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 LIVE

Presenter: Paul Lewis

Guests: Sally Scutt, Fred Galbraith, Richard Farrant

TRANSMISSION: 15th OCT 2001 1500 - 1530 RADIO 4

ANNOUNCER : And now it's two minutes past three now and time for MONEY BOX LIVE with Paul Lewis.

LEWIS: Hello. And today we answer your questions on problems with banks. We can't live without them, but we really don't like them - arrogant, unhelpful, expensive, and they're just some of the kinder remarks made by Money Box listeners. One in six adults don't even have a bank account - partly because they're afraid of banks or at least afraid they'll be seduced into easy credit. Those who save with banks certainly do find that they are seduced with promises of high interest rates which suddenly and silently fall to next to nothing.

18 months ago an enquiry into banking found we were being over charged by up to 5 billion pounds a year. One recommendation was to speed up the time it takes from paying in a cheque to when we can spend our own money. At least 3 working days, even if it's done electronically. The banks promised action. Why has nothing been done? And then there are the problems with some call centres that we've reported on recently in Money Box - they keep you hanging on for ages and when they do answer they can't deal with the problem. But are banks really as bad as we say?

Let us know by calling Money Box Live now - 08700 100 444 With me today to answer your questions about banks are Richard Farrant - he's chairman of the Banking Code Standards Board, that lays down the quality of service that we as customers have a right to expect from the banks. Fred Galbraith's here - he's company manager of the Cheque and Credit Clearing Company. Yes, he's the one who takes at least 3 days to clear your cheque, and Sally Scutt who is deputy chief executive of the bank's trade body - the British Banker's Association. And the first question is from John who's in Manchester. John, your question?

JOHN: Yes -now I go to the bank on a Tuesday morning see - pay a cheque in. I'm told I can't get my money until after the fourth day, so that takes me through to close of business on Friday which means I can't get it till Monday and if it's a bank holiday I can't get it till Tuesday. Now the person who gave me the cheque they lose contact with their -with their money by the Friday, so where is it for 2 or 3 days? Neither parties, myself or the person who gave me the cheque have contact with that money. Now if you tell the bank they say - ah well it's the same everywhere - it takes so many days to clear. But I think that after the Cruikshank report they said we will set up a pay..? cheque clearance. Now I understand that about 6 months ago the government dropped that particular and what I'd like to ask your panelists is there a sort of conspiracy to keep our millions of pounds on deposit in world-wide banking system?

LEWIS: Well John thanks for your call and I must say it's typical of many, many calls we've had. Let's talk first with Fred Galbraith who's here. Fred, why does it take so long to clear a cheque?

GALBRAITH: Well thank you for the question John. It's one everybody is asking. If I may I'd like to just run you through what happens in the system as a norm, and when I say norm, we're probably talking 97/98% of cheques - you pay your cheque in on a Tuesday. That cheque is actually debited to the other person's account, that's the drawer of the cheque at the paying bank on Thursday and the value for that cheque has passed across to your bank on the Thursday who will in fact I think have credited your account on the Tuesday. Now then, your own bank can decide when they want you to be able to draw those funds, and that is actually a competitive matter. You'll find that some banks are actually willing to allow their customers to draw the funds as they pay them in - in your case on the Tuesday. There maybe conditions attached to that but there are banks that advertise that availability.

LEWIS: So is this the confusion Fred, that there are 2 separate processes here - there is the actual process of sending cheques scurrying around the country and putting items on computers so we all know where the money is, and then there's the policy issue on the part of the bank about when you can get your hands on your cash?

GALBRAITH: Absolutely right. One of the...

LEWIS: Okay so it's not your fault cos you just do the practical thing. Sally Scutt from the British Banker's Association, why do banks hang on to our money? Why don't they let us have it as soon as it's cleared?

SCUTT: Well I think you've just made the point - it's a policy decision and banks are competitive organisations and they make a decision as to what is right for their particular institution. I think the remedy though is if you have an account and you're not happy then you should change to another one who has a policy that is more suited to you.

LEWIS: But if there is this gap between when the money leaves one account and when it arrives somewhere else it is somewhere, it is with one of those two banks and they earning interest on our money?

