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MONEY BOX

Presenter:                   PAUL LEWIS


TRANSMISSION:                3rd NOVEMBER 2007           12.00-12.30       RADIO 4



LEWIS:                       Hello.   In today’s programme, 15,000 Standard Life
customers have been warned this week their personal data have gone missing and they
could be at risk of ID fraud after the Revenue lost a CD with all their details on it.
New rights for credit card users who buy things from abroad. Banks come under
further pressure here and in the United States. As shares tumble, should we invest in
more physical assets? And with threats of fuel shortages and price rises this winter,
energy suppliers are told to offer cheap deals to low income households.


But first, 15,000 people are wondering this week if they could be subject to ID fraud
after HM Revenue & Customs lost a computer disc containing their names, national
insurance numbers and dates of birth. The people affected have a pension with
Standard Life and the disc went missing as it was being sent from the Revenue office
in Newcastle to the insurer’s headquarters in Edinburgh. The data was lost 5 weeks
ago, but customers were not told until this week, when they received a joint letter
from the insurer and the Revenue. Standard Life customer Carolyn told us how she
reacted.


CAROLYN:                     I was quite concerned that this happened at the end of
September and obviously it’s a month before notification.       I mean the national
insurance number is one of the reference numbers the Revenue use to check your
identity when you ring up and it’s a number that can gain access to information about
your personal tax affairs, hence your earnings. Now, they have assured me that


                                          1
records have been marked and they will be asking to ensure that all other information
is correct. And they’re saying that addresses weren’t on there, but if someone has
your surname, your date of birth, it’s not that difficult really to track you down in
terms of finding an address.


LEWIS:                            Well we wanted to talk to HM Revenue & Customs. A
spokesman confirmed the loss of the disc and the data but refused all requests for
someone to come on Money Box. We can though talk to Standard Life’s Director for
Customer Service, John Gill, who’s in Edinburgh.                John Gill, what’s your
understanding of how this happened?


GILL:                             HMRC send us discs on a regular basis. In this case,
we believe there was about twenty discs sent out to various insurance companies
through HMRC’s courier. In this case, the disc that was sent to us was not delivered
by their courier.


LEWIS:                            But the data was lost 5 weeks ago, wasn’t it - the disc.
Why did you only inform these 15,000 customers this week?


GILL:                             I’d like to reassure Standard Life’s customers that
we’ve taken all steps in a very timely manner. We immediately… as soon as we
became aware of this, we immediately put a flag on our records for these customers
and …


LEWIS:                            But you didn’t tell them.


GILL:                             Well we immediately put a flag on… What we had to
find out was exactly what had happened to the disc, whether it had gone to another
insurance company by mistake. At the point it was clear that the courier confirmed
that the disc was lost, we then acted to put our security measures in place as quickly
as possible and liaised closely with the Revenue so that they could put out a letter in
as quick a fashion as possible.


LEWIS:                            Right, so 5 weeks is as quick as they can act. The

                                              2
information though - it was name, national insurance number, date of birth, your own
pensions reference. That’s gold dust, isn’t it, for anyone who wants to steal an ID?


GILL:                          Well I think we need to be clear that the disc had the
data in a coded format that would not be easy to read. We have no evidence that the
disc has fallen into third hands, into any third party hands, and we’ve also been
closely monitoring all of the accounts involved here and we have seen no indications
whatsoever of any suspicious activity.


LEWIS:                         And when you say it was encoded, the Revenue
wouldn’t tell us whether it was encrypted or not - they said for security reasons,
bizarrely. When you say it was encoded, is this really strong encryption because
people who do go in for ID fraud are very good at decoding things, aren’t they? If it’s
just a simple password, it’s no protection at all.


GILL:                          Well we’ve continued to advise the Revenue on how
they could improve their safety and security procedures and we look forward to
continue working with the Revenue to make sure that this never happens again.


LEWIS:                         And how can you do that? Are they still going to send
you discs by courier?


GILL:                          At this stage we’ve received one further disc as part of
the normal process and we’re awaiting further information from the Revenue on how
they propose to do this going forward.


