Personal Finance: The trouble with Ernie

DON'T put your children's names on Premium Bonds, Mrs Worthington, now the stakes are even higher.

Somewhere in Surrey a new millionaire is getting used to riches. The first pounds 1m premium bond payout announced last week went to the holder of 29JZ644125. It was part of a holding of pounds 10,000 worth of bonds, so was more likely part of an adult holding than the smaller gifts held by children.

But what if a child should win? Commonly money from parents, grandparents or godparents is divided between all the children in a family, and premium bonds bought in their individual names. Bonds have to be bought in individual names. They cannot be held jointly and they cannot be held in trust.

What then if one child becomes a millionaire while the others get nothing in Ernie's lottery. Too bad. Parents of the under-16s cannot legally give away one child's cash to the other siblings to smooth things over. It is a real recipe for family strife.

The safest way of getting over the problem is for the parents to hold the bonds in their own names and then sign a trust deed to say that they are holding the bonds for all children equally.

Any solicitor could draw up such a simple document, which should not cost too much. Parents could always risk taking matters into their own hands as long as they, or their nearest and dearest, were the source of the funds in the first place. It all depends how 'understanding' the children are going to be when Ernie pays out to one and not the other.

THERE was a time when savings rates only moved as part of a Big Bang change in interest rates - when mortgages and savings moved at roughly the same time, in the same direction.

But over the past few weeks, bank and building society savings rates have been creeping stealthily down - with no corresponding movement in mortgage rates.

While variable-loan rates have remained stationary, fixed-mortgage rates have in fact been rising - but that's another story.

One by one those 'tombstone' adverts have been appearing in newspapers. The ones that show a grey list of numbers are the ones to watch out for - they are the ones that sneak in the gloomy news for savers.

They do not tell you what the rates were before, or even that they have moved. They merely record the new - inevitably lower - rates.

Cheltenham & Gloucester and Skipton Building societies have just moved some of their rates. So if you have a standard C&G loan, you will still pay 7.64 per cent. But if your savings are in the London share account, the rate dropped last week to 4.09 per cent from 4.27 net, and the Tessa rate for maximum investments dipped from 6.5 to 6.25 per cent.

Does that seem fair?

OVER one million people are eligible to attend the annual general meeting of the Bristol & West Building Society.

Usually only a handful turn up. But on Friday 22 April, there should be a better turnout at the Grand Hotel, Bristol, following the revelation that Tony FitzSimons, the former chief executive, who presided over the society as it slid into problems, is walking away with nearly pounds 500,000. Even worse, he isn't even walking away - he will get pounds 50,000 a year, plus VAT, for 'consultancy services' for three years.

Some members of the society may want to ask why, if he was not good enough to be kept on the staff, his 'consultancy services' are worth pounds 50,000 a year.

Unfortunately the members of the society - in theory the owners - are not being asked to approve any of the payments to the former chief executive. But at least the meeting will give them a chance to express a few opinions, and perhaps this may act as a deterrent to other building societies.