SCUTT: I think Fred's shaking his head here

GALBRAITH: It's not so in the cheque clearing business assuming that the bank allows value on the - on the Thursday

LEWIS: Ah assuming?

GALBRIATH And most - most of my members - the clearing banks, do just that and they advertise it

LEWIS: And Richard Farrant from the Banking Codes Standards Board -is there a standard on this? - is there something the banks are all committed to doing?

FARRANT: No there isn't as Sally just said

LEWIS: Well there should be shouldn't there?

FARRANT: No, I think the important thing is that you are clear as the customer as to what your bank is going to do. As Sally says it's a competitive matter, and provided you are told up front when you open your account as to what's going on, then so far as we're concerned that's the most important thing. It does enable you then to shop around looking for a better deal in this matter.

LEWIS: So competition should sort it out. Well we'll see if it does and we'll no doubt talk about how easy it is to change banks later in the programme. Let's go to Watford though now where Sue is waiting with her question. Sue?

SUE: Yeah Paul I have a pass book account and at the end of August I paid �600 in cash into it - ironically cos I didn't want to travel with that money on the tube cos I didn't think it was safe.

LEWIS: So this is cash?

SUE: Cash yeah. My pass book was receipted. And that was it - I left the branch. About 3 weeks later I went into a different branch to do some more banking and found a line put into my pass book saying correction the �600 was taken out.

LEWIS: And you hadn't taken it out?

SUE: I hadn't taken it out. I discussed it at the time at that branch I went into a more major branch on the Monday. I've had unlimited correspondence with building society and basically I'm getting nowhere fast.

LEWIS: Tell us which bank it was?

SUE: Halifax

LEWIS: Right, so that's a bank now - that's part of Bank of Scotland. Okay, Sue - well this is obviously a very worrying problem for you. Let me ask Sally Scutt, what do you do if you have a complaint like this or a problem like this?

SCUTT: Well first of all you marshal your complaint which clearly Sue has done. She's been into the relevant branches and such like. Now all banks, the rules change in December actually and all banks are required under the law now to have a complaints procedure and they're also required to tell you what their own banks procedure is. And so I would suggest to Sue that she needs to go back with all the work she's done so far and say I wish to make a formal complaint about this and I would like to know how I go about it, what your procedure is. Because having gone through a bank's procedure you can then if you're still dissatisfied and sometimes people are, you can then go on to the ombudsman and a service that's provided there.

LEWIS: This is a financial services' ombudsman?

SCUTT: Yes that's right

LEWIS: As it will be soon. So you go to the ombudsman and what happens then? - can the ombudsman order the restoration of in this case �600?

SCUTT: Well the ombudsman looks at each case on its merits, but what happens is when you make your complaint you can - you can put your side of the story and then the ombudsman on your behalf asks the other party to put forward their view of the situation and what has happened and then the ombudsman clearly makes a judgement.

LEWIS: It does sound a very strange case though because you'd think if you paid money in and you had a pass book that was stamped, then that was - that was good for the value of �600?

SCUTT: Well yes, which is why I think Sue's right to carry on with her complaint and I would advise her to go back and take it up formerly.

SUE: I have taken it up with the - they call it their Fraud department, and basically they're treating me like a criminal - I'm having to - they've asked me to give them details of all my bank accounts, my company's bank accounts, details - sorry to give them authority to contact everybody who holds accounts in my name, and I just think I don't have a problem with that, I've nothing to hide, but I don't see why I should have to do that?

LEWIS: No I suppose that from their point of view they don't quite know what's happened to the money, but it doesn't sound as if you're being treated brilliantly. Richard Farrant, is there anything in the banking code that will help?

FARRANT: The banking code says in this case you should do exactly as Sally has suggested - get the complaint in formerly and then if you can't reach agreement with the bank when it looks a bit as a formal matter, get it put through to the ombudsman. You have the right to go to the ombudsman and the ombudsman will look at it completely freshly without any prejudice as obviously your caller believes Halifax has.

LEWIS: And is there anything else you can do at the point when you're paying in cash - is there any - I mean Sue got a receipt, she had a, got a receipt, she had her bank booked stamped?

