NEWS,04.02.2013

Media lampoons Berlusconi's tax promise

Silvio Berlusconi's rivals lampooned him as a snake charmer and a TV huckster selling pots and pans on Monday after he promised sweeping tax cuts if his centre right wins Italy's election this month.The former prime minister launched his "last great electoral and political battle" on Sunday with a plan to reduce government spending, enact fiscal reform and what he called a "shock proposal" - reimbursing Italians for a much-hated tax on primary residences imposed last year.Forced from power in 2011 after financial market turmoil that threatened to push Italy into a Greek-style debt crisis, Berlusconi has focused his comeback hopes on attacking the austerity policies of Mario Monti's technocrat government."Even an imbecile is able to invent new taxes and impose them on citizens but only an intelligent person can cut costs," Berlusconi said at a rally in Milan, the northern city where he made his media and real estate fortune. But the day after, it was Berlusconi who was mercilessly derided by most newspapers and political opponents. Corriere della Sera, Italy's leading paper, ran a cartoon depicting him dressed as a smiling joker in a carnival outfit throwing coins and banknotes to everyone in his wake.Monti called Berlusconi "a snake charmer" and accused him of trying to sell "a dream even more fantastic than that in Alice in Wonderland".Just about the only comfort Berlusconi found in the media was in a headline in Il Giornale, a newspaper owned by his family: "Finally, More Money".The real estate tax, known as IMU, was imposed on primary residences last year by Monti to help with Italy's financial crisis, after it had been abolished in 2008 by Berlusconi.It is estimated to have raised some €4bn last year, a sum Berlusconi dismissed as no more than 0.5% of the €800bn annual budget.He said he would scrap the tax at his first cabinet meeting and refund payments already made. He promised to phase out a regional tax on businesses, reduce personal income tax rates, not hike value added tax (VAT) or impose a "wealth tax" on higher earners."This can work if alternative revenues are found," said Professor Fabio Marchetti, a tax expert at Rome Luiss university. "But I think it is rather utopian and demagoguery because it would make us the only country with no tax on primary residences." Berlusconi was criticised even by former allies.Giulio Tremonti, economy minister in the last Berlusconi government, said reimbursing the real estate tax "would objectively create a problem for public accounts."Vittorio Feltri, a journalist who was for years the editor of Il Giornale, said: "If the state can't find the money to pay its suppliers or make tax refunds, where is it going to find the money to reimburse the real estate tax?"Berlusconi said the money would come in part from striking a deal with Switzerland to tax financial activities there by Italian citizens."But a possible accord with Switzerland is still in stormy waters," said Professor Marchetti, adding that it could never be worked out before the new government takes office in April.Berlusconi promised to save money by cutting government waste, halving the number of parliamentarians, and eliminating public financing of political parties. Income would come from new taxes on things he called "not of primary necessity" - tobacco, gambling and lottery tickets."Some people will buy into it and it certainly will have an effect on some people's voting intentions but the unknown is how much of an effect it can have," said Marchetti.Most opinion polls indicate that the centre-left coalition, headed by Democratic Party secretary Pier Luigi Bersani, will win the Feb. 24-25 election. But the gap between the centre left and the centre right has narrowed steadily since Berlusconi returned to active politics. ($1 = 0.7301 euros)

German car sales down

New car registrations in Germany, a key measure of demand in one of the most crucial sectors of Europe's top economy, fell sharply in January, official data showed on Monday.Some 192 100 new cars were registered in January, a slump of 9% compared with the same month a year earlier, the VDA auto industry calculated.Export sales of German-made cars were down as well, falling by 8% to 310 700 units in January.In terms of output, the number of cars rolling off the production line fell by 11% to 394 300, VDA added.

 

Obama: more tax revenue needed

President Barack Obama said on Sunday more tax revenue would be needed in the coming years to reduce the US deficit but raising tax rates was not a key issue."I don't think the issue right now is raising rates," Obama said in an interview on CBS."There is no doubt we need additional revenue, coupled with smart spending reductions in order to bring down our deficit. And we can do it in a gradual way so that it doesn't have a huge impact," he said.At the beginning of the year Obama pushed through legislation to address the US fiscal cliff that raised income tax rates on households making more than $450 000 a year.

