Nationwide warning us to keep cash and cards safe this Christmas

December 16, 2013 at 2:55 pm

The run-up to Christmas may be giving you the feel-good factor but sadly the criminal element is pretty happy too, for there are rich pickings for the crook at this time of year. Peace and goodwill to all men is an alien concept in the underworld of criminality, and Nationwide has warned shoppers and party-goers not to let their guard down.

The number of credit and debit cards that go missing at this time of year is always high and the bank expects this year to be no different. It is easy to lose cash too, often without even realising it.

Nationwide’s advice for keeping cards safe is as follows:

  • Never ever be tempted to give your card to anyone, even close friends and family.
  • Take similar precautions with your PIN; never give your card and PIN to anyone, no matter who they are and how convenient it would be for them to pop to the ATM for you.
  • Do not allow your card to be taken out of your sight by retailers or restaurants.
  • Make sure that no-one can see your PIN when paying for goods or withdrawing cash from an ATM.
  • Cancel any lost or stolen cards immediately; it is a good idea to have your provider’s phone number stored on your mobile.

As for cash, when you are abroad and in a crowded place you probably take precautions such as wearing a money belt to avoid falling prey to thieves. It may sound excessive but there is no reason why you should not do the same when faced with throngs of Christmas shoppers in your own high street.

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TSB re-launched

September 15, 2013 at 11:05 am

18 years ago TSB merged with Lloyds to become Lloyds TSB but last week saw the revival of TSB as a stand-alone bank, promising to bring back the concept of local banking to the high street. Clients have been advised that their money will only be lent to local people in the mortgage and loans market or to help small local businesses expand.

The revival follows the November 2009 European Commission ruling which aimed to make the UK banking sector more competitive. The disposal, known as Project Verde, encountered difficulties earlier this year when a proposed deal with the Co-op failed to come to fruition.

Lloyds Banking Group have transferred some 4.6 million customers to TSB although there was an option to remain with Lloyds if customers so wished. Only 4,000 have opted to do so.

TSB started 200 years ago in Scotland, set up by the Rev Duncan to serve the “hardworking” local community. The re-launched bank now has 631 branches and 8,500 staff.

Sadly for TSB and its customers there were teething troubles on day 1 of the launch when a computer glitch led to the website crashing. Not only were potential investors affected but existing customers were unable to access their accounts online. Fortunately the problems had been solved by lunchtime.

Kevin Mountford of sees the launch of the TSB as good news for consumers, particularly for savers since TSB has its own banking licence. This means that if investors have savings with Lloyds and with TSB they will be protected separately by the Financial Services Compensation Scheme.

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EU plans could make banks “creative” in clawing back losses

July 15, 2013 at 2:50 pm

EU plans due out later this month are expected to reduce or even wipe out the fees that banks are allowed to charge retailers for accepting payment by credit or debit cards.

This is expected to cost the banks around 34p per transaction. Whilst in an ideal world it would make sense for the retailers to pass on the savings to their customers, it seems far more likely that the retailers will hang on to the savings and banks will become ever more creative in clawing back the money that they are losing.

There are fears that this could mean the end of using debit and credit cards without fees payable by the customer. When changes were introduced in Spain and Australia to the “interchange” fees paid by retailers to the banks, it was the customer who ended up losing out.

Europe Economics (which recently produced a report for MasterCard) predicts that customers will end up paying up to £25 a year for using a credit card and £11 a year for a debit card. Banks may also start charging customers for withdrawing cash at ATMs.

British people use their credit cards more than any of their European neighbours, and they will be hard hit if the dire predictions are accurate. In December 2012 a sizeable 74.7% of all retail transactions were made on plastic.

Richard Koch, of the UK Cards Association, summed up the reaction of many by saying that “the British are used to, and like, free banking. The Commission’s model would impact on the card issuers’ ability to continue that.”

To see a copy of the full report click here.

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We could soon be able to pay in a cheque using our mobile phone

July 5, 2013 at 2:56 pm

The use of cheques has declined in recent years but, for those of us who do receive cheques, it is often a real inconvenience. Unless you are comfortable sending the cheques to your bank by post, it means a trip to the bank, either to pay them in using a credit point or via a cashier. Imagine if you could take online banking one step further and pay the cheque into your bank account virtually. It seems that this may not be such an unlikely dream, although it would involve a new law being passed.

The idea is that customers could take a photo of the cheque and, using an app, the money would be transferred into the correct account. Two thirds of the UK owns a smartphone and many people already use it routinely for taking photographs. It would therefore be no problem for them to take a photo of the front and back of the cheque which would show the name of the payee, the sum involved, the sort code and bank account number and, all importantly, the signature. A smartphone app would make sure that the money is transferred to the correct bank account.

Any sceptics will be pleased to know that this system has been used very successfully in countries such as Canada, Spain and the USA since 2009. The campaign for introducing the same system to the UK is being spearheaded by Intelligent Environments, a company which produces software for the financial services sector.

