Consuming Issues: Don't ask a bank for advice
Saturday 27 March 2010
Of the seismic events in my lifetime, including the fall of the Berlin Wall, the death of Princess Diana and the attack on the Twin Towers, none has surprised me more than the banking collapse.
Ten years ago, Lloyds, NatWest and RBS were sturdy institutions with reputations as solid as their granite buildings. For them to have bet and lost so catastrophically on the roulette wheel of global finance and plunged towards bankruptcy was something I could never have imagined.
Their losses will reverberate around our lives for at least a decade. At the end of last year, the National Audit Office put the cost of bailing out the banks at £850bn, but it will probably pass £1trillion, or £40,000 for each of the UK's 25 million households.
While this financial collapse has been picked over endlessly in the media, less attention has been paid to the banks' accompanying and contributory moral collapse, which affects individual customers every bit as profoundly as its public manifestation affects taxpayers. Banks have been become greedy and untrustworthy.
Until the 1990s, clearing banks were boringly reliable – they received small sums for taking in pay and savings, administering current accounts and advancing loans and mortgages. Now they have sacked the managers who carefully oversaw these arrangements and installed in their place incentivised salespeople.
As a result, banking, admittedly never a philanthropic exercise, has become entirely and maniacally devoted to squeezing every last drop of profit from customers. Witness the penalty fees on current accounts, rapidly escalating margins on credit and store cards and the scandal of jacked-up payment protection insurance on loans, plastic and mortgages.
Another sideline has been funnelling account-holders' cash into investment schemes that pay the banks handsome, arguably excessive levels of commission that can eat up contributions for the entire first year of the scheme.
Latest research from Which? exposes this scandal and shows that you simply cannot trust what the suited bankers tell you in return for keeping their jobs. Researchers aged over 55 went to branches of eight leading banks and building societies, posing as retired people with more than £50,000 to invest.
Staff who advised these "customers" breached rules on giving investment advice and, in the words of Which?, "recommended complex and potentially unsuitable products without explaining how they work or the risks". Amazingly, in 14 of 27 visits, they failed to point out that savings of more than £50,000 were not guaranteed by the state-funded Financial Services Compensation Scheme if a bank went bust (perish the thought). Of the 20 visits to banks, only twice was wholly accurate advice given, once at NatWest and once at HSBC.
None of the 11 advisers at Santander branches of Alliance & Leicester, Abbey, and Bradford & Bingley passed the undercover test. Other failures were Barclays and the publicly-owned Lloyds and Halifax. Building societies fared a little better. None of the three elderly visitors to Britannia received perfect advice, but that was the outcome of half the visits to the Nationwide.
"If you have money to invest, it makes sense to go to an independent adviser, who can search the whole market, find the best deals available and recommend something suitable," says Rebecca Fearnley, of Which? Money.
My advice? Switch your current account to the Nationwide, and don't be old and vulnerable when you visit your bank.
Heroes and villains
Hero: Virgin Atlantic
One argument used by striking British Airways cabin crew is that they will not be able to deliver a premium service if salaries fall from their current average of £29,000. BA's competitors, however, pay stewards far less. Cabin crew at Virgin Atlantic, left, earn £13,500 – yet even a cynical friend of mine had to admit that Virgin's service on both legs of a recent economy flight to Los Angeles was far better than anything experienced on BA. Sometimes teamwork, motivation and professionalism count for more than money. Unless BA staff are paid less and perform better, they may not have jobs at all.
Villain: Alistair Darling
The Chancellor tried to pick a prudent course through the recessionary rubble, but his Budget attack on pubs was a mistake. He raised beer duty by 5 per cent and plans to increase it above inflation for the next three years. While drinkers and smokers cannot expect much leniency during a financial meltdown, the Government is oddly ambivalent about pubs. On the one hand, it trots out the "Pubs Minister", John Healey, to enthuse about their importance to communities, and on the other clobbers landlords with big tax rises. No wonder Britain's pubs are closing for good at a record rate of six a day.
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Bargain Hunter: From The Outsider to 1984, catch a cut-price classic, read it in the rye
Money Insider: Smart alternatives to the pensioner bond
Bank-beating exchange rates on your international payments
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 2 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
- 5 This crazy skiing video will leave you feeling queasy
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Greece elections: Syriza and EU on collision course after election win for left-wing party
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village