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 PRINTED HERE.

MONEY BOX

Presenter: Paul Lewis

TRANSMISSION 1ST SEPT 2001 1200-1230 BBC RADIO 4

Equitable Life

Woolwich Prime Gold

Euro Currency

Barclaycard Rewards

LEWIS Hello. And welcome to the first programme in our new series.

The Government announces an inquiry into Equitable Life - but why will much of it be held in secret and some of it never published?

Woolwich closes down its Prime Gold savings account - thousands of customers could get compensation.

The new Euro notes are revealed to the public, what can we do though with our old francs, pesetas and drachma?

And the loyal Barclaycard customers who're up in arms because they can no longer claim free gifts...

MAN We've got over eight thousand points left which means we spent over eighty thousand pounds on Barclaycard, I feel customers have been really badly treated with this.

LEWIS But we start, as we so often have this year, with Equitable Life and that surprise announcement by the government that it was launching an independent inquiry into what had gone wrong at Britain's oldest mutual insurance company. The inquiry will be conducted by a Scottish Appeal Judge, Lord Penrose. But within hours of the announcement, criticisms of the inquiry began. It won't be a full public inquiry some of it will be held in private and not all the report will be published. It will also be excluded from looking at crucial events in the recent past and at future actions by the company.

Paul Braithwaite is chairman of the Equitable Life Action Group. He had written to the Treasury again this week asking for action - but this was not what he wanted.

BRAITHWAITE When the action groups wrote to the Treasury and Gordon Brown for the fourth time , just earlier this week, this was not the action we had in mind. We wanted the Treasury to be pro-active and get off the fence, not to commission another post-mortem. This inquiry will not address the immediate concerns of nine hundred thousand policy holders, they are still anxious, day by day, and the Treasury and the Government have done nothing to ameliorate those concerns.

LEWIS Many people had been calling for a so-called lifeboat fund - to underwrite Equitable and remove the risk of it going bust. I asked Ruth Kelly, the junior Minister at the Treasury who was chosen to make the announcement, why she had not done that..

KELLY We have considered the options that have been called for by many including some policy holders of putting public money into a life boat , I do not think that that is the right thing to do and I thought that very important to spell that out to policy holders now. The right thing to do is to have a full and independent inquiry to look at the current situation and right back at it's roots and to identify any lessons to be learnt.

LEWIS People have said to us already that this report is commissioned by the Treasury , it will have to look into actions by the Treasury , it will report to the Treasury, you call it independent but can people really be confident in that?.

KELLY I don't think anyone will doubt the integrity and independence of Lord Penrose, he is a very senior Scottish Judge with extensive commercial experience he is also an accountant by training he's in a perfect position to carry out this report and he will have no interference whatsoever from the Treasury , he will I'm sure be completely his own man.

LEWIS There are some things though that you are not letting him look at aren't there? He won't comment on the compromise deal currently being worked out by Equitable, he won't look at past judicial decisions, he won't pre-judge future judicial decisions and he won't offer advice to policyholders. He is rather constrained.

KELLY This is something Lord Penrose himself felt very strongly on, it wouldn't be appropriate for him conducting an enquiry to try and second guess what would be properly be decided in a court of law, that's not his role, his role is to look at the background and events which that led to the current situation in Equitable and to draw out important lessons which need to be taken into account both by the industry and the regulator.

LEWIS The Financial Services Authority has also been asked to review what happened while it was in charge of regulation to Equitable Life. Is this new inquiry going to affect the publication of that report?.

KELLY Well I haven't seen what the report contains yet and obviously I will be looking at it very carefully. It's clearly important that its publication fits in with the Penrose inquiry so ;we will have to ask Lord Penrose what timing he thinks is appropriate and judge it in that light.

LEWIS So the publication of the FSA Report is no longer in the hands of the Treasury it's going to be up to Lord Penrose when that report is published ?.

KELLY No I'm going to take the final decision, we are still totally committed to publishing it's findings it's just important that the timing is correct.

LEWIS Some of the Penrose report won't be published you've made it clear that some of it will be held in private that doesn't really seem to set a very good precedent for publishing the FSA Report.

