Royal wedding: British culture with German origins

Why the royal wedding is a recipe for wider economic success

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Internships – a moral dilemma

Chris and his wife agonise over the ethics of advancing their son's employment prospects

Cameron defends internship places Clegg privilege unfair apprenticeship

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Payment Protection Insurance: bankers appeal to protect their right to do wrong

The banks have been comprehensively routed in the courts, and been publicly exposed in the most blatant stinking mis-selling of overpriced insurance to people who didn’t want it, didn’t understand it, and to people who weren’t even eligible to claim on it. So why are the banks going to draw out their humiliation with an appeal over Payment Protection Insurance (PPI)? The reason has little to do with PPI itself, and everything to do with something much more fundamental to the industry. The banks need to protect their right to do the wrong thing.

Regulation in the UK has been like a television game-show. The competitors – the banks, investment companies, insurers and the like – get to keep everything they can grab until the clock runs out. Gutless regulation and enforcement in the UK spends years investigating a rip-off, and then requires rippers-off to stop the ripping and pay fines and compensation that are a fraction of the ill-gotten gains. Leaving them to pocket the balance. A fact that is clear from the paltry fines imposed by the FSA.

This allows the rippers-off years of making profit, and then moving on to their next rip-off. Already a new variety of insurance “Accident, Sickness and Unemployment”, which seems to be closely related to PPI, is being marketed.

It is the “game-show regulation” that the British bankers want to salvage. In the PPI judgement of April 2011 the High Court backed the requirement from the FSA that the Financial Services Industry must not only stop perpetrating the PPI rip-off, but must compensate all victims, including those who haven’t complained, from the start of their ripping.

The banks will fight to hold on to their historic right to be able to do things that are plainly wrong, on the basis that

• They didn’t break the rules, and can keep all their profits up to the time the rules are changed.
• They only have to compensate people who complain. Those who don’t complain, either because they don’t realise they have been ripped off or because it simply isn’t in their nature to complain, can get stuffed.

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High Court ruling leaves consumers feeling H-a-PPI

Chris, Fee and KJ on a consumer win over payment protection insurance

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A royal wedding is just the tonic … economically

Chris and KJ get wedding fever, but Fee is less convinced

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Hotels: compare and dry

The gang discuss the OFT's investigation of hotel comparison sites, but KJ reckons he can still get a bargain … somewhere

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Pensions - having already swiped 50% of your savings in charges, how pension providers grab another 20% from you with your annuity

As you approach retirement, having spent the final years of your career dragging your aging bones into office to be bossed around by juveniles three decades younger than you, a letter will land on your doormat. The letter will contain a number, which may look rather large, and an offer which probably looks stunningly small.

I’d say £250,000 was a lot of money. If I’d won that in the lottery I’d get a mention in the local paper. I’d be thinking of a new car, a holiday or three, a few pairs of handmade shoes, and a mixed case of really good single malt whiskies.

If your pension fund, which is what the letter is about, is worth £250,000, that would buy you and your spouse an index linked income of around £8,000 per year. If this is your only income, then this puts you in the official definition of absolute poverty.

Poverty                       = below 60% of the Median income.

Absolute Poverty          = below 40% of the Median income

2009 Median income     = £489 per week = £25,428 per year.

Poverty                       = £15,257 per year

Absolute Poverty          = £10,171 per year

(Figures for 2009)

If you qualify for the basic government pension for a married couple, of £163.35 per week (£8,494 per year), then you will be propelled from absolute poverty into a little above the 2009 'ordinary' poverty line.

What is gob-smackingly cynical of the pension companies is that they hope you will just sign at the bottom of the paper they sent you, and take their offer. 

The pension companies are hoping with good reason that most people on the verge of taking a pension don’t understand annuities and don't know that they are allowed to take the "open market option" to buy an annuity from another provider. And those pensioners that do know this don’t know how to check annuity rates on the internet. The pension companies bet that it is far more profitable for them to spend money on advertising than to give the money to the pensioners. The two most highly advertised pension providers in the UK are probably AXA and Scottish Widows. These two companies were offering some of the most dreadful annuities, as could once be seen from the FSA backed comparison website, www.moneyadviceservice.org.uk. Both AXA and Scottish Widows now decline to be included in this website. Could it be because they are shy, or perhaps some other reason?:

As some providers are very small or offer specialist services, they have quite reasonably asked not to be included in the tables. But some larger providers have also chosen not to provide information for our tables at present
http://www.moneyadviceservice.org.uk/tables/

http://www.moneyadviceservice.org.uk/tables/ (taken in April 2011).