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Should you ditch your bank and invest in a lend-to-save instead?

April 30, 2013 at 2:53 pm

Officially known as peer-to-peer lending, lend-to-save cuts out the banks and allows investors to lend directly to borrowers.

The benefits are interest rates of up to 8%, markedly higher than the meagre offerings of today’s high street banks. Meanwhile, for borrowers there is no such thing as an early repayment penalty and lenders can even get their money back early for a marginal fee.

The first such enterprise began in the UK in 2005 and has so far been a roaring commercial success. To date Zopa has lent out more than £290 million and hot on its heels are two emerging competitors – Rate Setter and Funding Circle.

This new financial industry has been warmly welcomed by some sectors of the UK establishment with the UK Government, Huddersfield University and Lancashire County Council all lending money via Funding Circle.

With a lack of industry regulation, however, there is an increased risk of losing your money.

The Financial Services Compensation Scheme which guarantees £85,000 of a saver’s deposit does not apply to peer-to-peer lending. As such each company offers its own way to protect lenders’ deposits. If borrowers default on their loans, Rate Setter offers a fall-back fund and they have never failed to pay a lender back. Funding Circle, although suffering from the highest loan default-rate, offers lenders the ability to spread their risk across multiple borrowers, splitting their investments into smaller blocks and earn more interest by taking on higher risk loans.

All in, lend-to-save offers an interesting option for the small-time investor but be sure to remember that this is an investment and not saving. Don’t put all your eggs in one basket, check the real return you will make after paying tax and only ever invest as much as you can afford to lose.

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MPs warn that proposed banking reforms will not protect public from another crisis

March 20, 2013 at 2:21 pm

Radical reforms set out by the Government to curb Britain’s wayward banks have been criticised as too weak by the banking commission.

The commission, set up in 2012 after Barclays’ Libor scandal, counts the Archbishop of Canterbury among its members. Its job is to oversee a set of banking reforms that will protect the public from another financial meltdown. The Royal Bank of Scotland and UBS have already fallen foul of the commission and been fined enormous sums of money for malpractice.

High on the list of reforms is the ‘ring-fencing’ of public savings, in order to protect them from banks’ riskier operations. This will erase any need for repeat public bailouts of failing banks. However, the banking commission wants to go one step further and be granted powers to break up whole sections of the banking industry should things go wrong again. Effectively, this will let failing banks fail without passing the cost on to the public.

This is the second time the commission has called for tougher measures after it first criticised the Government’s report in December. They also accuse George Osborne of succumbing to the powerful banking lobby and trying to rush the reforms through Parliament. Indeed the Chancellor of the Exchequer has shortened the time frame for peer review of the changes.

Governor of the Bank of England Mervyn King has aroused further suspicion, pointing out Osborne’s overly close ties with influential bankers while lamenting the difficulty with which regulators were able to contact him at all.

Andrew Tyrie, who chairs the banking commission, agrees, stating that “the banks have lobbied very successfully in this area”. He goes on to say that this bill is absolutely crucial to the UK’s long-term financial health and that it is of paramount importance to seize this chance to make things right.

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How to choose an ethical bank account

March 12, 2013 at 2:17 pm

Hot on the heels of contributing to a worldwide financial crisis plunging the economy into austerity, Barclays Bank has posted pre-tax profits of a staggering £5.9 billion and a staff bonus pool of eye-watering proportions. In the only move they have left, or rather they have ever had, customers are choosing to walk away and invest their money elsewhere. There is a banking revolution going on and it has never been easier to get involved in the resistance effort. This article will help you find an account in an institution whose morals match your own and give you a quick rundown on how and why to choose an ethical banking account.

First of all navigate to the Ethical Consumer’s Free Guide to Banking Current Accounts. The simple design belies the sheer amount of research behind the scenes. Here 30 of the UK’s major banking institutions are rated on an ethical scale from 0 to 20. The rating takes into account five categories – Environment, Animals, People, Politics and Product Sustainability. Should one issue be of more importance to you, each one has a click-and-drag slider to modify its weighting.

Unsurprisingly, Barclays finds itself at the bottom of the table with a score of 0.5 while Coventry, Cumberland and Leeds Building Societies tie first place with 13.5. Building societies are an excellent place for ethical investments as they are bound by law to limit the amount of money they invest in certain industries. Furthermore they are owned by their members and run for the benefit of investors rather than shareholders.

A seemingly new trend in banking is dedicatedly ethical banking. For example Triodos only lends to organisations involved in positive change such as organic or fair trade businesses, and the aptly named Charity Bank, which is a registered charity, lends only to social enterprises and charities.

Another good ethical choice for your money, especially if you prefer local businesses, is a credit union. The UK now has over 400 credit unions dedicated to helping consumers access affordable credit, including more than 20 now offering current accounts. As they are far smaller institutions, you will not find these listed in the score table.