KELLY Some of the material which Lord Penrose will have access to will be commercially sensitive and in that situation he doesn't have legal protection to publish it - it would be breaking the law, so we have to be very careful about what hearings are in public and what hearings are in private but the presumption will be to publish as much as possible.

LEWIS And why did you decide not to make it a statutory inquiry so that people could be compelled to attend and give evidence.

KELLY Well statutory inquiries are quite rare, in fact to put this on statutory footing we would've had to recall both houses of Parliament.

LEWIS But it is a difficulty isn't it for example the past chief Executive Chris Heddon the past Managing Director Alan Nash may refuse to appear ?.

KELLY Yes and if they do refuse to appear I wouldn't hesitate to put this on a statutory footing, of course I hope that that 's not the case because a non-statutory inquiry does provide greater flexibility and of course makes it much easier to proceed quickly.

LEWIS So how quickly can we expect to see the report?

KELLY Lord Penrose is determined to start his inquiry now, it will clearly take him sometime to assemble all the material that he needs, I expect he'll probably report sometime next year although it is impossible to predict exactly at what time his report will be produced.

LEWIS But sometime in 2002 ?

KELLY That is what I would expect

LEWIS And policy holders who have suffered, the million people or so who've lost money out of their funds over the last year how will this help them ?.

KELLY Well policy holders have been calling increasingly for an inquiry into the current situation, I think the issues are of such importance that they deserve a full explanation, that's why I have asked for this independent inquiry to be set up and why I think that it will draw out important lessons which need to be taken into account in the future.

LEWIS But many of Equitable's million customers do want more than an explanation. Sir Gordon Downey, has been a City regulator. Now retired, he's also an Equitable policyholder. He fears the inquiry will be an excuse for the Government to do nothing.

DOWNEY I'm not against an independent review in principal and I think it could lead to some useful conclusions but of course it is addressed entirely I think towards avoiding similar problems arising in the future because it does nothing of course to deal with the present situation.

LEWIS Until 1999, the Treasury regulated the insurance industry. If the Penrose Inquiry finds that the Treasury had been at fault did he think compensation would follow?

DOWNEY Well I should think so but I don't think really this will come in time. I mean I do worry about the leisurely pace with which all this is taking effect. The crisis is now and I think some sort of solution is required now, this is why I favour a parallel approach to the parliamentary ombudsman because I think the parliamentary ombudsman could be asked to look into a complaint of mal-administration by the then regulators which was the DTI and Treasury. This would be a narrow remit - it wouldn't take all that long, I don't think. And I think the ombudsman would be in a position to apportion blame and if necessary require compensation.

LEWIS So that would be something quite separate from Government that could be initiated by angry policy holders making such a complaint through their MP's to the Parliamentary Ombudsman ?.

DOWNEY Well that's right and I think that should be done because I don't think the two are incompatible, certainly I don't think an approach to the Ombudsman should be held up pending the outcome of an inquiry which could take a couple of years and which after all the government may or may not publish or take any heed of it's recommendations.

LEWIS Sir Gordon Downey and earlier we heard from Paul Braithwaite who is in fact Chairman of the Equitable Members Action Group. If you have questions about investment and saving you can call Money Box Live on Monday, Vincent Duggleby will be here to take your calls - with a crisis of confidence in the pensions industry, the stock market falling and talk of a recession, where is our money safe? Money Box Live on Monday

LEWIS : Today Money Box can reveal that Woolwich, now part of Barclays Bank, is closing down one of Britain's worst savings accounts. Following pressure from this program and elsewhere, Prime Gold will disappear on the 17th September. And thousands of customers who had money in this account could be in line for compensation.

We reported in July that the Financial Ombudsman had found against Woolwich over its Prime Gold account. And yesterday we heard of another listener who's been repaid thousands of pounds by Woolwich. He had trusted his life savings to Prime Gold when it was offering a good rate of interest, only to find Woolwich slashed the rate to next to nothing. Chris A'Court is with me...

A'COURT Yes, Paul, the latest case involves Peter Mackness, who approached us a year ago when he realized that his brother, who's blind and couldn't get to a Woolwich branch himself, had lost out hugely - now he's getting over three thousand pounds to make things right. He says the top up interest is very welcome but customers should never have been put through such heartache....