UK banks face break-up under new law

Britain's biggest banks will face being broken up if they fail to ring-fence their retail and investment arms, under draft legislation set to be announced by finance minister George Osborne on Monday.The new law will empower the government and a new banking watchdog to "electrify the ring-fence" if banks refuse to separate high-risk operations from savers' deposits.Launching the Banking Reform Bill, Chancellor of the Exchequer Osborne was due to say that banks will no longer be able to become "too big to fail", forcing the taxpayer to bail them out.The government had already announced plans to force banks to ring-fence operations by 2019, in a bid to avoid taxpayers having to bail out troubled banks as was the case during the financial crisis.But the draft law has been toughened up to include "electrification" of the ring-fence after the Parliamentary Commission on Banking Standards complained last month that the proposals fell "well short of what is required".Osborne had previously warned the commission against "unpicking the consensus" on structural reform of the banking sector but appears to have accepted its warning that the draft law left room for loopholes.The announcement puts the finance minister on a collision course with Britain's banks, which claim the legislation would make London less attractive as a global financial centre."This will create uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses," said Anthony Browne, chief executive of the British Bankers' Association."Above all, what banks and business need is regulatory certainty so that banks can get on with what they want to do, which is help the economy grow."But Osborne was set to tell bankers: "When the RBS (Royal Bank of Scotland) failed, my predecessor Alastair Darling felt he had no option but to bail the entire thing out."Not just RBS on the high street, but the trading positions in Asia, the mortgage books in sub-prime America, the property punts in Dubai."I want to make sure that the next time a Chancellor faces that decision they have a choice. To keep the bank branches going, the cash machines operating, while letting the investment arm fail."If passed, the Banking Reform Bill would also establish a new watchdog for the industry and force investment and retail banks to have separate bosses.

No sign US eavesdropped on Cole suspect

A judge at Guantanamo Bay refused on Monday to suspend a pre-trial hearing for the prisoner accused of orchestrating the attack on the USS Cole, ruling that defence lawyers had offered no evidence supporting their suspicion that the CIA can eavesdrop on their private conversations with their client.Army Colonel James Pohl said that unless the defence can offer evidence of eavesdropping, the hearing for Abd al-Rahim al-Nashiri would continue."I can't stop a trial simply because something might happen," Pohl told defence attorney Navy Lieutenant Commander Stephen Reyes during a heated exchange at the start of the scheduled four-day hearing.Pohl granted ali-Nashiri's lawyers a three-hour recess to consider whether they can ethically continue representing him if they suspect that their privileged conversations are being monitored.The hearing was held at the US naval base in Cuba. AP watched a video feed of the hearing at Fort Meade.Al-Nashiri, a Saudi national, is charged with orchestrating the 2000 attack on the USS Cole, which killed 17 sailors and wounded 37. He has been imprisoned at the Guantanamo since 2006, after being held by the CIA in a series of secret prisons. He is considered to be one of the most senior leaders in al-Qaeda.The eavesdropping issue sprang from an episode last week in another Guantanamo case in which an undisclosed government agency unilaterally silenced courtroom loudspeakers to prevent spectators from hearing classified information. Pohl, who was surprised by the action, ordered the agency on Thursday to disconnect the equipment.Reyes said the defence wants to know whether any third party can secretly monitor privileged conversations at the courtroom defence table, in a nearby holding cell or elsewhere on the base.Prosecutor Anthony W Mattivi assured the judge that no such capability exists. Reyes wasn't satisfied."Now that we know there's a man behind the curtain, we can't say, 'Ignore the man behind the curtain’," Reyes said.Reyes said he especially wants to know if the CIA can eavesdrop on those conversations."If it is the CIA that is conducting the listening, this is the same organisation that detained and tortured Mr al-Nashiri," Reyes said.A CIA inspector general's report said al-Nashiri was waterboarded and threatened with a gun and a power drill because interrogators believed he was withholding information about possible attacks against the US. Such practices were allowed under rules approved by the George W Bush administration but many them have since been repudiated as torture.