LEWIS:                         John Gill, thanks very much for talking to us from
Standard Life. And the Information Commissioner has confirmed he’s investigating
this breach of data privacy and there’s a lot more information on our website,
bbc.co.uk/moneybox, with helplines and so on. In case you’re feeling a sense of déjà
vu, yes 4 weeks ago we did report a separate incident when HMRC lost a laptop
containing details of 2,000 ISA investors.
If you’re planning a shopping trip abroad before Christmas, there was good news
from the House of Lords this week. After a 12 year battle, the highest court in the

                                             3
land has finally told the banks they must protect people when they buy goods from
other countries with a credit card. The banks fought hard to prove that the protection
only applied to goods bought on a credit card in the UK, but now the Law Lords say it
applies worldwide. Sean Thomas is the director of the Office of Fair Trading which
brought the case.


THOMAS:                         This ruling makes clear that the protection we get when
we buy products in the UK also applies when you buy products overseas. So if you
buy a product and it isn’t delivered or it isn’t what you ordered or if it’s faulty, then it
means you can claim your money back from the credit card company. You don’t
have to go back to the shop or the supplier themselves.


LEWIS:                          And just to be clear, which cards are covered and what
level of transaction is covered?


THOMAS:                         All credit cards are covered. Not debit cards and not
charge cards, so that’s important. And it applies to any purchases overseas where the
price is more than £100 but not more than £30,000.


LEWIS:                          What if you pay a deposit on something? Is it sensible
to pay that with a credit card, so the transaction is covered?


THOMAS:                         Yes, that’s important. If you’re buying an item costing
over £100 and you’re asked for a deposit, I think it’s worth considering paying by
credit card because then you will get the protection for the deposit you put down.


LEWIS:                          Even if the deposit itself is less than £100?


THOMAS:                         Yes.




LEWIS:                          And what about purchases from abroad but made by
people sitting in the UK at their computers? Are they covered?



                                             4
THOMAS:                        Well if you’re buying from a company, anything you
buy over the telephone or by mail order or by the internet - as long as they’re
delivered to a UK address, they’re all covered by this ruling. If you’re buying from
an individual person then the chances are that you probably won’t be.


LEWIS:                         But that’s difficult, isn’t it, because if you’re buying
through an auction site like eBay, for example, how do you know if it’s an individual
or a company you’re buying something from?


THOMAS:                        When you’re buying from an auction site, most likely
you’re actually making a payment to an online payment system, something like
PayPal. Now some of those do provide protection, some of them don’t, so it really is
best to check. It’s a bit of a grey area, to be honest, and quite a new area.


LEWIS:                         So in those circumstances, if you’re buying through an
auction site, possibly from an individual, the situation despite this ruling is still a bit
unclear?


THOMAS:                        I’m afraid it is, it is a bit unclear, so this is an area we’re
going to be doing some more work on in due course.


LEWIS:                         Sean Thomas of the OFT. Individual banks didn’t want
to be interviewed, but Sandra Quinn of APACS speaks for the banks on credit card
matters. I asked her first why the banks have spent so many years and so much
money trying to undermine customers’ rights.


QUINN:                         It’s not about undermining customers’ rights. It’s about
getting a position of legal clarity. For a very long time banks have been meeting
Section 75 claims for overseas transactions and have had no problems about doing so,
but what we really wanted was to know what the final legal position was here. We’ve
now got that and in many ways the banks involved welcome that clarity because
everybody now knows where they stand.


LEWIS:                         Now that they have got that clarity and they have to

                                             5
accept that foreign purchases are covered, will they be telling their customers?


QUINN:                          Individual banks will do different things, but this type
of case has obviously got a lot of media profile and programmes like Money Box will
be doing their utmost to spread the word.


LEWIS:                          Sure, but it’s not our job to tell banks’ customers what
their rights are when they use their credit cards; it’s the banks’ job, isn’t it?


QUINN:                          Well I think the clear thing is we’ve always promoted
the benefits of credit cards as Section 75 coverage and we’ve never been shy about
doing that, and it applies now obviously for overseas transactions as well as domestic.


LEWIS:                          Customers who were turned down in the past may of
course now come to the banks asking them to re-examine their case. Will the banks
be doing that?


