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 17th November 2001 1200-1230 BBC RADIO 4

Debt and the Banking Code

Changing Bank Account

BT Shares

Winter Fuel Payments

Tracing National Savings

LEWIS: Hello, in today's programme, as one bank pushes a Money Box listener further into debt we ask does the banking watchdog need new teeth?

And, if you're unhappy with your bank, changing your current account should be easier from Monday.

BT splits into the wired and the wireless, which half will ring your bell?

The tax free �200 for anyone aged 60 or more,

And on the track of lost National Savings, one a half billion pounds waiting to be claimed.

And we start with debt, the big issue in National Consumer Week. On average each household in the country owes �5300 and that's without mortgages and other loans secured on your home. If you do fall into financial difficulties, maybe you lose your job or fall ill, the banks are supposed to treat you sympathetically and positively under their own Code of Practice but our reporter Mike Johnson has been talking to one Money Box listener this week where that promise has been broken, Mike�

JOHNSON: Yes, Elizabeth, a teacher from Gateshead, had a loan of just over �12000 with LloydsTSB, so quite a lot of money. She'd been paying off that loan by automatic direct debit from her bank account for eighteen months without any problems but last year ill health forced her to stop working. Well at first she could meet the �330 monthly repayment on her loan because she was on full pay but after six months, in January this year, Elizabeth wasn't getting any better and she had to go onto half pay. She knew she was in real trouble and that the only thing she could do was to talk to Lloyds to get the loan payments stopped.

ELIZABETH: I knew that no matter what I just couldn't afford to make these payments anymore and I was then told that those direct debits cannot be cancelled, under the terms and conditions of the loan.

JOHNSON: So Lloyds continued to take the payments out of Elizabeth's account, until that is she reached her overdraft limit. Then, month after month, the direct debits were automatically rejected. As a result she incurred bank charges and that meant with an overdraft already approaching three thousand pounds Elizabeth was sinking even further into debt.

ELIZABETH: It was like a Catch 22 situation. I would ring Lloyds, I would ask if I could cancel them, if I could speak to somebody to make an arrangement, I was told no arrangement could be made and in the meantime I just kept getting letters saying the direct debit had been bounced back and a charge had been made.

JOHNSON: As well as being charged a succession of fees for the rejected direct debits Elizabeth also had to pay charged for unauthorised borrowing and an interest rate of almost thirty per cent on her overdraft.

ELIZABETH: Since January, when I explained to them that I couldn't make the payments, and asked for the direct debits to be cancelled, they've charged me in the region of �800 in bank charges. It actually actively stops you managing what's wrong because it's always sort of shoving you into debt, whatever you do. It's ridiculous. I feel like it's been more like a loan shark than a bank.

JOHNSON: Elizabeth now owes Lloyds more money than she did when she first took out the loan more than two years ago. The bank maintains that Elizabeth hadn't told them clearly enough just how bad her financial situation was. But it did admit she's been given the wrong information and there was nothing in the terms of the loan which would have prevented Lloyds from stopping her payments. And as a result of Money Box's inquiries that's exactly what Lloyds was able to do on Friday. The bank's Group Operations Manager, Ron Watford, says he's also looking at refunding all the charges Elizabeth has incurred since January.

WATFORD: We will look actively at the case again, we will think about what we might have done better ourselves. If it's correct that she doesn't have the resources to pay off her loan we will come to a suitable arrangement with her and one which we can mutually agree on.

JOHNSON: That's good news for Elizabeth but not everyone will have Money Box to fight their corner for them. So are the banks failing in their responsibility to help customers who's debts run out of control? The industry's self-regulator, The Banking Code Standards Board, is now considering what more the banks should be doing to help people in financial difficulty. Nick Pearson of the Federation of Independent Advice Centres believes many more people are in exactly Elizabeth's situation and that the Banking Code needs strengthening.

PEARSON: There's a general feeling that it's far too vague and doesn't give enough protection to people who have got financial problems. It doesn't actually say anything at the moment about freezing interest and charges to take the case we've been talking about, and we think that's one of the options which banks should consider.

LEWIS: Nick Pearson ending that report by Mike Johnson, and the Banking Code that he was talking about, subscribed to by all banks, Seymour Fortescue is its Chief Executive. Seymour, the Banking Code failed Elizabeth didn't it?

FORTESCUE: On the face of it it did. I think there are two issues here. First of all we've got to ensure that the existing Code is enforced and from what you say she was certainly not treated sympathetically and positively, I'm very happy to look in detail at her case.

LEWIS: So in this case you're saying LloydsTSB didn't follow the Code, even as it exists now?

FORTESCUE: Well I think it's difficult for me to make judgements on the air but I'd very much like to look into this in more detail and then take a view. The second thing we have to do is to strengthen the Code because it talks about sympathetically and positively developing a plan, working with debt counselling organisations and so on but I don't think it goes far enough and I think the banks who we regulate recognise that as well so we're in the process of drawing up more detailed guidance, which we hope to have agreed by the end of this month.

LEWIS: So what will that say, what new provisions will there be?

FORTESCUE: Well a number of things, it'll talk about when it's sensible to waive interest, about the charges which can be made, which clearly with Elizabeth was a major problem, it's very important that banks and building societies should leave enough money for people for their everyday living, for paying the rent and household expenses and so on.

LEWIS: Will it make it clear that if somebody is in debt it's quite illogical to carry on imposing charges on them to make that debt worse?

FORTESCUE: Absolutely because it makes a small problem into a big problem and it aggravates the situation. I think also one should be aware that it gives rise to tremendous mental anxiety as well and we've seen cases where somebody's ill as a result of their debt problems and the bank is making them more ill so we've got to, we've got to, ensure that things improve.

LEWIS: And if a bank doesn't follow the Code, either the existing Code or in a month or so the new Code, what sanctions do customers have against them?

FORTESCUE: Well they can certainly take a case to the Ombudsman, they can also get in touch with us, if they have a look at our website www.bankingcode.org.uk they can see where to complain to.

LEWIS: Seymour Fortescue, thanks very much. And details of that will be on our website, details at the end of the programme.

It should be a lot easier from Monday to move your current account from one bank to another. There are lots of reasons, mainly because you're not getting on with your bank, to do it. But while the High Street banks charge you for the privilege of handling your money some of the newer banks actually pay interest, sometimes more than you get on a savings account. Well despite these reasons very few of us change banks. Some surveys put it as low as one per cent each year and half of us seem never to change, and one reason is the hassle. Ian e-mailed us at [email protected] with his experience in Norfolk.

IAN: I've just moved my current account to a new bank for the first time ever and it has been an utter nightmare that has lasted three months so far. After about a month a few companies sent me new direct debit forms to fill in and return. About a month after that I wrote to my old bank and cancelled all direct debits. Almost immediately I received a letter from my car insurance company telling me that as I had cancelled the direct debit for paying the monthly premium I was in breach of my terms of agreement and unless I sorted it out within a few days my car insurance would be cancelled.

LEWIS: Well those sort of problems should come to an end on Monday. In future your old bank should send a list of direct debits and standing orders to your new bank and it should do the legwork of swapping them all over. Live now to Sheffield to talk to Alan Hughes who's Chief Executive of First Direct, which launched the phone banking revolution over ten years ago. Alan, how exactly should the new system work?

HUGHES: It's very simple Paul. As you just summarised. You get in touch with your new bank, you agree with them the date upon which you want to make a transfer and they do the rest for you, using your authorisation they will contact your old bank, arrange for the transfer of the balance, but also now from Monday, contact each of your direct debit companies, give them the details of the new bank and instruct them to take the debits from the new bank. The direct debit companies themselves will get a confirmation of that for security purposes from your old bank, tie the two up and hey presto you just have to deal with your new bank. It should be as simple as that.

LEWIS: It should shouldn't it? Though we have heard, an Abbey National survey this week saying that some companies, the AA, the TV licensing agency too, are taking up to two weeks to change over the direct debits?

HUGHES: Yes I saw that. There's been a lot of problems, some direct debit companies are much more lethargic than others. Firstly this new system is a computerised one so there isn't really any excuse for delays, secondly you should agree a date with your new bank and that date should be a quiet time of the month for you but give it a couple of weeks hence in time for the new bank to get all the ducks in a row.

LEWIS: Now very few of us seem to change our banks. Do you think this simpler system will increase changes and, in that way, increase competition?

HUGHES: I hope so because there is real choice out there, all banks are not the same. As you said there are different prices available and importantly different qualities of service available. Very different between different banks. This year about seven hundred thousand people will move banks, next year as people realise you can do it safely without being left in limbo that will increase.

LEWIS: Will that help First Direct though because the tables you've issued, which I've got in front of me, show that there are better deals around than First Direct. There's Cahoot, Halifax, Smile offering higher interest rates and lower overdrafts�

HUGHES: I don't think people usually move entirely on price, they will move for a combination of factors, usually it requires a trigger, that they are dissatisfied with their old bank and then they will go for something that's convenient for them, that they're assured of getting good service and getting a reasonably good price.

LEWIS: And do you think that this cold wind of competition will force the old fashioned banks, if I may call them that, to improve the service they will give us?

HUGHES: It's inevitably going to be the result of it . The loser banks will be forced, it's consumer power and it will improve the standards in the market place, which is a good thing.

LEWIS: Let's hope so. Alan Hughes, Chief Executive of First Direct, thanks very much.

LEWIS: Nearly two million private investors in British Telecommunications will wake up on Monday morning owning shares in two new companies. That day BT splits in half. The mobile businesses including Cellnet here in the UK, become a separate company called mm02, and the rest of BT, including of course the fixed lines and the Internet become known as BT Group. For each BT share you'll get one share in each of the two new companies but you won't get the certificates just yet. They're being posted out in the next few days but may not arrive until the end of the month. With me is Gavin Oldham, Chief Executive of the Share Centre, a stockbrokers in Aylesbury. Gavin the company is being split in two - the wired and the wireless as one BT press officer called it to me - will they be worth more separately than the company is as a whole?

OLDHAM: Well they may well be after a period of time. I mean this is the latest in BT's restructuring programme. Just to recap they've raised five point nine billion in a rights issue, in disposal so far this year six billion, and they'll raising a further just over two billion in property sales by the end of the year so that's over fifteen billion that they've raised so far and now they're doing this split.

LEWIS: Sounds a bit like desperation to me?

OLDHAM: Well it certainly is quite a radical programme but at least they're doing something.

LEWIS: And what should people do, they're going to have two shares now, two companies, one basically a mobile company, one basically a fixed line company. Are you advising people to hang onto them or to sell them?

OLDHAM: Well they're very different shareholdings. As far as mm02 is concerned it is most likely to be an attractive bid target but may be after a period of time so we would suggest that if you do want to hold onto them watch out for takeover activity because that'll be the point to sell at some stage in the future.

LEWIS: Ah so waiting for a takeover bid so that your shares will rise in value. What about BT Group though? That's the sort of old fashioned bit if you like, phones attached to the wall with bits of wire.

OLDHAM: Well there are more attractive companies in the telecoms sector and we wouldn't recommend BT Group as a very strong buy in the sector as a whole. Certainly if you're not particularly attached to BT probably best to sell it. If you're a long-term holder you may feel reluctant to do that having seen quite a bit of loses so far this year.

LEWIS: Well indeed yes they were �13-58 last January, they're now �3-56 so that's a bit of a loss, or a paper loss anyway. And if you do sell them and you want to be in telecoms, if it's not in BT Group where should you be?

OLDHAM: Well we believe that Vodafone really is the company with leading prospects in that area, a real driving force for the future and certainly one to watch.

LEWIS: And a lot of people started their share ownership through privatisations, it's got very complicated with takeovers, restructurings like this. How do people keep track of what privatisation shares are in which company?

OLDHAM: Well we're very concerned about that and that's why we've just brought out a privatisation guide, survivors guide, to the privatisations. Because who would know for example that Viridian is actually Northern Ireland Electricity or perhaps Corus is British Steel?

LEWIS: Ok, and you can get a copy of that free. Details on our help line, it is actually quite a useful little reference work. Gavin Oldham, Chief Executive of the Share Centre, thanks very much for talking to us.

Now tax-free cheques for up to �200 are going out this week to almost everyone aged 60 or more. The Winter Fuel Payment is now simple paid on the grounds of age. If you were 60 on or before September 23rd this year you should get the money. It's normally �200 but if you live with another person who's over 60 you get �100 each. Now in its fifth year the payment puts nearly two billion pounds into the pockets of nearly twelve million over 60s. But there's a growing campaign for the payments to be extended to people under 60 who also need help with their heating bills. People like Mike�

MIKE: When the weather does get cold it has the effect of tightening a lot of the muscles and causing spasms which affect mobility further and use of limbs and fingers. It's particularly helpful to be able to put the heating on without worrying about it in order that these symptoms are not with me all day.

LEWIS: There are a million severely disabled people under 60 like Mike who need help with heating but who don't get it. Roger Berry the Labour MP for Bristol Kingswood is secretary of the all-party disability group in the Commons. He's been gathering support for the change from MPs and I asked him if he was hopeful�

BERRY: So far the government has not been persuaded that this is a top priority. A number of us are meeting with the Minister on Monday to discuss the matter further and the purpose of the Early Day Motion which I've tabled is to indicate the strength of feeling in Parliament. 155 Mps have already signed that Early Day Motion which is one of the most popular Early Day Motions currently before Parliament so there's a very strong support both in the Commons and in the House of Lords for this proposal.

LEWIS: And most of those are Labour MPs, are we going to see a backbench revolt on this?

BERRY: Oh I'm always cautious when I'm invited to speculate on backbench revolts. I think I'd simply like to say that the strength of feeling amongst Labour MPs, as indeed amongst other MPs in fairness, is very strong indeed.

LEWIS: Roger Berry. With me is Mary Wilkinson who's Editor of 'Disability Now' a campaigning newspaper, campaigning obviously for disabled people. Mary are you hopeful this will lead to a change?

WILKINSON: Yes, I think it's a very big issue in the disability community and our campaign which was launched last year has had a great deal of support, not only from members of parliament but also from twenty one disability and caring organisations from the Commons All Party Disablement Group and the Disability Rights Commission.

LEWIS: Now Mike made the point there that his disability, I think he'd had a head injury, meant he needed extra heat to live comfortably. Is that common to many disabilities, that you need to be warmer?

WILKINSON: Yes and that's why we've estimated there are one million severely disabled people who need that �200 winter payment because they need extra heat. I mean there are many extra expenses connected with disability and the DLA just doesn't cover that.

LEWIS: The DLA, the Disability Living Allowance. But the Government of course says, and they said to us in a statement, that severely disabled people do already get social security benefits to help with these extra costs. They get the DLA, they get a higher rate of Income Support, giving them an extra �200 would just be double provision for the same needs.

WILKINGSON: Well I don't think that's how disabled people see it. We've done a survey of disabled people and the story that we're getting is that there are many many people who are in great hardship during the winter. I mean Mike for example told me that he has to skimp on food and other things like going to the pub. A man with Polio told us that he has to move down into one room, keep warm with baths, a bed in his sitting room, a gas fire, blankets and coats and warm drinks. Now that's pretty typical.

LEWIS: So �200 would relieve a lot of that obviously. How would you limit entitlement though to the Winter Fuel Payment, to those who need it, because some disabled people who get the Disability Living Allowance may not have those symptoms that need relief from warmth?

WILKINSON: No the one million people is based upon an assessment of the number of people who have the middle and higher rate care component of the DLA, or the higher Mobility Rate.

LEWIS: So it's a million people so that's two hundred million pounds..

WILKINSON: Which is very small compared to what is being spent on pensioners, many of who do not actually need the money.

LEWIS: So finally Mary, what hope have you got, that this will go through?

WILKINSON: Well we're quite sort of excited about it and we're meeting the Minister for Disabled People, Maria Eagle on Monday and we're hoping that she will take on board our arguments and then influence the government.

LEWIS: Thank you for that Mary Wilkinson. And of course any changes in the future but remember if you were born on or before 23rd September 1941, regardless of your disability or your income you should get the �200 payment this year. If you haven't had one before you may have to claim it, there are more details with our audience line and with our website. Details of those later.

Well I'm not entitled, sadly, to the Winter Fuel Payment, not quite anyway, but yesterday I did do a bit of form filling of my own, and the first question was quite easy�.

"Full name, well I know that. Current address, I know that, which National Savings products do you wish us to trace for you? That's just Premium Bonds. What is the number? Well of course I don't have that because I lost the bond many years ago�"

Well that was me filling in a form yesterday. I was trying out a new service to track down missing National Savings products because when I was twelve my mother bought me one Premium Bond, but I soon lost it and I've never in more than forty years checked if I've won a prize. I thought without the bond I couldn't claim anyway but apparently not you can now trace old or lost National Savings certificates, forgotten National Savings accounts or those old Premium Bonds and altogether there's around one and a half billion pounds in these lost and forgotten products. With me is Gill Cattanach who's National Savings Commercial Director. Gill, why have you launched this new service, what's different about it?

CATTANACH: Well really what we want to do is reunite customers with their money, we've had a service like this for many years now and in fact we have about seventy five thousand traces done every year but the difference with this is we're trying to make it as simple and easy for customers to come to National Savings and find their long lost savings.

LEWIS: Now the form was easy to fill in but there were things I couldn't answer like when was it bought for me, what was the number, all this kind of thing, and I just about managed to drag my old address out of my memory at that time, how difficult is it to find things when people really have very vague memories?

CATTANACH: Well really what we look for Paul is we want to have as much information as you can put down, so if you don't actually know, in the case of you and your Premium Bonds you didn't know the bond number, we need your name, your address your date of birth and any other addresses in the past that you can have. The more and solid information we have the easier and quicker it is to trace your savings.

LEWIS: Now that was fairly easy for me because it was my product I was after but what about if someone dies and you think I'm sure they had a Premium Bond or I'm sure Granddad had a National Savings Certificate. Can you also apply on behalf of other people?

CATTANACH: You can do. If it is in the case of somebody who's died then as long as you're a beneficiary, and you have that proof that you are a beneficiary you can apply in the normal way as any other member of the public can do so.

LEWIS: Now there's a total of one and a half billion pounds waiting to be claimed but that is spread over possibly millions of people, certainly hundreds of thousands, is anyone going to get anything significant out of it?

CATTANACH: Well in the case of Premium Bonds we actually have one �25000 prize outstanding and we have about three �10000 prizes so there is significant money in there and the other, the majority is in pass book savings accounts and savings certificates. So what I would say to your listeners, if you do have that and you're not sure then please contact us. You can either phone us and we'll send out a form or you can find it on our website and I can give you details at the end, or just write to us and we will do that trace for you.

LEWIS: But the forms aren't in Post Offices are they, why not?

CATTANACH: Because we believe that by having them over the phone we're finding a lot of our customers like to pick up the phone to somebody, it's more reassuring at the other end to actually talk to somebody.

LEWIS: Ok, well there'll be details of that on our website, but before I finish Gill, I finished the form and sent it off to you, what was the result?

CATTANACH: Well we started with twenty three million customers, that was as at yesterday, and last night when I left the office we had twenty three Paul Lewis's that we now have to individually check so we will have to come back to you and ask some more details of your addresses I think Paul.

LEWIS: Well I'm sure listeners can't wait to hear the outcome of that in a week or two. Whether my one-pound Premium Bond is there and should I cash it in or not? I worked out a pound then was worth fourteen pounds today, anyway Gill Cattanach, Commercial Director of National Savings, thanks.

And one other story this week, Mike, a legal verdict makes it less likely we'll get all that we'll get all that irritating junk mail�

JOHNSON: Yes great news this. It was a High Court ruling, it was that councils can't supply electoral register details on to companies without the permission of people on that register. It was retired accountant Brian Robertson who brought the case, he refused to enter his name on his local register in Wakefield because he objected to his council selling the information on to companies, very common this. At the end of the day the Court ruled that the information should only be used with consent or if it's in the public interest.

LEWIS: So we'll see if that has any effect. Thanks very much for that Mike. That's all we have time for today, for more information on any of the items on today's programme you can call the BBC Actionline on 0800 044 044. Calls are free, 0800 044 044 or there's our website, www.bbc.co.uk/moneybox Personal finance stories through the week on Working Lunch, BBC 2 1230, Monday to Friday and Vincent Duggleby's here Monday afternoon with our phone in Money Box Live on using your home to give you an income. So if you own your home and have a low income this programme could be for you. Our email address [email protected] I'm back with Money Box at the same time next week, today the reporter was Mike Johnson, the producer was Penny Haslam and I'm Paul Lewis.