NEWS,30.11.2012

US 'fiscal cliff': No deal in sight

Washington politicians have one month to step back from the so-called "fiscal cliff," across-the-board tax hikes and austerity-driven spending cuts likely to return the country to recession, and a top Republican declares there has been no real progress after two weeks of talks between President Barack Obama and a divided Congress. The president has called for settling the issue before Christmas and headed on Friday to Pennsylvania to campaign for his demand that any deal include higher tax rates on US couples earning more than $250,000 a year. He also wants to keep in place the smaller tax burden that lower income earners have had for about a decade. But Republican House Speaker John Boehner, after receiving details of the Obama plan in a private meeting on Thursday with Treasury Secretary Tim Geithner, said "no substantive progress has been made" in negotiations since Congress returned to work after the 6 November election. "Much to my disappointment, it wasn't a serious one," Boehner said on Friday of the proposal. Democrats have said that any delay was the fault of Republicans who refuse to accept Obama's call to raise tax rates on the richest Americans."There can be no deal without rates on top earners going up," White House press secretary Jay Carney said Thursday. The austerity measures that automatically would take effect 1 January unless a deal is made is the looming punishment for Washington's inability, or unwillingness, in recent years to deal decisively with the country's spending far more than it has been taking in. Politicians in both major US parties are showing no signs of giving up on the deep partisan divisions that have crippled legislative action in Washington despite Obama's strong victory for a second White House term.White House officials believe Obama's trip on Friday would build momentum for his case, even as Republicans describe it as an irritant and an obstacle to productive talks. Obama insists on higher taxes for the top 2% of earners and casts Republicans as an obstacle to a deal. Republicans have said they are open to new tax revenue but not higher rates. Obama said both sides need to "get out of our comfort zones" to reach an agreement. Obama toured and spoke at the Rodon Group manufacturing facility, showcasing the company as an example of a business that depends on middle-class consumers during the holiday season. The company manufactures parts for K'NEX Brands, a construction toy company.The uncertainty over whether the US can resolve the critical budget deadlock is beginning to increase jitters in stock markets in Europe, where eurozone countries have already returned to recessionary economies. European investor sentiment had been buoyed this week by upbeat reports on the US economy, including economic growth and consumer confidence. But markets failed to sustain their rally on Friday as trading became increasingly focused on the difficult talks between the White House and Congress.Economists warn that sending the US economy over the "fiscal cliff" would trigger a recession and cause a spike in already stubbornly high unemployment.To avoid the danger, Obama and Congress are hoping to devise a plan that can reduce future deficits by as much as $4 trillion in a decade, cancel the tax increases and automatic spending cuts and expand the government's ability to borrow beyond the current limit of $16.4 trillion.Officials on Thursday said the White House is seeking $1.6 trillion in higher taxes over a decade and an immediate infusion of money to aid the jobless and help hard-pressed homeowners.In exchange, the officials said, Obama would support an unspecified amount of spending cuts this year, to be followed by legislation in 2013 producing savings of as much as $400bn from popular benefit programs over a decade.In political terms, the White House proposal are nearly opposite what Republicans earlier lay down as their first offer, including a permanent extension of income tax cuts at all levels.Senate Majority Leader Harry Reid told reporters, "We're still waiting for a serious offer from Republicans."The White House also circulated a memo that said closing tax loopholes and limiting tax deductions a preferred Republican alternative to Obama's call to raise high-end tax rates would be likely to depress charitable donations and wind up leading to a middle-class tax increase in the near future.