QUINN:                          Well I think the banks involved will need to examine
the judgement very carefully to see what impact this has retrospectively. But I think
the clear thing is if you’ve got a case in the pipeline at the moment coverage already
stands.


LEWIS:                          But will they be trawling through their records, for
example, for customers they may have wrongly turned down in the past and
contacting those people?


QUINN:                          Well I think it’s unlikely that they will be doing exactly
that.


LEWIS:                          One thing the OFT told us wasn’t clear is buying things
over the internet through an auction site like eBay when you don’t know if the person
you’re purchasing from is an individual or a company. What’s the bank’s view on
that question?



                                              6
QUINN:                         Well that is an interesting case.      One of the things
we’ve been saying to customers for some time is that if you use an intermediate
service like PayPal to buy something, then what you’re doing is you’re loading cash
into your PayPal account. You’re not buying directly and therefore you will be losing
the Section 75 coverage. And we’ve been very upfront about saying to customers if
you are using a credit card in these instances, be very careful who you’re buying
from. If it’s a business you’re covered; if it’s an individual you’re often not.


LEWIS:                         Sandra Quinn speaking on behalf of Britain’s high
street banks. So it seems it’s up to us to find out our rights and exercise them now the
House of Lords has pronounced.
News has been breaking over the last couple of days of a new crisis in the banking
industry. The Wall Street journal in America says that Citigroup, the world’s biggest
bank, is holding an emergency board meeting on Sunday where chief executive
Charles Prince is planning to resign. The bank has suffered heavily from the credit
crisis in the US and back here in the UK shares in the high street banks plunged over
the last two days wiping about £14 billion off their value. Worst hit was Barclays
after rumours, which it later denied, that it had sought emergency funding from the
Bank of England.      At the same time across the world share prices were falling
sharply. And with me is Justin Urquhart Stewart, a director of Seven Investment
Management. Justin, shares down sharply at the end of the week, nearly 3%. Was it
just these banking fears?


URQUHART STEWART:              What you had is fears overall about the global
economy. Although we’ve had an interest rate cut in the States this week, there is still
concern that actually the growth isn’t necessarily going to be as fulsome as some
people had thought. And also concern about that old problem of inflation as well,
particularly coming out of areas such as commodities and people have seen the price
of oil very nearly to $100.


LEWIS:                         Yes. But the sub-prime crisis that we’ve talked about
before does keep on rearing its head, doesn’t it, and that presumably is underneath the
problems with the banks? All the papers today have got big reports on the bank price,
bank shares falling and sub-prime crisis hitting the world. Where is all this bad debt?

                                            7
Don’t we know yet? I thought we should have found out by now and this crisis would
be coming to an end?


URQUHART STEWART:              That’s the problem because what you’ve had is this
huge pile of debt which has been spread all over the place. Now the idea of that was
to spread the risk. What they did was spread the damage. Now they’re trying to
identify who’s got it and so we’ve had in this past week the likes of Merrill Lynch
coming up with huge figures that they had to right off and also Credit Suisse and
UBS, and people are looking round the other banks and saying well where are your
losses? And the problem is some of them don’t come out automatically because they
may be with hedge funds who report every 6 months or once a year.


LEWIS:                         And now Citibank of course. Wall Street journal is
reporting this special meeting tomorrow; the chief executive going.


URQUHART STEWART:              Yes particularly when the chief executive only said that
this would be the year of no excuses and that he’d be putting things right. Well he’s
going to have to come up with a pretty good excuse otherwise he will …


LEWIS:                         He’s leaving, that’s his excuse.


URQUHART STEWART:              That’s it.


LEWIS:                         He can’t find an excuse, so he’s off. And what about
Barclays? I mean, there were these rumours which they have denied that they were
seeking emergency funding from the Bank of England. Apparently Northern Rock
we’re told said it wasn’t the only one and people homed in on Barclays.


