Simon Read: Turning the clock back for Northern Rock is mutually best
Saturday 18 June 2011
There's a great opportunity to give a massive boost to the mutual sector by ensuring that state-owned bank Northern Rock is returned to it. In his Mansion House speech this week, George Osborne announced a sale of Northern Rock adding: "Any interested parties can bid for it, including mutuals, which this Government is actively committed to promoting."
That sounds very much like a green light to the two big building societies that have been linked with the Rock: Coventry and Yorkshire. With other potential bidders expected to include Richard Branson's Virgin and – potentially – Tesco, I hope that the government's stated support for mutuals extends to ensuring that one of the building societies is successful in taking over Northern Rock.
As the Chancellor said on Wednesday, the sale of Northern Rock would be the "beginning of the end" of the financial crisis. The former building society became the focus of the crisis when it sparked the first run on a British bank in 150 years in 2007. It was nationalised in 2008 and then split in two last year, forming a mortgage and savings bank called Northern Rock Plc and Northern Rock Asset Management to house "toxic" mortgage loans. It is the former half – the so-called good bank – which is up for grabs in the government sale.
With just 70 branches it's actually smaller than, for instance the Coventry, but could help the Midlands-based society – or its rival the Yorkshire – kick on to become a bigger force on the high street. One thing that almost everyone agrees on, including the Chancellor, is that customers need more choice for their savings and borrowing.
Neither society has, as yet, admitted it will bid for the Rock, but I suspect both will throw their hats into the ring when details of the sale are published. The Yorkshire says: "We welcome the positive comments and the commitment to the mutual sector from the Chancellor George Osborne. We believe that building societies and other mutual organisations make a crucial contribution to the competition and diversity of the retail financial services market."
I agree with the last point. Ensuring that Northern Rock is returned to mutual hands would mean that extended choice is likely to be more trustworthy. Saying that doesn't mean I'm blind to the failings of building societies – and plenty of problems were thrown up in the financial crisis – but now is not the time to dwell on past errors. It's time to look forward and I believe the building societies – including the massive Nationwide – can re-establish themselves as a credible alternative to our banks.
In fact I believe that's essential if we are ever going to return to a financial services industry that focuses on serving us, its customers, rather than just boosting profits for shareholders.
The humble cheque may yet get a reprieve. Mark Hoban, Financial Secretary to the Treasury said this week that there is no "credible and coherent case" for the abolition of cheques. Meanwhile, the UK Payments Council – which is is working to phase them out – said it would only do so when another paper-based system was tried and tested.
The Council's chairman Richard North said: "We have not made a decision to close the cheque clearing system. The first time we will look at this is in 2016." In other words it's going to be five years before the industry even begins to discuss getting rid of cheques. However, if there's a workable alterative payment systems in place by then, the process of saying goodbye to cheques could be rapid.
So fans of the paper-based payments system would have been alarmed by this week's news that Vodafone, 02 and Orange/T-Mobile have joined up to speed up so-called "wave and pay" through mobile phones. The technology is already in place, and being used in some services, but the technology giants are confident that a more widespread cross-network system could be up and running by the end of the year.
If so, it will be well established by 2015, and the decision to scrap cheques could then seem to be a simple one. But the Payments Council should think very carefully before doing so. There are still millions of people who prefer using cheques and they should be listened to. The Payments Council should not dictate to customers, but serve them. If there are people who still prefer to use cheques, they should be able to.
There's been a surge of fake phishing emails sent out by crooks in the run up to the Tax Credits renewal deadline on 31 July, according to HM Revenue & Customs. The emails suggest you are due a tax rebate and offer a click through link to what appears to be the HMRC website.
But it's a bogus site designed to capture your credit and debit card details. If you get tricked by the fraudsters, they'll use the information to try and get the cash from your account. Not only that, they will flog the data to other crooks, meaning the cyber attacks will continue.
More than 46,000 phishing emails have been reported since April, says HMRC. But the tax authorities say they will never contact customers due a tax refund by email or phone or texts. If you get approached online, you should report it to the authorities by forwarding the rogue email to email@example.com
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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