EU set to fight internet tax at summit

European Union member states are preparing to fight as a bloc alongside the United States to prevent a move by Russia and countries in Africa to impose a levy on internet traffic and make it easier to track users' activities.The showdown over the policing and administration of the internet will take place at a meeting of the International Telecommunications Union in Dubai from Dec. 3-14, when the ITU's 193 member countries will meet to debate new net rules.The EU's 27 states are staunchly opposed to sweeping plans to regulate the internet, including proposals from Africa, Asia and the Middle East that governments should be able to trace the flow of Web-based traffic and introduce a tax on companies such as Google and Yahoo! if they deliver content to networks abroad.The United States, which plays a dominant role in administering the internet via ICANN, the Internet Corporation for Assigned Names and Numbers, is firmly opposed to any new restrictions, which it fears will limit innovation and commerce.It is backed in its stance by the EU, Canada, Australia, New Zealand, Mexico and other ITU-member countries. As well as having support from African countries, officials say Russia has backing for some of its proposals from China."The EU believes that there is no justification for such proposals," the European Commission, the EU's executive, said on Friday, saying it was the view of all 27 member states.Neelie Kroes, the European commissioner responsible for internet policy, says some of the proposals being made ahead of the ITU conference risk damaging the internet's evolution as a critical piece of global commercial infrastructure and a network for the free flow of information and data."The European Union's firm view is that the internet works," she said this week. "If it ain't broke, don't fix it."Leaked drafts of a proposal from Russia show it would like to have more say over internet traffic entering its networks, a proposal the United States has said is most troubling to them."Member states shall have the sovereign right to regulate... the national internet segment," Russia's proposal says.The US ambassador to the ITU, Terry Kramer, said Moscow's plans would give governments "the right to route traffic, to review content, and say that's all a completely national matter", a potentially profound limitation on speech and trade.Any agreements which would allow governments to shepherd traffic at their will threaten US business interests because most content on the internet either originates from, is stored in or routed via the United States.With some of the world's biggest and most innovative Web-based companies, from Google to Facebook, Twitter and Yahoo!, based in the United States, the country has the most to lose.While countries like Russia cite cyber attacks as a reason to monitor traffic, the EU see it as an excuse. "Some countries treat this as a euphemism for controlling freedom of expression," said a commission official.The EU is also alarmed by proposals to make content providers pay for having their services delivered abroad.As traditional phone revenues decline and internet access prices remain high, some countries argue that Google, Skype and Facebook ought to pay to have their traffic routed to that country, helping them fund the expansion of their networks.A leaked proposal from Cameroon says traffic reaching a network operator would incur "full payment." Kramer said some Arab states were also favourable to the idea.However, such proposals, known as 'sender party pays', are a potential boon to European telecoms companies, some of which annnounced in October that they supported such fees. Some European telecoms operators have or would like to have operations in developing countries such as Cameroon.The German operator Deutsche Telekom tried to promote the principle by comparing it to the first postage stamp. But in practical terms, extending the way the postal service makes money to the internet could mean that Google would pay each time someone in Cameroon read their Google-based email. Critics say such proposals are unworkable because traffic usually crosses half a dozen networks in several countries before it lands in a person's browser."The idea that you trace and bill all of this is ludicrous," said James Waterworth of the Computer and Communications Industry Association, a US group whose members include Facebook and Microsoft and which has an office in Brussels.Internet activists say such fees would 'Balkanise' the internet and cause an information black out in poorer countries."Who would be interested in providing content, if they have to pay for doing so?" said Markus Kummer of the Internet Society, a think-tank with offices in Geneva."And developing countries might be shooting themselves in the foot, as reversing the economic internet model might cut them off from accessing vital information."

Unemployment hits 19 million Europeans

Eurozone joblessness has reached a new high and the poor state of the economy is reducing inflation to near two-year lows, raising the prospect of further interest cuts by the European Central Bank. As the eurozone sinks into its second recession since 2009, the number of people out of work in the eurozone rose by 173 000 people in October to almost 19 million people unemployed, the EU's statistics office Eurostat said on Friday. That pushed joblessness to the highest level since the euro was introduced in 1999, at 11.7% of the working population, illustrating the human impact of a public debt and banking crisis that has reverberated across the world. Struggling companies and indebted households have also lost the confidence to spend and invest, evident in the annual consumer price inflation reading for November, which dropped to 2.2% in November from 2.5% in October. Consumer price inflation was at its lowest level since December 2010. One of the smallest rises in energy price inflation in a year helped to bring inflation to near the ECB's target of near, but just under 2%, opening the door to more rate cuts by the bank. The ECB last cut its main refinancing rate in July, to a record low of 0.75%, and economists in a Reuters poll this week were more divided than ever on whether there will be another rate cut early next year. "The outlook is still bleak," said Thomas Costerg, an economist at Standard Chartered in London, who sees an ECB rate cut in the first three months of next year. "We think that ECB President Mario Draghi will leave the door open for more stimulus in the coming months," he said. The cost of borrowing for banks and households in the eurozone is already at a record low of 0.75% and economists question whether further rate cuts will do much good, because of a lack of confidence among banks to lend. The central bank may decide to postpone a rate cut until after its next meeting on December 6 as it tries to keep markets focused on the benefits of its recently-announced plan to buy the bonds of governments in distress and keep their borrowing costs down. The bond-buying programme has calmed nervy investors who predicted the break-up of the eurozone just a few months ago and many are moving back into Italian and Spanish bond markets. But the eurozone's economic reality is one of a slowing German economy, stagnation in France, recession for Italy and Spain and an outright depression in Greece, with no signs of a quick recovery. Many economists blame the spending cuts implemented by almost all governments in the past three years to try to bring down their deficits that ballooned over the past decade. Portugal, for instance, shed more than one in 20 public sector jobs in the first nine months of 2012. But in a shift in tone, the International Monetary Fund and the European Commission say now that they may have been too aggressive in pushing for government cutbacks. The Commission is now advocating "growth-friendly fiscal consolidation". Draghi, speaking on French radio on Friday, tried to sound cautiously upbeat and has avoided the word "recession" in his public comments in recent weeks. "The recovery for most of the eurozone will certainly begin in the second half of 2013," he told Europe 1 radio. Yet even the European Commission's forecast of 0.1% growth next year looks optimistic and many banks, from Citigroup to Standard Chartered, expect the recession to continue and unemployment to keep rising. There are also wide divergences in unemployment in the eurozone, with the jobless rate at around 4% in Austria, 16% in Portugal and above 25% in Spain and Greece. "The number of unemployed, which better captures the shorter-term dynamics, is showing little sign of abating," said JP Morgan economist Greg Fuzesi. "Even with our expectation of a modest recovery next year, the unemployment rate could reach 12% quite soon," he said.