MACKNESS It's a shame to see people treated they way they are treated and then for us to have to fight so hard to get what is only ours in the first place. I truly believe that there is a big prize waiting for the organization that's big enough to stand up and say they would treat their savers in the future decently, honestly and with fairness.

LEWIS Well good news there Chris - but why is Woolwich paying up ?

A'COURT: Woolwich has decided not to argue with the Ombudsman's finding that it acted unfairly in cutting rates from March 1998 and didn't adequately inform customers. The bank could have appealed, but presumably thought that would have been too damaging for it.

LEWIS : So other Prime Gold customers who left money in the account after March 98, wrongly thinking there was good interest being paid, should they consider claiming too..?

LEWIS: Yes, Woolwich won't pay up automatically, people have to claim. But anyone who left savings in Prime Gold after March '98 thinking it was giving a fair rate of interest, when it wasn't, can make a very good case for compensation. And if Woolwich refuses to pay up, then you can threaten to go to the Ombudsman, who has made his views very clear.

LEWIS: And now after, what, a year's campaign by Money Box, Prime Gold is finally closing down.

A'COURT: Yes, it's almost a year to the day after we first highlighted it and from 17th September it will be no more. Woolwich is writing to all Prime Gold customers to explain the change and let them know they will earn more interest in other Woolwich accounts. But if customers take no action, Woolwich will transfer the Prime Gold balance into a replacement account, called Instant Access Cash, paying the same lousy zero point three per cent.

LEWIS: Why that alternative account is paying such a derisory rate of interest is of course one of the questions we would like to have asked Woolwich. We also would've liked to have asked why it was not paying compensation automatically forcing customers to go through a complaints procedure. But as on every other occasion the bank refused to provide anyone to be interviewed on Money Box. With me though is Rebecca Fearnley of Consumer's Association, a Senior Researcher there who's been keeping a close eye on Britain's poorest savings accounts. Rebecca - good news at last from Woolwich

FEARNLEY Absolutely , were very pleased to see the demise of the Prime Gold account at last after quite a long time campaigning to see the back of it. I think it's a shame it's taken them so long to take this action, It's also a shame that they haven't really conceded the principal and admitted that it was a superceded account.

LEWIS And they're suggesting customers move money to another Woolwich account - but that typically means earning no more than 4% - people can do a lot better elsewhere can't they ?

FEARNLEY Yes you can do a lot better elsewhere, it's always worth shopping around and Woolwich aren't on top of the best buy tables.

LEWIS Perhaps they're not at the bottom anymore though there are still plenty of bad one's aren't there ? We counted more than a dozen that are paying less than 1%. (e.g. Abbey Nat, A&L, Northern Rock, Halifax)

FEARNLEY Yes, there are some really shoddy accounts out there the Abby National Instant Saver account is one, Northern Rock has a similar account as does Alliance and Leicester , so there's still a lot of work to be done in terms of getting the other banks to buck their ideas up.

LEWIS Yes now of course there is a Banking Code - isn't there and that is supposed to, as I understood it, to stop banks opening accounts with high rates of interest, tempting us in bringing down the rates and hoping that inertia will keep us there. Why hasn't the Banking Code stopped this happening ?

FEARNLEY I don't know, it seems like the wording of the banking code needs to be tightened up, it does talk about superceded accounts, and what banks should do if an account is superceded.

LEWIS: This is like Prime Gold is now, because it's disappeared

FEARNLEY: That's right where an account isn't actively promoted anymore, most of these low paying accounts really fall into that definition, but the banks just aren't defining them as superceded, therefore they are getting away with treating their customers very unfairly. So I think we would like to see the Banking Code tightened up, yet again, to stop this happening.

LEWIS: And of course customers take action themselves.

FEARNLEY: Absolutely.

LEWIS: Rebecca Fearnley, thanks and Woolwich have set up a special helpline for customers of Prime Gold who've got questions the number is - 08457 474 645 that's 08457 474 645 Woolwich Prime Gold Help line and it will be kept open specially today for Money Box listeners until 5pm.

(EURO COMMERCIAL)

LEWIS: Well an advert we won't be hearing in the UK, that was from the Irish version of a campaign that starts this week to launch the new Euro notes and coins. They come into use in the twelve countries that have joined the Euro on the first of January. And this week the European Central Bank revealed the details of the design of the new banknotes. This was the first chance for people to see the real thing and the BBC's European business correspondent Patrick Bartlett was at the launch in Frankfurt. So what were the Euro notes like?

