Protection? What protection ?

I’ve just watched a Despatches programme on Channel 4 about where we should be saving our money in these times when interest rates are at such an appalling low. It really was most unedifying.

Mrs D and I live on our investments. We were lucky when we sold our previous house and put a wad of money in the bank because we decided not to stick it into the stock market until we’d taken time to do our research. Damn good job we did because shortly afterwards the stock market took a dive in the financial crisis so wilfully denied by Gordon Brown. We were totally liquid at the time so even though we hadn’t made a shed load of money, we hadn’t lost any capital.

We have several deposits in banks and building societies always making sure we stay underneath the FSCS guarantee of £85,000. We spread it around to spread the risk and when a deposit matures I always do my homework to find the best rates. But where to look? Interestingly, I find Moneysupermarket the best site – provided that you untick the box that says ‘only show accounts I can open through moneysupermarket.’ Interestingly, Despatches agreed but rated as the worst. Not surprising if you’ve ever visited their site.

Most worrying was the second half of the program where they got reporters to ring around and ask about guarantees for their deposits. Santander came out badly never having heard of the FSCS. This didn’t surprise me as I refuse to deal with Santander after the total and utter balls up they made last time I dealt with them. At one point they threatened to throw me out of the local branch when I said that if they didn’t sort out the cock up they’d made within the next five minutes, I was going stand in the middle of the branch and scream until they got on with it.

In case you’re wondering Santander put my money into the wrong account, offered me an appointment to sort it out, then when I appeared said that there were no appointments as it was a drop in day, and then couldn’t find the paperwork and told me I’d got it wrong until I produced the photocopy of my application. Eventually, they gave me a cheque for my full balance and told me to piss off and never darken their doors again. Needless to say they couldn’t pay me to do so. If they offered me an account with 75% pa interest tomorrow, I’d still go elsewhere. They’re totally useless.

But who got the golden peanut award for not knowing their facts? RBS. Yes, RBS – the people who went bust and had to be bailed out by the government. Now if you’d expect anyone to know about the FSCS, it would be a bank bailed out by the government, right? Well, seemingly no. They’d never heard of it.

So my advise if you’ve got a few quid to put in savings, shop around all the sites, then look at the bank or society’s web site to check the facts, ensure they’re registered with the FSCS and then decide – because it seems that they all train their staff so badly there’s simply no point in asking them over the phone.

Surprised? Well, I’m not…


4 responses to “Protection? What protection ?

  1. “Surprised? Well, I'm not… “

    No, me neither. Dealing with banks and building societies has got to be one of the most frustrating experiences there is. I'm in a similar boat to you Dioclese. I planned for my “early retirement”. I'm a singleton with no offspring. I live on a small company pension plus interest on savings. I decided for simplicity's sake to put all my eggs in one basket. It's all in a National Savings account. The reason I chose NS was because they guarantee the whole amount – it's underwritten by the government so it's 100% safe – yeah right! Makes me question why we bother with rates being piss poor for savers. What gets me is the differential between the borrowing and the lending rates – small wonder that they make huge profits and are able to award themselves huge bonuses – the bastards!

    It's almost impossible to function in today's world without having a bank account. If it was I wouldn't give them the steam off my piss.

  2. Not only that, but it's almost impossible to operate a bank account without a mobile phone. Every time I make a payment, they text me an authorisation code. I had to buy a bloody phone I didn't want just to run my bank account FFS!

  3. It was an interesting program but I was a little disappointed when they tried to do a hatchet job on Funding Circle – the Peer to Peer lending org.

    OK the featured company they lent to was dodgy.

    a) But it was rated as C minus i.e. a very risky loan
    b) The crook they highlighted was neither a director or employee of the dodgy Co anyway. So FC (or anyone else lending to them) could not have known his history.

    The guy featured in the program lost his money on this one loan. Unless he was stupid that would be about £50. That would have been more than covered by interest on other good loans.

    I'm a big fan of Peer to Peer lending and FC in particular. I have lost money on some loans too. But the vast majority work as expected and the gains way exceed the losses. Its much less fraught than buying shares.

    I expect you know how it works but anyway…..

    Say you want to lend out £5000. You lend that to (say) 100 businesses at £50 per business so you spread your risk over a large base. You WILL get bad debt but you will also get an interest rate similar to what the banks get when they lend money out. The vast majority of companies borrowing do not default. FC do the same checks/debt pursuit etc as the banks do.

    Each company of course needs more than your £50. So (say) they want a 50,000 loan. It would be built from around a 1000 lenders who on average would lend £50 each.

    I highly recommend Funding Circle. It lends soley to businesses. Zopa (and others – I only use Zopa & FC) lends to individuals.

    From Funding Circle AFTER taking off bad debt I reckon I get close to 6%.

    There are risks but I think they are small and known.

    Certainly better than the bloody banks!

  4. I agree that was a bit of a hatchet job too. My understanding is that persons with criminal records are not permitted to be company directors so it's rather difficult to see how anyone could have detected this particular bloke. Of course there are people out there who get around it by making their family the directors whilst they control the company.

    I'v looked at peer to peer ending and confess I've yet to be convinced to be honest.