NEWS,20.11.2012

Seven And A Half Things To Know: Fiscal Cliff Spurs Super-Rich Panic

Thing One: Super-Rich Super Panic: Rich Americans likely have the most on the line as we near the fiscal cliff, the New York Times notes. Their tax rates would rise under the President's plan or if lawmakers don’t reach a deal. Some are taking action in advance. The Walton family, which founded Walmart, may save as much $180 million in taxes thanks to the company’s decision to push up its dividend payout to December from January so investors can count the income for this year, according to The New York Times. If Obama and Congress fail to reach a deal this year the tax rate on dividend income could more than double. But as The NYT notes in a separate article, under Obama’s plan, rich is defined rather broadly. It could mean the super-wealthy Waltons or an individual or small business owner making more than $200,000 per year.Meanwhile, corporations also stand to lose: More than $150 billion over 10 years in tax breaks, according to the Financial Times. Some business leaders say they would graciously agree to help America by giving up their corporate tax breaks so as long as they come with more complete corporate tax reform next year. Still, it’s likely what business leaders want the most is for lawmakers to reach a solution. Stock indexes rose to their best day in two months on Monday on optimism that lawmakers would agree to a deal, according to the Wall Street Journal. There’s at least one CEO out there claims he’s willing to give up tax breaks for a solution, NASDAQ head Robert Greifeld said politicians need to worry less about “winning” and admitted that “broadening the tax base” may be necessary to get the necessary deal done. Thing Two: Walmart's Thanksgiving May Be Ruined: As Walmart’s founders are looking for ways to skirt higher taxes, some of their employees are protesting the company’s decision to make them work on Thanksgiving. More than 30,000 people have already signed an online petition protesting the company’s decision to open on Thanksgiving Day. Meanwhile, the Wall Street Journal reports that labor officials are trying to decide as soon as possible whether to seek an injunction on behalf of Walmart to stop planned protests at 1,000 of its store locations on Black Friday, the biggest shopping day of the year. Walmart claims the protests are an illegal disruption of business. Thing Three: The Twinkie Is Saved: Twinkie enthusiasts calm down, you’ll still be able to relive the tasteless 1950s as often as you’d like. Hostess Brands, the makers of Twinkies, agreed to mediation, with the Bakers Union, the group the company claimed was forcing them to liquidate. But don’t stop hoarding Cup Cakes and Ding Dongs just yet, the company isn’t positive it will reach a solution, a Hostess spokesman told the Financial Times. The two sides will meet with the bankruptcy judge that ordered the mediation Tuesday in an aim to reach a new contract and save 18,500 jobs, according to the Wall Street Journal. If they can’t reach a deal, Hostess will be able to move forward with its plans to liquidate.Thing Four: Eurozone Crisis Still Not Over: The European crisis rages on and yes, leaders are still fighting about what exactly to do. European finance ministers are racing to find a fix after deciding last week to give Greece two extra years to cut its budget deficit creating a $19 billion hole in the country’s finances and angering the IMF, according to Bloomberg. Meanwhile, France, one of the region’s stronger economies isn’t faring too well. Moody’s cut the country’s credit rating and slammed President Fancois Hollande’s attempts to fix the economy, according to the Wall Street Journal.Thing Five: Ex-Trader Found Guilty Of Losing Lots Of Money: In the continuing saga of finding others to blame for banks’ risky behavior, ex-UBS trader Kweku Adoboli was convicted of one count of fraud for losing the bank $2.3 billion, according to Reuters. In defending himself Adoboli had said that his managers encouraged him to push the risk limits, adding that his huge loss came “in pursuit of the goals set by our leadership.”Thing Six: Credit Suisse 2.0: Apparently when one of your rivals cuts 10,000 jobs it makes you consider a few things. Credit Suisse is splitting off its investment bank unit outside Switzerland from its global wealth bank, Swiss investment banking and wealth management units in an aim to meet the “new regulatory reality,” according to the Financial Times. The move comes just a few weeks after rival UBS slashed 10,000 jobs in its investment banking unit. The move will likely keep the bank less vulnerable to the whims of international markets and corporate finance. The bank might also get another thing added to its plate soon. The New York Attorney General’s office is planning to file a lawsuit against Credit Suisse, alleging that the bank misled investors on the quality of its mortgage-backed securities in the lead up to the financial crisis, according to Reuters. Thing Seven: People Still Don't Like PCs: The death of the PC claims another victim. Intel CEO Paul Otellini announced yesterday that he’s stepping down from his post early after not successfully shifting the chipmaker from a PC-based business to a mobile business, according to Bloomberg. The unexpected announcement may indicate the depth of the company’s woes, Intel is typically known for careful succession planning and Otellini could have stayed on for another three years, according to the Financial Times.Thing Seven And A Half: Your Favorite Thanksgiving Moments Revealed: Just two more days for Thanksgiving and the best holiday of the year can’t come soon enough. Here are the 15 best moments of Thanksgiving (many in gif form) via Buzzfeed to get you through these last 48 hours of work.

