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From the Daily Mail 13/1/09
TONY HETHERINGTON: Sort out this muddle over saver protection
By Tony Hetherington
Last updated at 12:27 PM on 12th January 2009
D. C. writes: The merger between Nationwide and Derbyshire Building Society takes me above the £50,000 Financial Services Compensation Scheme limit, as I have accounts with both. If anything happens to Nationwide, I will not be fully protected. I have a fixed-term account with Derbyshire and cannot withdraw from it before next December.
The shake-up involving banks and building societies in recent months has led to huge confusion over who is covered by the compensation scheme and for how much.
But let me start by setting your mind at rest. Your money is fully protected, just as it was when Nationwide and Derbyshire were separate building societies. This is because the Financial Services Authority,backed by the Government, has broken its own rules.
In a nutshell, any bank or building society licensed by the FSA can offer £50,000 of compensation cover to each customer, or £100,000 for a joint account. Nationwide merged with Derbyshire last month as well as Cheshire Building Society. Legally, there is now just one society, Nationwide, with one bite at the compensation cake if disaster strikes.
What's happening: The ongoing mergers between many a bank have left compensation rules confused
However, and after repeated nudging by Financial Mail, the FSA has bent its rules to say that customers who had money in Nationwide and in one or both of the other two societies at the merger dates (December 1 for Derbyshire and December 15 for Cheshire) will keep their pre-merger protection, at least until next September, by which time officials hope to have found a permanent solution.
So you are now covered for £50,000 in Nationwide plus another £50,000 in what was your Derbyshire account. And if you held a Cheshire account on the merger date, that too is separately protected.
Confusingly, the rules for banks are different. They can choose to have more than one name registered with the FSA and offer more than one slice of compensation cover.
Royal Bank of Scotland owns NatWest, but the two are licensed separately by the FSA so customers could have £50,000 in each and be completely protected. Clydesdale Bank owns Yorkshire Bank, but has only one licence from the FSA so anyone with £50,000 in each is only protected for £50,000 in total.
There is a debate going on in the FSA on a range of reforms to the compensation scheme. The FSA's Consumer Panel of advisers (of which I am a member) is pressing for any compensation ceiling to apply separately to each brand name, whoever owns it.
Panel chairman Adam Phillips said: 'We believe it is unrealistic for the FSA to expect people to follow the details of who owns which part of each bank account, particularly in these changing times.
'For instance, at present deposits with Halifax, Birmingham Midshires and Saga would all come under the same single compensation limit. Ideally, we would like 100% compensation for all - but at the very least limits should be applied separately to each brand name.'
The question of compensation cover was confusing enough before recent events. It is now almost unfathomable, with those in power altering the rules as they respond to each new crisis. It is good that they are extending protection, but the resulting mess has to be sorted out.
Consumer confidence comes at a price and simple across-the-board compensation cover is part of that.
Worry: An elderly pensioner was scared by an erroneous letter from Halifax
Debt threat scares ill pensioner
C. F. J. writes: I am 83 and not in the best of health so I was upset to receive a letter from Halifax saying it had passed my debt of £8,488 to an outside firm that will now be legally entitled to collect it from me. I have never owed money in my life and my only dealings with Halifax were several years ago when I invested some money with it.
I have rung Halifax several times, but nobody has any idea why I have received this letter. I have also rung the outside finance firm, but it says it has been empowered by Halifax to investigate me.
Thank you for sending me a copy of the Halifax letter alleging you owe £8,488. I can tell from the reference at the top that this refers to money owed on a credit card, but you have told me that you have never had a Halifax credit card.
Another thing that stands out is that though the letter is addressed to you, it was sent by Halifax c/o your home address. This suggested to me that Halifax originally had a different address, lost touch with its cardholder and then somehow linked the cardholder's name to your address.
I asked officials at Halifax head office to investigate and my guess turned out to be correct. There is a man who ran up debts on his card and then disappeared from an address not far from where you live. He has the same name as you so when Halifax found you, probably from the electoral register, it assumed you were the debtor.
