Dear Listener

I have been a little distracted in recent newsletters by non-financial items. So how about this by way of redress. In 2010/11 the total cost of policing the financial services industry and compensating those who are failed by it will top £1 billion for the first time. That is more than £20 for every adult in the country. And we all pay for it through the price of insurance, mortgages, loans, credit cards, bank accounts and the low rates given to us on our savings.

Half this money will go to run the Financial Services Authority. In 2010/11 it says it will need to raise £454 million in 2010/11 from the financial services industry to fund its expanding role. The other half – £505 million – will go to the Financial Services Compensation Scheme. And the bulk of that - £377 million – is the interest due on the £20 billion lent by the Treasury to make sure no depositors lost money when five banks and one building society went bust in the recent banking crisis. The other £128 million is the anticipated compensation to customers when insurance, investment or borrowing goes wrong.

On top of these amounts the industry has to find another £33 million to pay for educating consumers to understand the complex products it sells. And it will have to pay £114 million altogether to the Financial Ombudsman Service to pay the cost of dealing with a record number of complaints.

Altogether a shade over £1.1 billion. Or about £22 per adult in 2010/11.

WHICH MAKES MONEY BOX SEEM A BIT OF A BARGAIN – THERE IS NO LICENCE FEE TO LISTEN TO THE RADIO – AND THIS WEEK YOU CAN HEAR….

Millions of people who get a state pension are discovering that parts of it will not be going up in April even though RPI inflation is now 3.7%. One bit that won’t be increasing is the extra pension earned by deferring retirement. But – until today anyway – the Government website says this extra pension is “increased each April in line with increases to your State Pension”. Which is not true – it is frozen while the basic state pension will rise by 2.5% in April. All other bits of the pension including SERPS and graduated pension will be frozen. We explore the issues.

Talking of inflation, it is now so high that it is almost impossible to get a return on savings which exceeds it. In other words even if you do not spend your interest the value of the capital you have saved up is falling as prices rise.

We find out why some people are being charged £1.50 for using their debit cards – it’s all in the number.

Is there a simple solution to the great PAYE errors disaster that we have reported on in the last few weeks? We talk to the Conservative MP who thinks he has one.

And find out who was last week’s mystery voice….

All that packed into a far too short 24 minutes or, as Radio 4 calls it, half an hour. Find out what we squeeze in by listening just after noon on Saturday, or nine pm on Sunday, or on the website www.bbc.co.uk/moneybox at any time. There you can also watch videos, follow up items, read web pieces, download transcripts, follow links, subscribe to our podcast – 117,000 of you did that in December – and send us stories or ideas you want us to look into. And of course Have Your Say – on a subject still to be decided.

Best wishes,

Paul

e-mail Paul Lewis