This Transcript Is Issued on the Understanding That It Is Taken from a Live Programme As It Was Broadcast. the Nature of Live Br

THIS TRANSCRIPT IS ISSUED ON THE UNDERSTANDING THAT IT IS TAKEN FROM A LIVE PROGRAMME AS IT WAS BROADCAST. THE NATURE OF LIVE BROADCASTING MEANS THAT NEITHER THE BBC NOR THE PARTICIPANTS IN THE PROGRAMME CAN GUARANTEE THE ACCURACY OF THE INFORMATION HERE.

MONEY BOX

Presenter: PAUL LEWIS

TRANSMISSION: 6th OCTOBER 2012 12.00-12.30 RADIO 4

EXTRACT: FIRST MONEY BOX PROGRAMME, OCT 2nd 1977 (Music) Good morning, I’m Peter Hobday. And I’m Louise Botting. And this is Money Box.

LEWIS: Well that wasn’t me. That was the Money Box time machine taking us back to our very first programme - October 2nd 1977 - because this week is our 35th anniversary. More of that later.

But today, how secure is the new service from NatWest that lets you take cash from a machine with no more than a six-digit code? Changes to council tax benefit could mean that 2 million working age families have to pay more towards their local taxes. And if you have savings, how much can you earn on them? Savings rates have started falling, but where are the best deals?

But first, you may have heard or seen this advert recently.

NATWEST ADVERTISEMENT: (Music) There are times when we all need help - help like the NatWest emergency cash service. So if your debit card is lost or stolen, you could still get your cash from our ATMs any time of the day. NatWest: helpful banking.

LEWIS: That’s NatWest and Shirley Bassey advertising its new service which allows customers to withdraw emergency cash by tapping in a six-digit code instead of using their bank card. There’s a similar system using a Smartphone to get the code for times when … well you just can’t be bothered to carry round a debit card. But how easy is it for fraudsters to access your account from their phone? Bob Howard’s been finding out.

HOWARD: If you’re a NatWest customer and you lose or mislay your card, its emergency cash system allows you to phone up and get a security code which you can take to an ATM to withdraw cash. And if you’re registered for mobile banking, you can also download a mobile app and get a security code through something NatWest calls Get Cash. But in August, Tim from London had £950 fraudulently taken from his account after somebody applied for withdrawal security codes. The money disappeared in eleven ATM withdrawals in just three days with the fraudsters making sure they never exceeded NatWest’s limit for each withdrawal of £100. Tim didn’t know it was possible to withdraw cash from NatWest without using a card and banks rarely discuss with customers how a fraud has been carried out. So when Tim first phoned to report the fraud, NatWest refused to tell him what had happened. But his bank statement had emergency cash next to each transaction, and in another call to the bank Tim got some clarity.

TIM: She began to read my file aloud, which enabled me to know a little bit more about the system, and she said, “You’ve been defrauded by an iPhone application on the emergency cash system. I said, “Emergency cash? How do they do that without the PIN?” “Oh they don’t need a PIN,” she said.

HOWARD: NatWest confirmed to Money Box that the money had been withdrawn via security codes issued using its new mobile app. Tim was registered for online banking but not mobile banking, so he could not have used the app to take the money; and making eleven cash machine withdrawals in three days, six of which were in just one day, was not Tim’s normal spending pattern. NatWest quickly accepted he hadn’t made the withdrawals and Tim thought a refund would be straightforward. But 2

NatWest then accused him in a letter of giving his personal details to a fraudster via a phishing email.

NATWEST LETTER: Under the provisions of your terms and conditions of the card, customers are required to keep their card details and personal identification number secure at all times. After taking the circumstances of the fraud into account, I’m not in a position to refund the disputed transactions.

HOWARD: But although Tim had received such emails, he had never sent his banking details to anybody. After Money Box contacted NatWest, it said it would refund Tim the £950 as a gesture of goodwill. But Tim says he still wants to know how a fraudster managed to sign up for mobile banking on his account, download the app and carry out eleven emergency cash machine withdrawals.

TIM: It’s a huge liability that you don’t actually know about. I had to find out what emergency cash was, and I’ve contacted the bank straightway to say under no account, whoever it is on the phone, whoever details they’re giving out, ever hand out emergency cash. I’ve never wanted emergency cash, I’ve never asked for it, and I don’t want it as a facility.