The collection firm has been called off and by the time you read this you should have received a written apology from Halifax, an assurance you do not owe £8,488 and a cheque for £50 to make up for all the worry.
Sorry, bank was right to charge you for going overdrawn again
Going into your overdraft is something best avoided
M. B. writes: I hold power of attorney for a customer of HSBC. Her account was overdrawn by £88 for 15 days, but the bank has imposed a charge of £100. This is extortionate and does not represent the cost of the account being overdrawn by this small amountfor such a short time. I am writing to publicise the way HSBC treats its customers when it should be adopting a more sensitive approach, given the banking crisis where corporate irresponsibility has prevailed to the ultimate cost of the taxpayer.
As you may know, the Office of Fair Trading has brought a court case against several banks on exactly this issue, arguing that such personal account charges are unfair. The case is dragging on.
Meanwhile, with the benefit of a rule waiver from the Financial Services Authority - a waiver that also seems to be lasting longer than was ever intended - the banks are being allowed to ignore complaints unless the customer claims financial hardship.
So much for the background. What your letter did not tell me is that this account is a business one. And the lady for whom you hold power of attorney had agreed to operate the business account on terms and conditions that included a charge of £8 a day for going overdrawn without permission.
HSBC has told me that in 2007 the account slipped into the red and ran up charges of £52. You protested and the bank refunded £48.
The account slipped into the red a second time, with charges of £56, and was again overdrawn recently without permission, with the charges of £100 referred to in your letter. HSBC says that when it refused a refund, you closed the account and contacted me.
Frankly, while I might argue over the size of the charges, I cannot fault HSBC. It let you off once and unless there were circumstances you have not mentioned, I cannot see any good reason for doing so again.
You and your colleague have been operating a business and a business bank account and must take responsibility for these. As a small business, you can appeal to the Financial Ombudsman. But if you do, I would be interested to know whether the Ombudsman disagrees with me.
TONY HETHERINGTON: Sort out this muddle over saver protection
By Tony Hetherington
Last updated at 12:27 PM on 12th January 2009
D. C. writes: The merger between Nationwide and Derbyshire Building Society takes me above the £50,000 Financial Services Compensation Scheme limit, as I have accounts with both. If anything happens to Nationwide, I will not be fully protected. I have a fixed-term account with Derbyshire and cannot withdraw from it before next December.
The shake-up involving banks and building societies in recent months has led to huge confusion over who is covered by the compensation scheme and for how much.
But let me start by setting your mind at rest. Your money is fully protected, just as it was when Nationwide and Derbyshire were separate building societies. This is because the Financial Services Authority,backed by the Government, has broken its own rules.
In a nutshell, any bank or building society licensed by the FSA can offer £50,000 of compensation cover to each customer, or £100,000 for a joint account. Nationwide merged with Derbyshire last month as well as Cheshire Building Society. Legally, there is now just one society, Nationwide, with one bite at the compensation cake if disaster strikes.
What's happening: The ongoing mergers between many a bank have left compensation rules confused
However, and after repeated nudging by Financial Mail, the FSA has bent its rules to say that customers who had money in Nationwide and in one or both of the other two societies at the merger dates (December 1 for Derbyshire and December 15 for Cheshire) will keep their pre-merger protection, at least until next September, by which time officials hope to have found a permanent solution.
So you are now covered for £50,000 in Nationwide plus another £50,000 in what was your Derbyshire account. And if you held a Cheshire account on the merger date, that too is separately protected.
Confusingly, the rules for banks are different. They can choose to have more than one name registered with the FSA and offer more than one slice of compensation cover.
Royal Bank of Scotland owns NatWest, but the two are licensed separately by the FSA so customers could have £50,000 in each and be completely protected. Clydesdale Bank owns Yorkshire Bank, but has only one licence from the FSA so anyone with £50,000 in each is only protected for £50,000 in total.
