The end of free banking?
The man expected to be the top banking regulator
has said that he doesn’t like free current account banking and may act to end it
when he takes up his job next year.
Andrew Bailey’s job used to be signing banknotes
– his name will on any tenner you pick up. But from next spring he is expected
to head a new financial regulator which will make sure banks are clear and
competitive in their pricing. And he thinks ‘free’ banking is neither clear nor
fair. In May he told a Business Forum
“the reform of retail banking in this country
cannot move ahead unless we tackle the issue of free in-credit banking, and have
a much better sense of what we are paying for and how we are paying.”
Of course, people who keep their accounts in
credit can run a current account for nothing. Although the banks make money by
lending our money out to other banks and charge those who go overdrawn heavily –
making more than £8 billion in 2006. But for most of us who stay in credit all
the valuable services the bank gives us do seem to be free. They keep our money
safe, take in pensions and wages, pay out standing orders and direct debits,
give us an almost instant online money transfer system, and let us get our cash
24 hours a day through 36,000 cash machines.
All that costs money. And Andrew Bailey may make
the banks charge us a fair price for it “in the public interest…to encourage
greater competition”. It will not be a popular move.
Andrew Bailey’s speech
www.bankofengland.co.uk/publications/Documents/speeches/2012/speech574.pdf
War loan comes into its own
To help pay for World War One the Government
invited those with money to invest in Government bonds. They were promised
interest of 5% a year, though that was cut to 3.5% in 1932. Unlike most
Government bonds War Loan had no date when the Government would repay the
capital. And for years the 3.5% taxable interest seemed rubbish compared to the
rates you could get in a savings account. But now with all interest rates very
low, the guaranteed 3.5% a year forever from War Loan seems a very good deal. So
much so that the value of these bonds has soared and you can now sell them for
round about their face value – £100 for each £100 of War Loan. A year ago you
would have been lucky to get £75 per £100. So it may be a good time to rummage
round in those old papers you inherited to see if there are any 3½% War Loan
certificates among them.
You can sell War Loan through Computershare but
there is a minimum £12.50 charge and the price varies from day to day
www.dmo.gov.uk/index.aspx?page=Gilts/FAQ
Fines for ‘free’ NHS care
Dental treatment is free to people in certain
categories. They include unemployed people on one sort of jobseeker’s allowance.
And if you did not know there are two sorts you are not alone! One depends on
your National Insurance contributions and lasts for six months. The other is
related to your income. It normally kicks in once the contributions based JSA
runs out but it can start earlier if your income is low and you have dependants.
Needless to say people – and dental surgeries – get them mixed up. But if you
claim for free treatment on the wrong sort of JSA you can be charged for the
treatment and fined £100.
A similar trap awaits those over 60 on pension
credit. There are two sorts of pension credit – the guarantee credit which makes
your income up to a certain level and the savings credit for those on slightly
higher incomes. If you get guarantee credit then dental treatment should be
free. But if you only get the savings credit and not the guarantee credit then
it is not free. And there is a £100 fine and your treatment fees in full if you
get it wrong.
The Department of Health says 8300 people were
fined £100 last year and more than 5000 of those were fined another £50 for not
paying the penalty on time.
Even ‘free’ eye tests can bring £100 fine down
on you if you have too many – you are allowed just one every two years unless
you have a medical need for more. In Scotland you are allowed one a year.
What premium rate calls really cost and how to avoid them.
If you want to get help from a financial firm,
like a bank or building society, or from a Government department like HM Revenue
& Customs or the Department for Work and Pensions you will normally be asked to
ring a number beginning with 084 or 087. These numbers normally cost more to
call than normal numbers which begin with 01, 02, or 03. The reason for that is
because the firm you are calling will get about 2p a minute from the call you
make. The cost can be particularly high from a mobile phone – anything from
12.5p to 41p a minute. But even from a landline the cost can range from 1.5p to
13p a minute. In addition there may be a small set up charge which will be added
to the cost. Even 0800 numbers are not normally free on mobiles.
You can avoid these charges if you look up these
high cost numbers on a website called
www.saynoto0870.com. It lists alternative 01 or 02 numbers for the
higher rate calls. Another tip when calling your bank or credit card provider is
to look on the back of the card for a number to be used from abroad – normally
beginning +44(0). Replace this with a 0 and dial the number as normal. If the
firm does not allow your call as you are making it from the UK then simply dial
141 first before the 0 which will hide where you are calling from.
Finally if any firm asks you to call a number
beginning 09 never dial it. You will pay up to £1.65 a minute from a landline
and £2.55 from a mobile. They are usually scams.
More information:
www.ofcom.org.uk
search for ‘number crunching’. And
www.fairtelecoms.org.uk