FARRANT: It sounds as if she has everything she needs

LEWIS: Right well Sue good luck with that and we'll just have to hope the system works, but make sure you get those letters off as soon as you can and hopefully get in touch with your own money fairly quickly. Sue from Watford thanks for calling. Andrew's in Potters Bar - what's your question Andrew?

ANDREW: My question is what actually - how do we stand with direct debits? I have or had for several years now a direct debit set up to pay in full a credit card and with - that I have with Beneficial Bank. And I then found that on one month Beneficial Bank appeared not to have received any money from Lloyds who I bank with and it's been going on as an argument between the two banks and with me in the middle as to who's fault it is. The final straw being that Beneficial Bank have actually put a stop on my credit card although they've now actually admitted that it's their fault, but they put a stop on my credit card so on Saturday I wasn't able to use my credit card in Sainsbury's and still can't use it because their computer is now down. Where do I stand with - with the direct debit?

LEWIS: Well indeed, embarrassing and very awkward and Fred I know it's not directly your responsibility but you are part of the organisation that is responsible for direct debits - there is supposed to be a direct debit guarantee isn't there whereby problems are sorted out?

GALBRAITH: Absolutely. If you have signed a direct debit you get a guarantee that the originator of that direct debit will deal direct with your bank who will refund you if you say that a payment's been debited to your account that shouldn't have been. I'm not sure that that's the problem you have here.

LEWIS: That's the other way round - one hasn't been debited that should have isn't that right Andrew?

ANDREW: Yes yes - I mean they should have taken out the money to pay my credit card in full and they failed to do so.

LEWIS: And Richard Farrant, is this another case where under the banking code Andrew should marshal all his evidence and then make a complaint and then if the banks still won't accept it, go to the ombudsman?

FARRANT: Yes I think so. I mean don't give up. If you're not happy with what the bank is proposing to do or not do, then see if you can get he ombudsman to take it.

LEWIS: But Sally Scutt, the problem is we've got a lot of callers like Sue earlier and now Andrew, they are very annoyed - something on the face of it seems to have gone horribly wrong and yet they're put in the position of going through a long, complicated complaints procedure to get their own money or what the bank undertook to do done?

SCUTT: Yes, that's right. They have a statutory right to complain and to find out and such like and you know we're unusual in that together with some of the European countries it is a right for you to do it. And that's unfortunate you know it's unfortunate it's part of the stress of modern life which gets us all down.

LEWIS: Banks part of the stress of modern life - you heard it from the British Banker's Association. Richard Farrant, just before you come in with your point, is one of the problems that this code that you operate is a voluntary code?- it's the banks policing themselves. Shouldn't there be some outside body telling the banks what they should do?

FARRANT: I don't think so and nor indeed does the Treasury or the Financial Services Authority. At the moment the collective view and it's just been confirmed by a review body that was set up by the Treasury, the collective view was that the voluntary way is the best way for the present. But of course that always has to be reassessed, but at the moment I think it's - it's the best route forward.

LEWIS: You think it works. Well Andrew it does seem you've got to go through a lengthy process, but good luck with that. Caroline's now calling us from Johnston - Caroline?

CAROLINE: Hello there

LEWIS: Your question?

CAROLINE: Yes, it's not really a question, it's just a real complaint, a grouse. My daughter who has quite a small wage went on holiday and during her holiday went �2.40 over her �100 overdraft. She came home to a bill of �20 as a charge for that as a penalty, �25 for a charge for the letter and because she was on holiday and didn't respond at once there was another letter so for her �2.40 she was being charged �70.

LEWIS: Right well Sally Scutt, that's quite a high rate of interest even for a bank isn't it?

SCUTT: Yes, I'm not sure this is a rate of interest - it's actually a fee I think and the difficulty is �2.40 is a small amount to be overdrawn and so it does seem a large - well it is a large amount. Unfortunately, one has to have pre-agreed overdrafts and it's not something that one can have by right, and so if one does it accidentally or on purpose, unfortunately that takes a fee with it.

LEWIS: But why are the penalties so high? - writing a letter doesn't cost �25 - she will also be charged a very high rate of interest - why is she also charged �20 just for doing it?