There is a debate going on in the FSA on a range of reforms to the compensation scheme. The FSA's Consumer Panel of advisers (of which I am a member) is pressing for any compensation ceiling to apply separately to each brand name, whoever owns it.
Panel chairman Adam Phillips said: 'We believe it is unrealistic for the FSA to expect people to follow the details of who owns which part of each bank account, particularly in these changing times.
'For instance, at present deposits with Halifax, Birmingham Midshires and Saga would all come under the same single compensation limit. Ideally, we would like 100% compensation for all - but at the very least limits should be applied separately to each brand name.'
The question of compensation cover was confusing enough before recent events. It is now almost unfathomable, with those in power altering the rules as they respond to each new crisis. It is good that they are extending protection, but the resulting mess has to be sorted out.
Consumer confidence comes at a price and simple across-the-board compensation cover is part of that.
Worry: An elderly pensioner was scared by an erroneous letter from Halifax
Debt threat scares ill pensioner
C. F. J. writes: I am 83 and not in the best of health so I was upset to receive a letter from Halifax saying it had passed my debt of £8,488 to an outside firm that will now be legally entitled to collect it from me. I have never owed money in my life and my only dealings with Halifax were several years ago when I invested some money with it.
I have rung Halifax several times, but nobody has any idea why I have received this letter. I have also rung the outside finance firm, but it says it has been empowered by Halifax to investigate me.
Thank you for sending me a copy of the Halifax letter alleging you owe £8,488. I can tell from the reference at the top that this refers to money owed on a credit card, but you have told me that you have never had a Halifax credit card.
Another thing that stands out is that though the letter is addressed to you, it was sent by Halifax c/o your home address. This suggested to me that Halifax originally had a different address, lost touch with its cardholder and then somehow linked the cardholder's name to your address.
I asked officials at Halifax head office to investigate and my guess turned out to be correct. There is a man who ran up debts on his card and then disappeared from an address not far from where you live. He has the same name as you so when Halifax found you, probably from the electoral register, it assumed you were the debtor.
The collection firm has been called off and by the time you read this you should have received a written apology from Halifax, an assurance you do not owe £8,488 and a cheque for £50 to make up for all the worry.
Sorry, bank was right to charge you for going overdrawn again
Going into your overdraft is something best avoidedM. B. writes: I hold power of attorney for a customer of HSBC. Her account was overdrawn by £88 for 15 days, but the bank has imposed a charge of £100. This is extortionate and does not represent the cost of the account being overdrawn by this small amountfor such a short time. I am writing to publicise the way HSBC treats its customers when it should be adopting a more sensitive approach, given the banking crisis where corporate irresponsibility has prevailed to the ultimate cost of the taxpayer.
As you may know, the Office of Fair Trading has brought a court case against several banks on exactly this issue, arguing that such personal account charges are unfair. The case is dragging on.
Meanwhile, with the benefit of a rule waiver from the Financial Services Authority - a waiver that also seems to be lasting longer than was ever intended - the banks are being allowed to ignore complaints unless the customer claims financial hardship.
So much for the background. What your letter did not tell me is that this account is a business one. And the lady for whom you hold power of attorney had agreed to operate the business account on terms and conditions that included a charge of £8 a day for going overdrawn without permission.
HSBC has told me that in 2007 the account slipped into the red and ran up charges of £52. You protested and the bank refunded £48.
The account slipped into the red a second time, with charges of £56, and was again overdrawn recently without permission, with the charges of £100 referred to in your letter. HSBC says that when it refused a refund, you closed the account and contacted me.
Frankly, while I might argue over the size of the charges, I cannot fault HSBC. It let you off once and unless there were circumstances you have not mentioned, I cannot see any good reason for doing so again.
You and your colleague have been operating a business and a business bank account and must take responsibility for these. As a small business, you can appeal to the Financial Ombudsman. But if you do, I would be interested to know whether the Ombudsman disagrees with me.