URQUHART STEWART:              Well what you’ve had is banks will be seeking money
from the Bank of England at the moment because liquidity is tight in this overnight
market - that is to say when banks have to square their position at the end of the day.
Lending between the banks is still really rather difficult - so even though interest rates
themselves may not be going up, the charges from banks in terms of their own interest
rates may well be doing so. Much more likely, Barclays suffered from a bear attack

                                            8
and that’s really what’s happened here. They’ve been buying their own shares back.
Barclays themselves don’t seem to be in too much difficulty.


LEWIS:                          And do you think, just briefly, will we see an end to this
fragility or is it going to go on?


URQUHART STEWART:               This is going to carry on for some time, I’m afraid. The
sub-prime is all over the place. Until everyone has wiped down all the floors and
walls and we know exactly where it’s all gone, there’s going to be some smelly stuff
still around.


LEWIS:                          Well stay with us Justin. As shares plunged, the price
of commodities, which Justin mentioned - metals, oil, even timber - seem to be rising
strongly as growing demand runs up against world shortages of many of these vital
ingredients. Mark Dampier is head of research at financial planners Hargreaves
Lansdown.


DAMPIER:                        We’re basically witnessing the last great industrial
revolution really, the urbanisation of emerging markets- that is the people moving
from agriculture into land and demand for all the things that you and I take for granted
in the West. When you consider that China and India alone account for 38% of world
oil demand, that gives you some idea of what’s going on. And of course one of the
great problems in the world is we’ve had very little done to actually find new supplies
because we haven’t needed it until about the last 4 or 5 years.


LEWIS:                          So that’s oil and we’re all familiar with that and what it
does, but there’s also a growing shortage in all sorts of metals - many of which people
haven’t even heard of - that are essential for our electronic society that we live in.


DAMPIER:                        Well obviously platinum for converters for cars; copper
is huge. I know everyone’s heard of that. I mean the Chinese over the last 20 years,
their consumption’s risen by more than 190% - so, again, mind blowing numbers
really. And even gold, which hasn’t got a major industrial use, is beginning to rise,
although that’s the only precious metal I’d say that hasn’t reached its all time high,

                                             9
which was $850 an ounce back in 1980.


LEWIS:                          It’s a persuasive analysis, but we have seen already
strong rises in the prices of these things. Isn’t that sometimes just the wrong time for
people to invest - you invest when they’re high and sell when they’re low, exactly the
opposite of what you should do?


DAMPIER:                        I think you have a very valid point. I do think this is
going to go on for 10 to 20 years though, but I do think in the short-term there is a
danger - we’re just beginning to see it with a few retail clients - of them losing their
heads. If you’ve got an ordinary unit trust portfolio, you’ve got a portfolio of shares,
you’re quite likely to have exposure to metals already. In the FTSE, you’ve only got
to look at companies like BH Billiton. It’s up 100% this year. So people ought to be
a little bit careful. It’s probably already in their portfolios.


LEWIS:                          Yes because you’ve got investments in oil funds in the
FTSE 100, you’ve got mining companies. Are you saying that’s enough for most
people?


DAMPIER:                        Well what I’m saying is that this is also tied up to the
emerging market story and many people have 10% to 20% exposure to emerging
markets, which I don’t think is necessarily unreasonable.          But then if you add
commodities to this as well, you can have upwards of 30% to 40% and start to have a
portfolio facing in one direction.


LEWIS:                          What about investing more directly in commodities
because you can now buy shares in physical bars of gold and bars of platinum, can’t
you?


DAMPIER:                        Yes you can. You can buy, exchange traded funds that
will give you exposure to silver, gold, platinum. So, again, you are coming into a
very specialised area here, so be careful. Bear in mind also that of course if you really
do believe that the gold price is going to move stronger, I’d have to say that you really
want to be buying mining shares because they’re effectively geared to the gold price -

                                              10
in other words if the gold price increases, they should go up more. So my personal
feeling would be towards buying mining shares or buying a unit trust that actually
invests in that area.


LEWIS:                         Yes, though of course investing in individual mines is
very risky, isn’t it?


DAMPIER:                       Indeed. Oh yeah, absolutely. I’d prefer to go for a unit
trust myself.


LEWIS:                         Mark Dampier of Hargreaves Lansdown. Well Justin
Urquhart Stewart is still here. Justin, Mark’s saying this boom in commodities might
last 20 years and we heard this week we might be at the start of a 100 year boom in
this market. Is that right?