HOWARD: Nobody was available from NatWest to give an interview about cardless cash withdrawals. The bank admitted it had suffered other fraud losses via these systems, but insisted it had stringent security measures in place. For example, it said to download the app customers had to first apply for mobile banking, which required a combination of card and personal details and their online banking number, and a letter would be generated to the customer’s home address, alerting them to the fact that mobile banking had been activated. Tim didn’t receive this letter and he still doesn’t know how fraudsters were able to obtain these details and NatWest hasn’t told him. Dr Stephen Murdoch from Cambridge University’s Computer Lab believes any criminal who finds a way round the security, like the man who defrauded Tim, would be amply rewarded.

MURDOCH: I’m sure a lot of fraudsters are thinking about using this application because it’s now relatively easy for banks to identify fraudulent transactions and reverse them even several days after they’ve happened. And so when the fraudsters can get access to this mobile app, what this app makes really tempting for fraudsters is that they can use it to get cash. I think that’s what is going to make it a priority for them.

LEWIS: Stephen Murdoch ending that story by Bob Howard. And if you’ve had similar problems, let us know via our website: bbc.co.uk/moneybox. Click on ‘contact us’ at the top of the page. Several of you have already. Tim’s not alone, it seems: Dawn from Devon says she lost £1,000 in nine emergency cash transactions two weeks ago; Jackie from Wiltshire says she lost £900 earlier this week; and Paul tells us he lost more than £2,000. Do let us know your experiences.

Nearly 5 million people who get their council tax reduced on grounds of low income, sometimes to nothing, will see big changes from April. The Government’s handing over the whole system to local councils - that’s more than 300 of them in England alone - and at the same time it’s cutting the funding by 10% while insisting that pensioners are paid the same as now. So working age people will bear the brunt of the cuts. They could see their benefit reduced by 20% or more. Most working age people will have to pay extra. Some will have to pay for the very first time. Dr Peter Kenway is with me. He’s Director of the New Policy Institute, a think tank which has been looking into this. Peter, for those who don’t know, just explain what council tax benefit is now and who gets it.

KENWAY: Yes, council tax benefit is a social security benefit that is available to low income households to reduce the amount of, if you like, ordinary council tax that they have to pay. As you’ve already said, it’s a system that’s been in place for 20 years. The rules are set nationally and the Treasury picks up the bill. As from April, that’s no longer going to be the case. Each local authority - that’s as you say more than 300 … I think about 325 local authorities in England - will all have their own schemes. Pensioners are to be protected and so the brunt of the adjustment (and there 4

is a cut in the money from Treasury) will fall on low income working age households.

LEWIS: So that whole 10% cut - which I think is nearly half a billion pounds altogether, isn’t it - will fall on the families who are not protected, which is working age families?

KENWAY: That’s right. I mean local authorities have been given other powers - to look, for example, at how much they charge or don’t charge to empty properties. So it’s not completely the case that it’s all going to fall on working age; but the only people who are going to be impacted are working age families - that’s correct.

LEWIS: And why are they making these changes? Is it just to save the 10%?

KENWAY: I mean I think that’s a very good question. The argument is that it will give local authorities an interest in seeing people in their area enter work. Whether local authorities can do that is a good question.

LEWIS: And I suppose if they have a take-up campaign, as many councils do because lots of people who could get this benefit don’t, then the burden will fall on them rather than the Treasury?

KENWAY: No that’s completely correct. I mean at the minute lots of people don’t claim this benefit, including pensioners who are entitled to it. Local authorities try to encourage people to take up what they’re entitled to. In future it won’t be in their interest to do that.

LEWIS: And we’ve been contacted by Money Box listeners worried about how they might be affected by the changes. Here’s Michael in St. Albans who emailed us.

MICHAEL: I’m on full council tax benefit. I received a letter from my local council informing me that from next year, I’ll have to contribute towards my council tax bill.

It also said that pensioners are exempt from this. As I have recently transferred to pension credits, do I count as a pensioner; and, thus, do I have to pay?

LEWIS: So two questions there. Will he be affected?

KENWAY: Well I think it’s a good moment to say that local authorities at the minute are just consulting over what they’re going to do. We won’t know until December and January until it’s certain, so that’s a very important caveat to this answer. If you are entitled to pension credit, then it looks like in most cases that you won’t be affected, and so the answer is no he won’t have to pay. But it does also appear that if he has a partner who is receiving a working age means tested benefit - income support, for example - then they might be. So it is unclear, and lack of clarity is the overriding sort of characteristic of where we are on this at the minute.