SCUTT: Well that's - in this case I suspect it was because it wasn't a pre-arranged limit - what - what I suggest she does is either look for an alternative type of account which would suit her and her lifestyle better, or use other forms of payment. It's this question of whether it's authorised or pre-notified and that's a facility one - one gets a benefit from.

LEWIS: Richard Farrant?

FARRANT: Perhaps the daughter also ought to check whether in fact she was made aware of these - of the possibility of these charges before she went into overdraft, because under the code it is required that all these sorts of charges are clearly laid out to each customer before they are incurred and if she wasn't made aware, then she has legitimate grounds for a complaint.

LEWIS: I think my suspicion though would be that she was made aware probably in 6 point type on a 22 page document containing terms and conditions which we don't all read do we?

FARRANT: Well that is perfectly true. We should read of course

LEWIS: I think there is a golden rule Caroline isn't there - don't ever ever go over your agreed overdraft limit, but some banks are better than others and I can only say as my guests have earlier, competitive pressures - if she doesn't like the way that bank has treated her find another. It maybe the only way to make them change their ways. Let's talk to Arthur now in Doncaster. Arthur, your question?

ARTHUR: Yes hello there. Last Sunday in July I sold a pup for �350 to a chappie who in fact had a pup from me before. He had - he gave me a cheque - I didn't hand over the pup but I deposited the cheque on the Monday, told it would be cleared on Friday, followed the process on my on-line account and sure enough it was shown as available credit on the Friday - handed the pup over on the Saturday. The following Tuesday that �350 was taken back from my account. Apparently on the Wednesday the cheque had been stopped by the client bank and the bloke's bank, but it didn't get to me till the following Wednesday and I've been in irritated correspondence every since.

LEWIS: I can imagine you have so Monday you got the cheque - Friday you handed over the puppy - the goods in this case, but the Wednesday before it had been stopped?

ARTHUR Yeah

LEWIS: Right, okay, let me put that

ARTHUR: Two days after it had been stopped it was shown as cleared funds and 6 days after that it was taken out of my account.

LEWIS: Fred Galbraith is this just a clear mistake?

GALBRAITH: No, it's not a mistake. It's an unfortunate consequence of the fact that the notification of dishonour of a cheque is done by the first class post, and if that cheque was returned as I suspect it was on the Wednesday, it's languished in the post until the following Tuesday and your bank didn't know it had been dishonoured.

LEWIS: But Fred the point is that the cheque was shown as cleared - what is the point of clearance if it doesn't mean the money's there?

GALBRAITH: I think that that is an automatic system that the bank in question will have in place because it makes the assumption that the system works properly and there aren't delays.

LEWIS: So when it says cleared it - that cheque could have been torn up and thrown in the bin and never appear in you're account? It says it's been cleared but it's not?

GALBRAITH: It's information that the bank has on its computer that says in normal circumstances this cheque will have been cleared and we would have expected it to be paid and that's what's not happened in this case.

LEWIS: So we can't rely on that? - when it says cleared balance we cannot rely on that?

GALBRAITH: Not if you are talking about the possibility of an unpaid cheque because the first class post is used, one of the things the banks are trying to do, and all the banks want to do this, is to change the method of notification of unpaids - to do it electronically so that we cut out this problem, but we aren't there yet. We're moving towards it.

LEWIS: When will you be there?

GALBRAITH: Don't know the answer to that. It's very complex because whereas in the past all the banks have processed their own cheques, they are now moving to out source that function to two big American processing companies who will put in high tech equipment - I'm not sure how long they're going to take to do it. Eight of our banks have moved across to these companies now and we're waiting for them to let us know how they're going to move forward and get us to a system that uses the electronics rather than things like the post.

LEWIS: And Richard - Richard Farrant, is there anything in the banking code that will help Arthur?

FARRANT: No there isn't I don't think - no.

LEWIS: Right, well thanks very much for your call Arthur. I'm sorry that we can't be of more help. Let's move to Jackie now in Suffolk. Jackie, your question?