BARTLETT: Oh we weren't allowed to touch them, no member of the public is going to be allowed to touch these notes until January the first but we were able to have a look at them. The most striking thing I have to say about the notes is their colour they're very bright and also they get larger as you go from smaller denominations to the larger denominations.

LEWIS: These are obviously going to be entirely new to people when they start using them. How can they be sure that the notes they're handling are genuine?

BARTLETT: Well that was the purpose of this launch to inform people about the security features that these notes contain. It's said they are the most sophisticated bank notes ever produced.. They have a very special cotton paper which apparently when you touch it has an unique feel to it. They also have a water mark of course, a security thread, and most noticeable an iridescent foil stripe which contains a hologram and when you tilt it in the light you can see a symbol and the value of the bank note in it. They really do look rather classy, expensive, notes - a sort of Gucci of bank notes if you like.

LEWIS: The banks have the problem don't they of distributing billions of Euro in genuine notes. How are they going to be sure they are not going to be stolen and redistributed by criminals?

BARTLETT: Well obviously this is a massive security operation, in some countries, in France in particular, the army is being brought in to guard cash transport over the next months. And Although the biggest security risk is the notes, the biggest logistical problem is actually the coins, if you take all the coins involved and we are talking here about 50 billion coins we are told they weigh the equivalent of twenty five Eiffle Towers and this is an enormously difficult task to deliver them to all the banks and retailers and other traders across the Euro zone.

LEWIS: And if all that happens as hoped - how ready are the people in Europe to use this new currency ?

BARTLETT: Well I think the people are only now beginning to be prepared for this, and this is partly deliberate. The authorities have taken the view that to begin an information campaign too early in the year could be counter- productive, it might turn people off. So really they've left it to the last four months of the year for really intensive publicity campaign .

LEWIS: Patrick Bartlett. Britain of course won't join the Euro unless the public votes yes in a referendum. But millions of us visit France, Spain, Greece, Ireland, Germany and the other seven Eurozone countries and will be using the new currency there next year. And of course many of us have some old currency left over - so what should we do with it? With me is Clive Kahn the Finance Director of Travelex... I think the biggest foreign exchange company in Britain. Clive, January the first the new notes come in to you - can we still spend the old currency?

KAHN: Yes as far as the British traveller is concerned they will continue to be able to spend the legacy currencies the French francs, Deutsche marks, in shops within the Eurozone generally for two months after their introduction on first of January.

LEWIS: So that's till the end of February basically

KAHN: Correct. After that date if they are in Europe and they want to exchange their currencies they'll have to do that at the bank and they will have until the end of 2002 to exchange their currencies in that way.

LEWIS: So if we are not going to Europe before the end of February what can we do with our old Francs, Pesetas and Drachmas that we might still have in a jam jar?

KAHN: If you still have some left over European currency at home, as far as travellers cheques are concerned they will retain their value in perpetuity, so if you have a French franc, Deutsche mark travellers cheque, you can keep those. As far as the bank notes are concerned the majority of the British banks, well certainly the larger foreign exchange specialists, will continue to exchange them for you until the end of 2002.

LEWIS: And, right, we can change those into sterling presumably , but it would be cheaper wouldn't it to change them straight into Euro in the new year, so we could just take the Euro to Europe.

KAHN: If one is travelling to Europe then that would be the best advice, if one isn't then I think you would have greater use for sterling.

LEWIS: Yes of course you'd change it into sterling. And will you take anything, will you take notes, coins?

KAHN: That will depend on the individual bank or provider but certainly many of the larger providers will take coins as well as notes. If the individual has some coins they may want to consider giving it to one of the various charities that accepts foreign coins Unicef's Change for Good being the most famous.

LEWIS: And from January first we can convert these notes anyway direct into Euro without paying anymore than a nominal charge.

KAHN: Correct. If you're exchanging them within Europe there will be no charge.

LEWIS: Clive Kahn from Travelex thanks very much.

LEWIS Barclaycard, the country's biggest credit card company is under attack from customers after ending its free gift scheme for loyal customers. The scheme was scrapped this summer and some who've been saving Profile or Rewards points for more than ten years can't get the free flights and other gifts that they've been saving up for. Money Box has been investigating. Chris�.

