This email was sent to Money Box subscribers on 30 June 2012

Dear Listener

 

Oh dear. One tweep said to me this week - What does it say about our world if you trust politicians more than bankers? And I might have added – or journalists!

 

As the week comes to an end, many customers of one of the biggest UK banking groups still cannot get access to their money. On Thursday another major bank, Barclays, admitted rigging the roulette wheel to favour the bets its own traders were making on whether interest rates would rise or fall. And now, Friday, the Financial Services Authority has published a damning report on commission driven sales of complex hedging-your-bets products alongside loans to small business.

 

These hedging products were supposed to protect the business from extra costs if interest rates rose putting up the cost of servicing the loan. In fact, of course, interest rates fell to their lowest in history and the product the business paid for in fact protected the bank. Quelle surprise (the use of French denotes irony I believe). Attempts to leave the whole contract were met with references to the terms and conditions paragraph 94 clause (j) subclause (iii) blobby point four – if you leave this contract early you will have to pay a penalty that will cost more than staying in it.

 

Needless to say that particular clause was usually not explained at the start; there was often no proper explanation of the risks of these products nor an assessment of what risk the customer was prepared to take; and sometimes the product lasted longer than the underlying loan. Oh, and did I mention the sales were driven by the commission earned by those who sold them? I did? Never mind I will mention it again because it is fairly crucial.

 

And the names in this particular frame? RBS (who has kept 16.9 million customers in the dark about the state of their current account for days), Barclays (rigging the roulette wheel to favour its own traders) together with Lloyds Banking Group and HSBC. Both of whom are also being investigated for the same actions as Barclays. Now all four banking groups must review sales to 28,000 small business customers and pay redress where appropriate. Normally that would mean putting the customer in the position they would have been in if the mis-sale had not occurred. But as some of these customers were actually driven out of business by these expensive products it is quite hard to see how they can do that.

 

Banks have a lot of power and money. But even they cannot wind back the clock.

 

***IN MONEY BOX THIS WEEK***

 

RBS and NatWest computers were supposed to be back to normal this week. But customers are still telling us all is not well. Many have finally got access to their own money and bank records. Others have not. And there is still no information from the bank about compensation apart from saying no customer will be out of pocket. We look at the problems of claiming compensation and repairing credit records. And what about the nearly two million customers of RBS subsidiary Ulster Bank who still have no access to their correct balances? Many are without money and cannot be promised that it will be resolved even by Monday – 13 days after it began.

 

If you have a currency card – a prepaid plastic card that you use to pay for things – beware if you stick it in a drawer and do not use it. Some of them have a charge for non-use, called a dormancy fee, which eats away at the balance left on a card like a moth in a sock drawer. So you pay NOT to use your card.

 

Since I wrote the opener to this newsletter we have decided to do an item on today’s FSA ruling on interest rate hedge products and small businesses. So take the opener as a long introduction to this item. We talk to one business owner who was badly affected and a man who used to sell these products but now helps victims get redress.

 

It is a plot straight from Kafka. We have closed your bank account. We cannot tell you why. And as an ex-customer you have no rights to challenge the decision. When you try other banks they mysteriously refuse your custom, quoting an obscure European law that no-one actually shows you. For the banks you are a non-person. And as such have no rights at all. Then you come to Money Box…

 

There is another fifth story jumping up and down shouting -me this week, me this week, pleeeeease- but we are probably going to have to say -No. Our 24 minutes are just too short. Perhaps next time-. See if you can hear it banging on the studio door by listening live at midday on Saturday, tune in to the repeat on Sunday 9pm, or catch up anytime online at www.bbc.co.uk/podcasts/series/moneybox. Remember you can put in a regular order for our podcast. More than 200,000 listen that way each week. It is free.

 

There is more information on our website www.bbc.co.uk/moneybox where you can also download transcripts of past programmes and send us ideas or problems you want us to look into.

 

This newsletter is available at bbc.co.uk/moneybox/newsletter around the time it hits your inbox - tell your friends who do not subscribe. And you could join the more than 35,300 people who now follow me on Twitter to enjoy, or rant about, my random but timely thoughts on money and a few other things whenever I am awake at twitter.com/paullewismoney.

 

I will be back with Money Box Live on Wednesday at 3pm to take your questions on tax and tax credits. You can email questions through our website or call on the day.

 

Best wishes,

 

Paul

 

PS I am on Breakfast on BBC One on Saturday probably around 0845 trailing one of the items from Money Box. And on Breakfast again on Thursday morning usually at 0640 and 0820 but times, and even the day, can change.

 


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