 

China escalates subsidies spat with US

China is to ask the World Trade Organisation to rule on its latest commercial spat with the United States, the WTO said on Tuesday, hoping it will back Beijing's complaint that punitive US tariffs imposed on a raft of Chinese goods are illegal.In a move that deepened the dispute, China will ask the WTO to set up a three-person dispute panel at a meeting on Nov. 30. If China wins the case and any subsequent appeal Washington could be forced to drop the tariffs it levied on 31 Chinese products which it said were being traded unfairly.The US tariffs affected photovoltaic cells and modules used in solar power, various steel products, off-road tyres, aluminium goods as well as towers for windfarms.Such capital-intensive and cyclical commodity products have frequently been at the centre of trade disputes as national industries have asked governments to step in and stop foreign competition from destroying profits and jobs.Steel products have frequently been involved, as more recently have solar power components, with the oversupplied global solar industry struggling to maintain its profit margins.The United States has been a fierce critic of what it says are clandestine Chinese subsidy programmes, but Beijing says Washington's efforts to tackle suspected wrongdoing have gone beyond the rules.China's complaint targets Public Law 112-99, which was signed by President Barack Obama in March, as well as US steps taken against suspected export-distorting subsidies between Nov. 20 2006 and the passage of the contested law.In a WTO filing, China said the US law had broken the rules because it applied retroactively to suspected Chinese subsidies as far back as 2006.The United States was also at fault, China said, because it used "double remedies" against China between 2006 and March this year.Double remedies means targeting the same Chinese exports twice over - once for being subsidised and once for being "dumped", or sold at unfairly cheap prices.China launched the complaint in September, just hours after the United States lodged a similar complaint against China's support for car exports.Under WTO rules a country accused of breaking the rules has 60 days to try to resolve the complaint, after which the complainant can ask the WTO to set up a panel of adjudicators to judge the merits of the dispute. The WTO's ruling is likely to be made public in mid-2013.

Watchdog investigates lending practices

Britain's consumer watchdog has launched investigations into several payday lenders over aggressive debt collection and expressed its concern about general poor practice within the sector.Payday lenders offer short-term loans, which are intended to be paid back when borrowers receive their wages. Britons have increasingly turned to these loans as mainstream banks have tightened their criteria for granting short-term credit."We have uncovered evidence that some payday lenders are acting in ways that are so serious that we have already opened formal investigations against them," David Fisher, the Office of Fair Trading's (OFT) director of consumer credit, said on Tuesday."It is also clear that, across the sector, lenders need to improve their business practices or risk enforcement action."The OFT identified issues around debt-collection practices, the adequacy of affordability checks made by lenders, the number of loans not repaid on time and the lack of forbearance shown by some lenders when borrowers get into financial difficulties.Wonga.com, which offers individuals short-term loans of up to 1 000 pounds, more than trebled its earnings last year. Like other payday lenders, the company has faced criticism that its annual percentage rate (APR), listed on Wonga.com as 4 214%, takes advantage of the financially vulnerable.The OFT is reviewing the whole sector and has said that some firms will face enforcement action if they do not improve their practices.Wonga said that it welcomed the OFT's review. "We provide a valued, transparent service to more than a million customers and want to see rogue practices rooted out across all financial services," it said.The OFT will publish a full report next year and state whether wider action is needed to tackle problems in the sector.