JACKIE: Hello yes I'm rather- feeling rather cross because a few years ago I opened a current account with Lloyds TSB - a Gold Service Account in which I was told that I had to keep �1000 in the account - minimum. And I thought that was rather a lot at the time, but however I went with it 'cos the rest of the deal seemed quite good. However, then earlier this year I was told that I now have to keep �1500 in that account, and I think that's far too much money. You know this just seems like a rip off. I think that's ridiculous.

LEWIS: So you have to have �1500 and I must say we have had other questions -we've had e-mails about this particular problem, about this Lloyds TSB Account where you have to have �1500 in order to I think avoid - avoid paying charges?

JACKIE: That's right, and I'd very much like to change my account now but that's to another bank you know, but that seems such a lot of work?

LEWIS: Okay let me talk to Sally Scutt. Let's ask Sally Scutt. Sally, how can terms and conditions be changed without giving proper notice?

SCUTT: Well I think terms and conditions can change and they do have to give notice as part of the banking code. And products do change over time. What I would say is I think Jackie you're very - you're quite right, if you are unhappy and you're dissatisfied you should try talking to your bank first, but if you're still unhappy about it then I would recommend that you do look around and find a bank which has a facility and a product that really does suit you and the way you live and your lifestyle.

LEWIS: But you see we've had an e-mail about this very account as well from Philip and he says that they require �1500 - if you didn't keep it in you had an �8 monthly service fee. He says he's not been given proper notice and I complained to the bank and was met with the comment is this about the �8 service fee? We've had a lot of complaints about people not being given the proper notice. Jackie, were you given proper notice?

JACKIE: I think I probably was given some notice, but that not withstanding I still think �1500 is a lot of money for them to demand that you keep in your account.

LEWIS: It is really isn't it because Sally Scutt there are Internet accounts where you can put �1 in - there are no charges and you get more than 5% interest. Here's Lloyds saying you've got have �1500 in there to avoid �8 a month service charge?

SCUTT: Well that's right, and that's really my point about shopping around and finding the account that's right for me in that I believe, I'm not really very keen to talk about individual banks, but I believe that all the banks provide a whole range of - of accounts to suit people with you know different requirements and so I think it really is important to find one that suits you.

LEWIS: Richard Farrant?

FARRANT: Yes, I would just add that for those who don't believe they were given proper notice - the banking code is very specific that you must be given at least 30 days notice if there's going to be a change in the terms of an account that are to your disadvantage and this is clearly one, so if you weren't

LEWIS: And is that given by a personal letter or is it a small ad in the Daily Telegraph?

FARRANT: No it should be a personal letter, and if you weren't given 30 days then you have legitimate cause for complaint, and when you complain I would also add there's no reason why you shouldn't say and I want compensation for all the work involved in having to make this complaint and pursue it and so on.

LEWIS: So don't just complain, you can get your call to Money Box Live and your letters and your stamps all paid for if there hasn't been proper notice. Thanks for your call Jackie. Just before we move on to the next caller many people have said to us we - we change banks accounts but Sally that can be very difficult and time consuming. Why do banks seem to make it so hard to change your current account?

SCUTT: I think that's a myth in that things can go wrong with direct debits - we've all experienced something like that - actually the banks try very hard and these days you know people like me say if you're unhappy then shop around and find something that suits you. And I think if you find a bank or a way of dealing with your bank whether it's the phone or whatever, one of the things that you'll find increasingly is that the bank that you want to move to will take on responsibility for some of that paperwork for you and get it done to help smooth the transition.

LEWIS: But not all them do. I recall when I tried to change bank accounts I was told I had to write down the list of direct debits because if they sent them to me they would charge me a fiver.

SCUTT: Well that must be part of the choice of how you - how you choose your next bank I think.

LEWIS: Okay, let's talk to Andrew in Gloucestershire?

ANDREW: Good afternoon. Yes my question is of a year ago some money was transferred from a Swiss bank to a London branch and although the Swiss bank said they sent the money London branch are not saying whether they've received it or not and on my account it's as not been received. Can -wondering if the panel can give me any help?

LEWIS: Well let's talk to Fred Galbraith first. I know you deal mainly with- with -moving money around within the UK Fred, but what happens with a foreign cheque?

GALBRAITH: I think the only thing you can do Andrew is to go back to the source - you have to start I think at the Swiss bank where you paid the funds in or where the funds were paid from, and you have to ask them to give you the audit trail of where those funds went and when.