The Free Guide to Banking also contains a special report on the industry in general – outlining the intrinsic problems in our current collapsing system and further chronicling the latest indignities perpetrated by the ‘big five’. Featured articles such as “Stop Bankers Betting on Food”, “RBS Attempts at Greenwashing Backfires” and “Islamic Banking” all make for compelling reading.

In these times of austerity and government cuts it is heartening to know we have a vote to cast even if it’s not the one on the ballot paper. As the old phrase goes, “Money talks” – well it walks too and perhaps that’s the way to make the biggest noise.

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A salutary tale from Coronation Street

February 7, 2013 at 3:51 pm

In an episode broadcast last week, Coronation Street character Gail was conned out of £40,000 in an internet banking scam. According to the Payments’ Council this could have been avoided if she had followed the seven golden security rules.

Sadly Gail is not alone in being so lax with her security. Indeed, according to a survey conducted by the consumer education campaign PayYourWay 75% of us use the same password for more than one account and 33% of us share log-in information with someone else. Even if this is a family member, that is no guarantee that the information will not fall into the wrong hands as Gail found out to her cost.

Here is a quick reminder of the seven golden rules of internet banking safety:

  • Never use the same password more than once so that if it falls into the wrong hands the damage is limited.
  • Update your passwords from time to time.
  • If you are worried about having to remember all these different passwords use a password manager to manage them. If you do need to write passwords down, disguise them.
  • Think about your security questions. Could someone else find out the answers using Twitter or Facebook?
  • Keep your anti-virus software up to date and ignore any requests for security information purporting to be from your bank.
  • To make it difficult for a crook to guess your password use a combination of upper and lower case letters, numbers and symbols e.g. C@RiS385
  • Avoid names of family members or pets, birthdays, street names, etc and get creative! One ingenuous way suggested by the Payments Council is to take the first line of a song and string together the initial letters of each word.

For more detailed advice on security issues go to the PayYourWay website.

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Mobile payments set to start in 2014

January 17, 2013 at 2:34 pm

Our mobile phones are the thing we are least likely to leave at home, whether we use them to keep in touch, surf the internet or take photos. In just over a year, however, they will have yet another use. In spring 2014 it will be as easy to make a payment from a mobile phone to an individual or business as it is to send a text, and the good news is that 90% of us with current accounts will have this facility.

Currently eight financial institutions have signed up to the process including the large high street banks and other less well known institutions such as the Cumberland Building Society. Others representing a minority of account holders are still in discussions.

Early next year banks will contact their customers giving them the chance to register their mobile phone number and details of the account to which they want to be linked. Full details of what else the customer has to do and when exactly the service will be available will also be provided in due course.

Last year over 5,000 people took part in research carried out by the Payments Council, two thirds of whom were smartphone users, and gave it a big thumbs-up. Between now and next spring, financial institutions will be carrying out work on speed of service, security and other technical issues.

There will be no need to share account details, but customers are nevertheless bound to be concerned over security; it is likely that a passcode, PIN or similar safeguard will be required to make a payment. Banks will also have the ability to freeze an account remotely if they suspect misuse.

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Thousands of consumers desert high street banks

January 7, 2013 at 2:39 pm

According to UK not for profit organisation Move Your Money, customers are deserting high street banks in their droves, and the reason? The seemingly never-ending series of ethical scandals that have rocked the reputation of the ‘big five’ – Barclays, HSBC, Santander, RBS group and the Lloyds group. Last year’s Libor rigging scandal was just the most recent in a long line of banking scandals, which began in 2007 with the sub-prime mortgage fiasco and the sparking of the global financial crisis.

Credit Unions, Cooperatives and Ethical banks are experiencing a boost in interest meanwhile. Could this be grass root sentiment turned into action by an increasingly politicised population? Indeed the facts seem to point this way. Take the fact that more than 70,000 new customers signed up for Building Society accounts last year, hot on the heels of the Barclays’ Libor rigging scandal. Again, Ethical banking institutions Triodos, The Ethical Bank and Ecology report that they have gained from the big five’s losses but perhaps no-one more than the Cooperative bank which is set to take over more than 600 Lloyds branches in 2013. In stark contrast to the banking practices to which we have become all too accustomed, The Cooperative bank has been awarded a ‘best-buy’ by The Ethical Consumer website for exemplary policies which include campaigning on green issues and those concerning international development and human rights.

If you are among those who wish to switch your money to more ethical providers then there are a number of websites dedicated to helping you do exactly that. Which has an excellent guide on moving your money to a better bank account. Move Your Money is a UK not for profit campaign designed to help jaded banking customers move to other financial institutions, via their easy to use website.

If this banking crisis has taught us anything, it’s that as end-consumers we may not make the policies but we sure pay the price. For this reason alone it may be better to move to a mutual where you will feel the effects of the good banking practices, not just the bad.

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