LEWIS: Well let’s try another one, Graham. He lives on his own in Guildford in Surrey.

GRAHAM: My name is Graham. I’m 58 years old and I’ve been unemployed since January of this year. I am currently in receipt of full council tax benefit. I live in a three bed-roomed house, which is Band D. I think I could cope with a small contribution, but not anything major.

LEWIS: And what might happen to Graham?

KENWAY: Well Graham certainly isn’t a pensioner, or at the age of 58 you’re not entitled to pension credit. Some local authorities are saying if you have a disability or if you have a child for example under 5, then you won’t be affected. That doesn’t sound like the case here. In which case it sounds like he will be … a person in this position will be - given I think we know roughly the band that his property’s in, assuming Guildford does the sort of scheme that most local authorities are talking about - he would probably be looking at contributing somewhere between £4 and £5 a

week.

LEWIS: And at the moment he pays nothing. I should also add that the reduction, the 25% off for a single person, isn’t changing. Peter Kenway, Director of New Policy Institute, thanks.

And now, if you’d tuned into Radio Four 35 years ago this week, you’d have heard this new programme.

EXTRACT: FIRST MONEY BOX PROGRAMME, 2nd OCT 1977) (Music) Good morning, I’m Peter Hobday. And I’m Louise Botting. And this is Money Box.

LEWIS: Well that was the very first Money Box on Sunday 2nd October 1977. It sounded very different, but the topics were familiar: credit card charges - 2% a month then, much the same as they are now; how children understand money; unit trust investments; and an interview with the head of what was then the Inland Revenue. In the first 3 months, there were pieces on how building societies were changing; does Ernie choose premium bonds at random; a guide to equity release; dealing with doorstep salesmen; should you buy your council house; and of course an analysis of the Budget. A few weeks in, there was a piece on benefits, but the programme hadn’t really worked out then how to get the complicated details over.

EXTRACT: MONEY BOX, 1977

BHAKTA: For a single person, the means allowance is £25.25. For a couple and also a single parent, the allowance is £36.25 plus £6.10 for each child. Now if your income is … (fades under)

LEWIS: Well tricky stuff there from John Bhakta of Child Poverty Action Group. So presenter Louise Botting ended with this friendly assurance.

BOTTING: If figures aren’t your strong point, don’t worry - the council will work it out for you when you give them the facts.

LEWIS: There was also more music on the programme then.

MUSIC EXTRACT: MONEY BOX (presented by Hobday and Botting)

HOBWAY: If, like singer Rosemary Clooney, you live in an old house or if you’re thinking of buying one, then you should look very carefully at what the local council can offer you in the way of an improvement grant.

LEWIS: And listeners didn’t like being approached in the street any more than they do now.

BOTTING: But first clipboard salesgirls, the girls who stop you in the street apparently doing market research but actually collecting names of suitable prospects for insurance companies.

LEWIS: Well that story led to action in Parliament. And when Barclaycard’s monopoly was broken by “your flexible friend”, the Access credit card, Money Box presenter Peter Hobday tackled Access’s boss, George Gillespie.

EXTRACT: MONEY BOX (presented by Hobday and Botting)

HOBDAY: So Mr Gillespie, our first question really is do you think that the British population, the British population, the British consumer really wants to have a credit card in his pocket?

GILLESPIE: I think they do. We’re collecting new accounts at the rate of something like 30,000 to 40,000 a month. That must be an indication that people want a credit card and will use one. 8

LEWIS: And in January 1978, it was mortgage rates that were the concern.

EXTRACT: MONEY BOX (presented by Hobday and Botting)

BOTTING: Building societies. Will they cut the mortgage rate when they meet next Friday?

HOBDAY: Next Friday, when the building societies hold their monthly meeting, there’ll be 36 men behind your money with the problem of whether to alter the mortgage rate. Last year the rate was cut twice and currently stands at 9.5%, but the pressure is on them to come down again in the light of interest … (fades under)

LEWIS: There was no competition then of course. There was one mortgage rate, take it or leave it. And those voices of Peter Hobday and Louise Botting that you heard really do put me and Bob Howard to shame, don’t they? (laughs) Well the man who created Money Box and got it commissioned by Radio Four was my colleague and Money Box Live presenter, Vincent Duggleby. There was very little in the press about personal finance in 1977 and nothing at all on Radio.