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What a plonker!

Chris risks the wrath of a wine snob by serving up a bottle of cheap plonk

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Quitting the UK? Don't bank on it

The cost to the UK economy of banks leaving these shores is less than you think

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Banks eye up relocation, relocation, relocation

KJ, Fee and Chris look at potential locations if the banks decide to leave the City of London

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Pensions - how fund management charges swipe 50% of your pension

The government and the pension industry are continually preaching to us that we are saving too little. They deploy vast advertising and advisory budgets to get this particular gospel across to us. You’ll be doomed if you don’t save, they tell us, but there is a nagging suspicion that we will be doomed if we do save too.

It would be unfair to say government and pension fund managers are entirely in cahoots. Each have their own separate reasoning for their common cause:

a)         The government, so it can transfer the blame for pensioner poverty to the pensioners, for not saving enough. A low cost and curt “I did warn you!” is much cheaper than actually doing something about it. It’s a tactic from the same handbook as putting “Smoking Kills” on packets of cigarettes – nothing to do with warning the smoker, everything to do with providing an “I told you so” defence in compensation court.

b)         The pension industry so it can rip us off. The impact of pension fund charges, which typically range between 0.5% and 5%, can slash your savings by over 50%. For a prudent young person planning for the future thus;

• 25 years old, planning to contribute for 40 years until they are 65
• £100 per month, increasing by 3% each year
• Fund growing at 6% per year

A report by the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) found that a reasonable charge would be 0.5%, and that excessive charges in the UK meant:

"If a typical Dutch and a typical British person save the same amount for their pension, the Dutch person can expect a 50% higher income in retirement. "

Let’s put the government to one side and focus on the pensions industry, for now. The government will wait for another time. You need a bit of mathematics to explain what is possibly the widest reaching, most chronic, and most ruthless rip-off of them all. To be more precise, widest reaching, most chronic, and most ruthless sequence of rip-offs. “Sequence”, because you are ripped off during every stage of your life.

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Working from home, and why it's not for all

Chris, KJ and Fee debate the transport minister's idea of remote working

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Isa rate ruses are a con

Chris, Fee and KJ pour scorn on the Isa tricks pulled by banks and building societies

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Liebrary: With proper bank regulation and some banking leaving the UK, the impact on taxes would be less than 1%

Reality: Barclays admitted that of the £2billion taxes they took credit for, only £113m was corporation tax. The rest was taxes paid by their staff - the vast majority of whom would remain in the UK even if Barclays shifted its HQ overseas. 


The Independent Banking Commission's interim report, in April 2011, stated that only £3billion of financial services tax contribution can easily be moved out of the UK.  That is less than 1% of UK tax takings.

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Every Lidl helps

How to save money on your shopping budget

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Cash ISAs: How banks can pinch 92% of your savings income, and the Office of Fair Trading says it's ok

There are few actions under the sky that cannot be spun and woven into a tissue of good intentions. Even the most wicked action can have a benevolent reason behind it. Whipping a horse may be to prove it is still a good runner, and save it from the glue factory. Inflicting pain and death on laboratory animals may result in the development of medical products and procedures to improve health, or test cosmetics which make your loved ones less…well…ugly. The political decision to massacre a civilian population may save more lives by the bloody example hastening the end of a war. Monstrous individuals through history and fiction have excused themselves as being resolute bulwarks against greater monstrosities.

Among those few actions that can have no benevolent purpose whatsoever, other than enriching the perpetrators, is the habit of banks quietly cutting interest rates on savings accounts. Not quite none whatsoever. This does have one positive result – providing one of the clear pieces of evidence of the complicity between regulators and the financial services industry.

As we enter the start of the new financial year, Banks offer eye-catching interest rates on Cash ISAs that last for the first 12 months, and are then cut to as little as 0.05%. The teaser rate is advertised in large font and eye-grabbing colour, and the reduction is announced quietly, if at all, in the form of an email. The impact of this can devastate what should be a great way of saving:

Using the average savings interest rates for each year since 1999, a saver investing the Cash ISA limit of £3,000 in that year would have earned £1,976.81. Using the banks’ scam of dropping the interest rate to 0.1% after the first year, the saver would have earned just £162.05. By this scam, the saver has lost £1,814.73, or 92% of his income.

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Transport troubles

The cost of travelling by bus and train has gone up more than the cost of driving since in 1980 - so it's time to take a stand

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