. Reacting in the way they are, it is not going to help them politically but it is doing a great deal of damage. The responsibility of politicians in this situation is to look at the facts and the simple point is that there is very little evidence of benefit tourism of people coming from eastern Europe. All the evidence is that they put far more into the economy in tax than they take out in benefits.

"It was right to stop abuse of the benefit systems. Freedom of movement, albeit constrained as it is in the European treaty, is an absolutely basic principle a lot of British people take advantage of.

Referring to the proposed immigration cap of 75,000 a year from the EU, floated last weekend by Theresa May, the home secretary, Cable said: "It is not going to happen and Nick Clegg has made it very clear it is not going to happen. There is a bigger picture here. We periodically get these immigration panics in the UK. I remember going back to Enoch Powell and the 'rivers of blood' and going back a century there was panic over Jewish immigrants coming from eastern Europe. The responsibility of politicians in this situation when people are getting anxious is to try to reassure them and give them facts and not panic or resort to populist measures that do harm."

In an article for the Sunday Times, Clegg wrote: "Sticking a big no-entry sign on the cliffs of Dover may be politically popular, but at a huge economic cost. What would happen if tonight every European living in the UK boarded a ship or plane and went home?

"Are we really that keen to see the back of German lawyers, Dutch accountants or Finnish engineers? Do we want the NHS to fall over and the City of London to grind to a halt?"

He said the issue was "the biggest dividing line in politics today" and that plans for a cap are arbitrary, pointless and distracting.

Cable admitted there was "quite a lot of tension" around the issue in the coalition, saying "there are big differences over fairness, tax and immigration and we will argue our corner.

"It's not just illegal, but I do not see how you implement a cap when you want people's skills and investment coming to this country. There are an awful lot of British people that benefit from the right to circulate in Europe's single market."

He added he was still fighting a battle over the rights of skilled migrants from outside the EU to come to the UK: "What we have got to stop is damaging policies that do harm." He said the measures discouraging overseas students and visa restrictions were so tight they were stopping people from China and India from doing business.

Soubry said: "The overwhelming majority that come here come to work, but clearly there are some that don't. They are a small number and they are going quite rightly going to be discouraged. The majority come to work and they benefit the country. In certain parts of the country they do the jobs that others unfortunately are not doing. Some of the headlines of some newspapers make my stomach churn. There is a fear of immigration, but we are not getting all the facts. When times are tough there is a danger we blame the stranger and history tells us that is very dangerous."

Family of murdered British aid worker in Sri Lanka still awaiting justice

Cover-up fears remain for fraught parents as trial date of six men linked to Christmas Day killing of Khurum Shaikh finally set

David Cameron has raised the murder of Red Cross worker Khuram Shaikh at the seaside resort Tangalle with the Sri Lankan president. Photograph: theguardian.co.uk

Mohammad Zaman Shaikh woke up on Christmas Day 2011 feeling sick and uneasy. He had slept badly but couldn't say precisely why. All he knew was that something wasn't right.

When, at 10am that morning, the police knocked on the door of the family home in Rochdale with the news that his son Khuram had been murdered in Sri Lanka¬, Zaman initially assumed they'd made a mistake.

It seemed unlikely that his youngest son, a rehabilitation programme manager with the International Committee of the Red Cross, could have died in a hotel at the seaside resort of Tangalle. He had, after all, worked in some of the most dangerous and desolate places on earth, from North Korea to Ethiopia, and had gone to Sri Lanka to relax with his girlfriend after a stint fitting prosthetic limbs in Gaza.

After a little while, though, Zaman's certainty began to evaporate.

"I remember my heart beginning to beat faster and faster and my eyes began to fill up as I started to think that the police information could be correct," he says. "When they told Khuram's mother, she screamed and cried hysterically, then she fell to the floor and fainted."

Khuram is thought to have been attacked and killed while trying to protect his girlfriend from a group of men who had arrived at the hotel and begun to sexually harass her.

Two years on, Khuram's mother still cries as she goes through the daily torture of trying to imagine her son's final moments.

"While I worry for her health and mental state of mind there is very little I can do to help her," says Zaman. "A mother's loss is different to anyone else's and only a mother can explain that."

Zaman, a 67-year-old retired businessman, tries to cope by visiting Khuram's grave several times a week and by clutching to the hope that one day his son will get justice.

But although the trial of the six men accused of murdering Khuram and raping his girlfriend is finally due to begin in March next year, and although Prince Charles and David Cameron have raised the murder with the Sri Lankan president, Mahinda Rajapaksa, Zaman is far from confident about the island's judicial system.

Frequent delays in bringing the accused to court – not to mention the fact that one of the alleged attackers is a politician with close ties to Rajapaksa – have taught him to limit his hopes.

"The Sri Lankan authorities have handled the case in a painfully slow manner," he says. "They are trying to brush it under the carpet in the hope that people will forget about what happened and that we will stop fighting for justice."

But what they fail to understand, he adds, is that "we will never stop fighting for justice".

Zaman, who has been unable to speak publicly about Khuram's murder until now, is succinct when he reflects on what the loss has done to the family: "It has shattered our whole world."

He remembers Khuram as a happy, handsome and sporty boy who was obsessed with Liverpool FC and would take any opportunity to play football, cricket or snooker.

"My son grew into the most kind-hearted, selfless and ambitious person you could ever wish to meet," he says. "He put everyone else's needs above his own and I am incredibly proud of everything he achieved in his short life."

Zaman's pride reached a pinnacle when Khuram got his job with the International Red Cross. Despite realising how dangerous the work would be, he knew his son had set his heart on it.

"When he explained that he wanted to use his skills and knowledge to help those less fortunate than himself, we started to come round to the idea," says Zaman. "He assured us that he would stay safe wherever he went."

The Shaikhs' local MP, Simon Danczuk, has travelled to Sri Lanka twice this year to ask ministers why the case is progressing so slowly, and was instrumental in bringing the matter to David Cameron's attention.

"The loss this family has suffered is unbearable and I've seen for myself the pain in the parents' eyes as they struggle to come to terms with what happened to their son," says the Labour MP. "I do not want another Christmas to pass with Khuram's killers still walking free."

At the end of last month, the prime minister wrote to Danczuk to tell him that he had raised the subject of Khuram's murder "very directly" with Rajapaksa during the Commonwealth summit in Colombo, adding that he had told the president that the "shocking and appalling case" needed to be resolved as quickly as possible.

Until that day, the family is fated to remain trapped somewhere between grief and despair. Khuram's father will keep up his near-daily trips to his son's grave; his mother will tear herself to pieces trying to imagine his suffering, and his five-year-old niece will continue asking for the uncle she does not know is dead.

Closure, if such a thing exists for a family who have lost a son in such circumstances, is very distant - a fact of which Zaman Shaikh is painfully aware.

"Khuram was incredibly close with his siblings, especially his younger sister," he says. "Khuram was a mummy's boy and although he has died once, I watch his mother die every single day.