DUGGLEBY: The economy was in a terrible state. Most notably we had the stock market falling 73% in 1975 and then we had inflation going up to more than 25%. We had interest rates of 15% and Britain had to go to the IMF for a bailout. Now the point about this was that while there was a reasonable amount of city courage, there was absolutely nothing to help the man in the street, woman in the street understand what on earth they could do with their money, and that was really what prompted me to say could we please have on Radio Four a weekly programme on personal finance.

LEWIS: How did it proceed from there?

DUGGLEBY: We brought it in pretty quickly from the acceptance to the first programme, and Louise was new to radio but she took to it very quickly. She had

been writing for Money Mail and done some British Forces broadcasting. But the key thing was that we had very little (if I may call it) infrastructure. There were mortgages, there were National Savings, there were building society term shares, there were unit trusts and there were pensions. Interestingly enough, 35 years ago SERPS came into force. But we didn’t have any regulation either, so it was a completely blank sheet as far as we were concerned.

LEWIS: And of course mortgages then were fixed by the building society. The rate was fixed. And in fact there’s one programme where they actually fixed that rate and the programme looked ahead well will they cut it from 9.5%

DUGGLEBY: Yes. And of course you had to save up for at least a couple of years before you could get a mortgage.

LEWIS: And what about credit cards then? Access was a new credit card and there was quite a bit in the programme about that in the early years.

DUGGLEBY: That’s right, I mean Barclaycard had been in existence I think for quite a time, but Access was the non-Barclays credit card. I suppose we were really doubtful that there were was room for two credit cards. But then credit you see was extremely limited. I mean you know we didn’t analyse debt in the same way as we do today.

LEWIS: But looking at the agenda of the programme, it was actually similar - it was about tax, it was about investment, it was about children and finance, new products, and a great deal of scepticism about them very often and of course warnings about scams - so in that sense, the agenda’s pretty much the same.

DUGGLEBY: Precisely, Paul. That’s absolutely right. During the 1970s an awful lot of insurance companies went bust. You know we had a property crash. Things haven’t changed very much over the years. The one thing I think is important is that now of

course we have a very sophisticated and regulated system of independent financial advice, as you were reporting last week, about to change. But in those days there was virtually no regulation at all. Indeed there was no regulation to speak of until 1986 when the Financial Services Act came into play, so we were always dealing with people we couldn’t be absolutely sure they were totally honest and upright.

LEWIS: Have you got any particular moment you think in the early days when Money Box really had a great success?

DUGGLEBY: Yes, I think probably the most significant report we did in the early days was the exposure of what was known as the offshore insurance companies, particularly those based in Gibraltar which were really gigantic frauds; and the exposure of a company called Signal Life by the then reporter Michael Robinson I think will probably go down as one of the best pieces of investigative journalism that I’ve ever heard.

LEWIS: Vincent Duggleby and Michael Robinson presented our summer series this year, Fixing Broken Banking, which you can listen to via our website. And you can also hear the whole of that very first Money Box via our download page: bbc.co.uk/moneybox will take you to those.

Well onto the next 35 years now. Why are savings rates coming down? After all, the Bank of England this week held bank rate at 0.5%, where it’s been since March 2009. But if you’ve got savings, those rates have not stayed the same; they’ve been dropping. With me is Anna Bowes, Director of the comparison site SavingsChampion.co.uk. Anna, what has happened to savings rates recently?

BOWES: Well since July, on easy access savings accounts, for example, the rates have fallen from the accounts you can open now from about 3.25 to 2.8%, so they’ve come down significantly. But it is for people opening new accounts. So what you tend to see with savings accounts these days, certainly easy access, is that they’ll have a

large bonus, and those accounts (if you’ve managed to open one recently at over 3%) the rates are probably the same for you. It’s just for people looking for opening new accounts now.

LEWIS: Until they come to an end. And what about if you tie your money up? You can get better rates than that, presumably?

BOWES: You can get better rates on fixed rate bonds. You can get around 3.25% at the moment if you tie up for a year. You know that’s the same that you could get on an easy access account in July, so they’ve come down as well.

LEWIS: And the longer you tie up, the more you’ll get. I used to have a sort of shorthand that you can get 3% instant access and 4% if you tie it up, but that’s no longer true really, is it?

BOWES: No, that’s right. I mean you can get 3% on easy access ISAs, interestingly. So at the moment ISAs are paying more than the equivalent easy access accounts, which is quite unusual. So M&S has got a 3% easy access ISA and doesn’t have a big bonus on it, so you have to keep an eye and track that rate to make sure that they don’t cut the rates you know once it goes off the radar, but it’s a good account.