ANDREW: I have already done that and the person I'm dealing with over in Switzerland is - who actually works for Swiss Bank - Berner Canternel Bank - he's actually been trying to get the HSBC in London to say what has happened to the funds but they just won't deal with him

LEWIS: So this is a problem with your bank in England really from what you say. Richard Farrant what can he do?

FARRANT: Well I actually had personal experience of this but going the other way, from a British bank out to Argentina, and there I must say my bank, the bank who I paid the money into the cheque into, did actually keep a record of it and they were quite happy to provide me with a xerox copy of the cheque and so on and as you said the audit trail was immensely helpful to have that and in the end I did get my money. So the more evidence that he can get I think the better. But he really has to you know he has to start with the Swiss bank and get evidence from the Swiss bank that the money did get to London.

LEWIS: Andrew said he'd had that so it really is how he deals with HSBC that I think he's interested in.

ANDREW: I mean the Swiss bank have said they themselves have tried to contact the HSBC and they just aren't talking - talking with them.

LEWIS: So I think it's a question to write strongly to HSBC and

FARRANT: In that case you have to write to HSBC, put it in the form of a complaint if necessary and take it through the full procedures until you get satisfaction.

LEWIS: Right, well we've had a string of complaints - we've only got a couple of minutes left but I suppose I must reflect some of the e-mails that are saying, I'm listening to your programme and would like to add my comments - I am very happy with the service I receive from the Swansea Barclays Bank. I appreciate the personal service. I have a current account which suits my needs. What I'm saying is Barclays in Swansea deserves praise. Well there it is. Barclays in Swansea well done. Let's move on to our next caller - Valerie from Haywards Heath. Your question Valerie?

VALERIE: Good afternoon gentlemen. I'd just like to ask I'm a blind person and I don't find it so easy to get into a bank. Why do we have to speak to a call centre? - why can't one ring one's local branch?

LEWIS: Sally Scutt, this is a big complaint. Call centres are proliferating -you can't speak to the person who knows your own account?

SCUTT: Yes. I think this practice actually varies from bank to bank and it does depend who you bank with Valerie.

VALERIE: I bank with Lloyds TSB

SCUTT: Right. We've just completed a piece of research with the RNIB actually and we're releasing this tomorrow

LEWIS: This is the Royal National Institute for the Blind?

SCUTT: Yes - we're releasing this tomorrow at a press launch which I'm doing and we've done a piece of work about how to make banking facilities more accessible for blind people. And one of the things we've looked at is how we can encourage people to use websites and such like as a means of communicating.

VALERIE: I will never be on the web.

SCUTT: Yes well I mean you know - yes but what I suggest you do is try - I can give you some information or we can make sure you have it on - on somewhere you can go to actually get quite explicit advice on how to manage contacting someone within your area and I'm sure we'd be happy to pass on those details to you Valerie.

LEWIS: Valerie hopefully better news tomorrow. Now we're running out of time but Dorothy in Tunbridge Wells a very quick question Dorothy?

DOROTHY: Yes, why does it take up to 5 days by Barclays to clear even a banker's draft and a quickie. May I have a quickie? Why has the amount by which you can be compensated never altered in years, in other words if

LEWIS: Well we can't get on to the second - Fred Galbraith a banker's draft, that should clear immediately?

GALBRAITH: The trouble is that there is so much fraud about - the banks have become very nervous about their banker's drafts.

LEWIS: And that's the answer - it's fraud and that indeed has gone up I think 80% in the last year. Well, that's all we have time for. My thanks of course to all the callers and my thanks to Sally Scutt from the British Bankers Association - Fred Galbraith from the Cheque and Credit Clearing Company and Richard Farrant from the Banking Codes Standards Board. There's more details of things raised in the programme on the action line number - 0800 044 044 where calls are free - 0800 044 044 Our website - www.bbc.co.uk/money box and our e-mail [email protected]. I'm back on Saturday with MONEY BOX and I'll be taking more of your calls on MONEY BOX LIVE next Monday afternoon.

BACK ANNO: And that was Paul Lewis. The producer was Jennifer Clarke.