A'COURT Yes Paul, it's an issue that's got many Barclaycard holders steamed up. Profile points, later renamed Reward points, started way back in 1988 - you get one point for every ten pounds you spend using a Barclaycard. And if you spent a lot and have never claimed a gift you could easily be holding thousands of points, like David Sampford. He has eight thousand but now claims they're virtually worthless�

DAVID I want the value back. I estimate my eight thousand points were worth around two hundred and fifty pounds, now they're just worth the same as soap coupons really - I think it's a dreadful way to treat long-standing customers.

A'COURT The problem for David and other Barclaycard customers is that nothing comes for free anymore - there are still rewards but they're now in the form of discount vouchers which only give you money off things, like CD's. So to benefit at all you must spend even more than you already have. Until this summer, David could have exchanged his reward points for a free flight to Europe, or 20 free family visits to the cinema or twelve free bottles of top champagne. Not any more though.

David's angry and believes he has the support of thousands of other disgruntled Barclaycard holders. Certainly more have been contacting us, like Judy. She planned to exchange her 6000 points for a free flight�.

JUDY The thing that made me most angry is that they didn't have the decency to write to me and all the other Barclaycard users to say in six months time or three months time we're stopping this scheme - there won't be any free gifts, there won't be any free flights, so you might like to redeem them before then.

A'COURT Barclaycard confirmed to Money Box that they didn't write specifically to warn customers that after all these years free flights and gifts were to be axed�.their argument was that the brochure terms had always allowed the firm to stop any offers after 12 months and the decision to offer discounts rather than free gifts is in response to what customers want. Not those like David Sampford though, who'd like Barclaycard to do a U-turn and restore free gifts. If not he wants a public burning�..

DAVID I understand that Barclaycard are planning to bring out another brochure at the beginning of November and I'm urging customers to look at that and if it's no better than what they've just brought out on November the fifth they should put their Barclaycard and the brochure on the bonfire and take their custom elsewhere.

A'COURT Well I'm afraid we've bad news for David and others- Barclaycard told us it will make NO guarantees that there will be any free gifts in the next rewards catalogue. And free flights ? We asked if the company couldn't at least still accept claims for those from customers who've saved for years to gather enough points, �Barclaycard spokesman Nick Gault...

GAULT Sadly not. We have had some calls about the flights offers as people clearly have to save over time for those. We extended it from May 31st through to the 31st of July but because of the way the scheme is set up, the third parties that we work with we haven't been able to extend it any further than the 31st of July and we're just not able to do anything more on flights now.

A'COURT Nick Gault of Barclaycard. It'll be interesting to see if the new policy might backfire Paul - free gifts points were a prime reason for many Barclaycard customers using and holding on to their cards - which charges one of the highest interest rates if you don't pay off your bill each month.

LEWIS: Yes and of course there are better alternatives Chris aren't there .??..

A'COURT : There are many cards with lower interest rates certainly, and cards that give cash-back on the purchases you make. So they're worth investigating and that's what many listeners have already told us they'll be doing.

LEWIS: And if you're looking for suggestions - Egg, Halifax Classic Cashback, Morgan Stanley Mastercard and the Capital One Circle Rebate Card, all pay you back a percentage of what you spend on them and Chris an interesting week ahead�

A'COURT: Yes the Government is expected to announce next week that young teachers, nurses and police officers will be able to borrow �10,000 interest free towards buying a home.

And on Tuesday a 75-year-old pensioner is going to the High Court to try overturn the rule that says he must buy an annuity with his pension savings.

LEWIS We'll keep our eyes on that but that's all we have time for today. If you would like more information about any of the items on today's programme, you can call the BBC Action Line on 0800 044 044. Calls are free on 0800 044 044. or of course you can look at our website - www.bbc.co.uk/moneybox.

Remember that Vincent Duggleby is here on Monday with our phone-in Money Box Live on Savings and Investment. You can email questions to [email protected] and of course it's the same address for any of your financial problems.

I'm back with Money Box at the same time next week.

Today, the reporter was Chris A'Court, the producer was Jennifer Clarke and I'm Paul Lewis.