LEWIS: Now bank rate fixed. It’s been fixed for 3.5 years, for heaven’s sake, at 0.5%. Why are rates falling?

BOWES: Well one of the reasons could be that there is more available money to banks and building societies that they can get at the moment cheaper in order to lend out. There is a new scheme called the Funding for Lending Scheme that has released £80 billion to banks and building societies over the next 18 months.

LEWIS: That’s public money, that’s Treasury money that’s being used?

BOWES: That’s correct, that’s correct, and that is to try and encourage more lending at lower levels to people. But it’s having a knock-on effect. It looks like it’s having a knock-on effect on savings rates.

LEWIS: So if the banks don’t need our money to lend out, they’re getting it so cheap from the Government that this could carry on?

BOWES: Well it could carry on. And, as I say, this scheme is in place for 18 months, so we’re looking at least for another year. But there will be other things that come into play, so competition may change in the future. We just don’t know exactly when.

LEWIS: Well let’s hope so because I’m sure people with mortgages rather than or as well as savings are going to point out that Santander, for example, have just put up its rate by half a percentage point. So although savings rates are coming down, funding and lending isn’t cutting mortgage rates.

BOWES: No, I think that there are some new accounts, new mortgages coming out that are offering good value, but it tends to be for the same people who’ve already got you know larger sums of money and lower loans to value.

LEWIS: You’ve given us some good deals, Anna. I must say I was looking at bad deals and some banks are paying 0.05%. HSBC. I mean some of them are appallingly low, aren’t they?

BOWES: It’s a really important point actually and you need to go back and have a look at the account you’ve got and make sure if you are sitting in one of these accounts … You know at the end of the day 2.8% has dropped from 3.25, but it’s still considerably more than the base rate at the moment. So have a look round, find out what rate you’ve got; and when you then fit into a better rate, then make sure you track it, so that you know the rates going forward.

LEWIS: Put a note in your diary. Anna Bowes of SavingsChampion.co.uk, thanks very much. Bob’s here with a quick update on when you should and shouldn’t give out that three-digit number on the back of your bank card.

HOWARD: Yes, this is known as the CVV2 number and we recently reported how a gym had wrongly asked a customer to write it down on an application form when she went in to join. We said according to the card industry body, the UK Cards Association, it was against the rules to store these numbers and they should only be asked for when making payments online or over the phone. We were contacted by Tania Jane Rawlinson from Bristol who says her university ask donors and people placing orders to write down their CVV2 numbers on paper forms which are sent through the post. She said after processing the transaction, the CVV2 number and card details are then destroyed. So we spoke again to the UK Cards Association and it agreed with Tania that you can correctly be asked to write the CVV number on a form you send through the post. The charity doesn’t have to ask you for it, but some do, and the UK Cards Association says it’s okay to provide it. But it says the charity should then mask the CVV number once the payment has been processed, so it can’t be read or used again.

LEWIS: Yes, I was wondering about how you mask a number earlier, Bob. (Howard laughs) But anyway, cut it out and put it in the shredder, I think. And Bob, problems with PayPal said to be resolved now?

HOWARD: Yes, PayPal have said that the technical issue which led to a string of payments being delayed whilst security checks took place on certain customer accounts has now been sorted out. We received several complaints from people who hadn’t received their funds by the next working day in line with EU regulations. PayPal have made a commitment to do so since Money Box covered the issue of late payments at the beginning of the year. Drop us an email if you’re still experiencing problems.

LEWIS: And Bob, two more banks had problems over the week? 14

HOWARD: Yes, Coop and Lloyds both had problems on Friday, which left people unable to do online banking, and in some cases they couldn’t use ATMs or debit cards. Both banks tell us those problems were resolved by Friday evening.

LEWIS: Thanks, Bob. Well that’s it for today. There’s more on our website: bbc.co.uk/moneybox. You can sign up for the newsletter, download the programme, send us your ideas through that ‘contact us’ tab, as I said earlier. I’m back on Wednesday with Money Box Live, this week taking your questions on part-time working, employed or self-employed. I’m back with Money Box next weekend and on Tuesday there’s World Service ‘Your Money’ at 11 o’clock. Today the reporter was Bob Howard, the producer Jane Beresford. I’m Paul Lewis.