Does the financial industry have your interests at heart?
If you work at the top of the industry you will agree that it does. Fund manager pay across Europe has risen by 18% in the last 12 months, despite an outbreak of even more dismal performance than usual. However, for those outside the industry, no one has ever come across a circumstance where the answer is ‘yes’. Nowhere is that more clear than in the rip off that is retail banking. It seems only a matter of weeks ago that the big banks were caught scamming customers into buying payment protection insurance (PPI) that they didn’t need and the papers were full of the horror of high overdraft charges. But already the banks have a new scandal on the go: the packaged account.
One in five Britons now have these. The idea is that they pay a fee every month and get extra benefits in return. The problem? You pay a lot and mostly don’t get much back. The average packaged account costs £15 a month, with the most expensive (Lloyds TSB) coming in at £25. For that you get travel insurance, mobile insurance, ID theft insurance, preferential exchange rates and the like. That might be fine if you needed and used all these services. However, just 10% of people say they do, while a third of people use none of the services on offer.
This is partly down to the fact that no one needs some of the inclusions: banks have to refund your money if you are defrauded, so ID theft insurance is generally pointless. It is also partly because customers often find they have doubled up: mobile phone insurance can come with house insurance; travel money is pretty much always cheaper at a dedicated firm such as Sterling Exchange (see Peter ’s Friends ) than at a bank; and holders of fee- paying credit cards may already have travel insurance.
But it’s also because some people could never use the extra features: if you don’t travel much, why pay up for airport lounge access? The upshot is that holders of these accounts are wasting somewhere in the region of £240m and £320m in bank fees every year. The Financial Services Authority (FSA) is wondering if this is yet another mis-selling scandal in the making and has published new guidelines aimed at forcing bank salesmen to check if customers need the extras before flogging them overpriced accounts. The banks aren’t behaving any better than they were and their customers seem as dim as ever (can you believe that one in five of us has fallen for this!). But it is nice to see the FSA intervene earlier rather than later.
|Jonathan Willis is a media originator, publisher, author, property developer, film & TV executive producer, script and copywriter, entrepreneur and financier.
Jonathan wrote two books, the first of which was brokered to a publisher in days, and the second title based on auctions, around which he developed a publishing business on Fleet Street, sold 286,000 copies in six months. Subsequently, Jonathan has created many popular consumer and business magazines and books, and his advertising copywriting skills have led to the creation of several thriving private companies and 3 plc’s. His property publications have serviced 40,000 UK subscribers per month. He currently has in hand the development of 2 spa hotels on the idyllic island of Koh Phangan, Thailand, two holiday parks (in Spain and Portugal) together with a villa complex in Morocco.
Johathan’s latest project is The Ideas Factory: Our goal is simple – to promote the healthy exchange of ideas within a friendly forum of like-minded entrepreneurs and investors.Through a combination of regular newsletters, live events and website updates, the Ideas Factory keeps its members informed and abreast of outstanding and timely business, property and other investment opportunities, whilst also providing an informal forum for people to get together to form business partnerships and lifelong friendships. You can download the latest copy of The Ideas Factory Magazine here: