Lottery plan for savers

Bishop condemns societies' proposal to offer cash prizes in lieu of interest

BUILDING societies hoping to cash in on the public's love affair with the National Lottery are pressing the Government to allow them to run controversial lottery-style savings accounts.

The Treasury and the Home Office confirmed yesterday that they had been in discussions with several building societies seeking to launch such accounts.

One proposal put forward by the Norwich & Peterborough, one of the most innovative building societies, has already been turned down by the Treasury.

Under the proposed schemes savers would forgo some or all of the interest on their balances in return for the chance to win big cash prizes. It is not clear whether such accounts would be legal in Britain under the 1976 Lotteries and Amusements Act.

One possible system would be to transfer account-holders' accrued interest into a prize draw which would offer large prizes every week, month or year. The more money a saver has in the account, the greater his or her chance of winning.

Such accounts would be similar to National Savings Premium Bonds. A National Savings spokesman confirmed it had made "one or two comments'' to the Treasury about the proposed schemes. National Savings took a net £1.4bn from sales of Premium Bonds last year.

Another option would be to offer both a small amount of interest and more modest lottery prizes. Such an option would be less likely to be outlawed by Britain's strict gaming rules.

Martin Armstrong, chief executive of the Norwich & Peterborough, said: "We did suggest to the Treasury that they might look at the possibility of allowing financial institutions to offer investment opportunities with a lottery element, but under the Lotteries Act they say it is illegal. We've suggested that they might legalise it."

The idea was condemned yesterday by the Bishop of Peterborough, the Rt Rev Bill Westwood, who said he would close his account if his building society introduced a lottery account. "Of course, can you blame them for following a national trend started by the Government? Inevitably they will want to get on this lucrative bandwagon. But what is this lottery mania doing to the soul of the country? A nation can only survive, let alone flourish, through hard work and endeavour, yet we are being whipped up into a culture of idleness and fortune."

A spokesman for the General Synod of the Church of England was equally opposed. "A building society is there to help you build up your savings, not encourage you to fritter them away."

But Mr Armstrong defended the idea, which comes from Japan, where lottery- based savings accounts are taking the nation by storm. Last autumn a small credit association, Johnan Shinkin, set up a deposit account with a lottery scheme attached. Within three days of opening, it had attracted more than Y14bn (£105m) in deposits.

Customers of the "Super Dream Account" win Y50,000 (£370) if their account number is picked. They still get interest on their savings, but not at a competitive rate. Over the next 12 months Johnan Shinkin expects to hand over Y4m in prizes.

Brian Waterhouse, a banking analyst at James Capel in Tokyo, said: "Now even the major Japanese banks, who were at first disdainful about going down such a tacky path, have followed suit." Mitsubishi Bank is now offering free trips to Disneyland.

Similar schemes are also emerging in Spain, where small to medium-size banks such as Banco Bilbao Vizcaya are offering prizes such as cars and villas to lure new customers.

While the Treasury is cool about lottery accounts, the Home Office, which supervises individual lotteries, is more open-minded. A spokesman said they could be legal: "Under the Lotteries and Amusement Act the setting up of lotteries for private profit or commercial undertakings is forbidden unless there is an element of skill or a free prize draw. If the societies also offer interest, it could be argued that the prize draw is free."

Start your day with The Independent, sign up for daily news emails
Keith Fraser says we should give Isis sympathises free flights to join Isis (AFP)
Life and Style
Google celebrates the 126th anniversary of the Eiffel Tower opening its doors to the public for the first time
techGoogle celebrates Paris's iconic landmark, which opened to the public 126 years ago today
Cleopatra the tortoise suffers from a painful disease that causes her shell to disintegrate; her new prosthetic one has been custom-made for her using 3D printing technology
newsCleopatra had been suffering from 'pyramiding'
Arts and Entertainment
Coachella and Lollapalooza festivals have both listed the selfie stick devices as “prohibited items”
Nigel Owens was targeted on Twitter because of his sexuality during the Six Nations finale between England and France earlier this month
rugbyReferee Nigel Owens on coming out, and homophobic Twitter abuse
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Client Services Assistant

£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor