Julian Knight: Why the silence on this shambles at ailing Co-op?

The watchdog had misgivings over the deal to buy Lloyds branches but the pretence went on

Personal Finance editor

More details of the shambles at the Co-op emerges on almost a daily basis. It now seems that senior figures at the Financial Services Authority (FSA) – now the Financial Conduct Authority – were warning that the mutual giant was in no position to buy the 632-plus branches of Lloyds.

In fact, worries about the Co-op’s financial position were being expressed as far back as 2011. Nevertheless, management at the co-op, in the depressing pattern followed by the likes of Equitable Life a decade or so earlier, decided to grow its way out of its problems rather than consolidating the core business and going from there.

At the root of this was the merger with the Britannia building society and its less-than-rosy loan book.  The interpretation in the corridors of power at the FSA was that rather than the strong Co-op taking on failing Lloyds branches it was the case that the Co-op actually needed the strength and professionalism of a big chunk of Lloyds to prop it up.

Questions have to be asked over why it was that the pretence of the Co-op-Lloyds deal was kept going for so long. Was this to simply smoke other potential bidders into the open or was anyone colluding with the Co-op in an attempt to repair its balance sheet by taking on the Lloyds branches?

It is quite ridiculous that we could have been put in a position where a bailed-out bank was knowingly having key branches hived off to prop up a badly run mutual.

Yet again the great British public have had the wool pulled over their eyes about the health of the  banking system.

Mobile message

Tesco mobile sent me the following message this week: “Great news, it’s now cheaper to use your phone abroad.”

What the message should have read is as follows: “Great news, we are your mobile company and we have been dragged kicking and screaming into reducing our exorbitant charges for calls, messages and data charges when you are overseas.” Now it would be wrong to single out Tesco (it has to pay to use the networks itself) as all the mobile operators have been royally ripping us off for years when it comes to usage overseas.

Our consumer rights columnist, Liz Barclay, gets dozens of emails about unfair charges racked up by holidaymakers who unsuspectingly downloaded content – I have done it myself. 

I find it quite telling that the mobile firms have known about these new, EU-wide caps on charges yet waited until the last-possible second to enforce them. What was to stop them accepting that their charges were too high and unjustifiable when the decision was handed down on this rather than squeeze the public for as much cash as possible.

The “great news” is that the reduction in charges we saw at the start of the month is likely only to be a first step and eventually it should be possible to call from overseas for the same sort of costs as calling domestically. I look forward to my mobile-phone company texting me that “great news”.

Shop around for your annuity

I am 100 per cent behind an amendment that has been introduced by Labour into the Pensions bill.

In short, this will make it a requirement on auto-enrolled pension schemes when workers retire to point out to them that they can shop around for an annuity by using an independent broker.

At present only a minority of people shop around for the best annuity at retirement. As a result they are missing out on potentially thousands of pounds in income each year, for no good reason.

Getting people to shop around is key not only to their financial well being but also on helping them avoid being a burden down the line to their fellow citizens in the form of means-tested benefits. 

One statistic to bear in mind is that pension incomes could be almost £4bn higher each year if we all secured the best-possible annuity for our pension pot. That is the equivalent of nearly two pence of income tax. This is money we cannot afford to let go.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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