URQUHART STEWART:              It’s being called a super cycle. Well of course there’s
only a limited supply of these until we start attacking other planets to be able to get
hold of other suppliers. So, yes, whilst you’ve got that demand, but this is a boom at
the moment and booms end after a period of time.


LEWIS:                         Yes, though supply and demand implies the demand is
growing but the supply, as you say, is finite; there’s only one earth.




URQUHART STEWART:              Is constricted and so there’ll be an issue there. That
will have to come to an end and start slowing down.


LEWIS:                         And, briefly, do you share Mark’s caution about
moving money from shares to precious metals and things like that for the ordinary
individual investor?


URQUHART STEWART:              Key rule for all investors: broad asset allocation and
therefore not just in shares but also in commodities. And he’s quite right: you may
already have some commodities there in your shares. But there’s nothing wrong with

                                           11
some commodity exposure, but probably no more than about 5% and that’s probably
for the riskier investor.


LEWIS:                         Okay. Justin Urquhart Stewart of Seven Investment
Management, thanks.
Well it may be unseasonably mild weather outside, but there are fears of power cuts
and fuel price rises this winter and that will hit hardest the people who already are in
fuel poverty spending at least 10% of their income on keeping warm at home. This
week the consumer watchdog Energywatch called for action to make sure poor
families could afford to heat their homes. It wanted what it calls “social tariffs” -
cheaper rates for low income households. Live now to Adam Scorer who’s head of
campaigns at Energywatch. Adam Scorer, many suppliers do offer cheaper tariffs for
some low income households. What more do you want?


SCORER:                        Well actually we want to see the whole of the market,
all the six suppliers, really take their lead from the best. We’ve got the likes of British
Gas and EDF Energy who have produced real social tariffs that will benefit a large
number of fuel poor consumers. And that at the top end of the market is exemplary,
to be applauded, but we need that to be replicated across the market because
unfortunately EDF Energy and British Gas don’t have all the fuel poor consumers in
their customer base. So what we need is some coherence about social tariff provision.
We need it to become part of the architecture of the strategy to fighting fuel poverty
and I think really what we need is the Energy Bill that should be announced in the
Queen’s speech on Tuesday to include a power for Government to require all
suppliers to match the status and the level of the best.


LEWIS:                         Well with us is Duncan Sedgwick. He’s chief executive
of the Energy Retail Association which represents those energy suppliers. Duncan,
should the government be forcing your companies, your members to do this?


SEDGWICK:                      Well I think this is a real dilemma and I think the
dilemma here is one of you know is government wanting to see wealth redistribution.
Each of the companies do a range of things. Adam’s actually focused on, you know,
certain aspects of that. We are in a competitive energy market. We very strongly

                                            12
believe that is where the benefit lies. Each of the companies will actually do different
types of things and surely that competitive market is where you really see the sort of
benefits to customers long-term?


LEWIS:                          But you’re not competing for low income customers,
are you? You’re competing for the people who pay by direct debit, who switch
frequently, who know what the tariffs are. The people who are on prepayment
meters, the people who can’t afford their bills, you’re not competing for them. Very
often your members won’t even accept them as new customers if they’ve got debts.


SEDGWICK:                       I don’t think that’s necessarily the case. Just because
people are, you know, in a fuel poor situation or a prepayment customer, for instance,
doesn’t mean that they are a bad customer for the energy supplier. I think the real
dilemma here is if we actually want and if government wants to see a situation where
you know yes there has to be social tariffs for energy, well what about social tariffs
for buying pints of milk or packets of cornflakes? How are we going to try to change
that?


LEWIS:                          Yes, but we’re not here to discuss the grocery market,
are we, and you know although everyone has to eat, you don’t need particular kinds of
food. But you do need power. Everyone needs electricity. Most people, certainly in
towns and cities, need gas. And I’m leaving aside oil and bottled gas for people
outside the cities because I know you don’t represent them, but we’ll certainly get
emails about that, I’m sure. If you look though at what your members do - Adam
mentioned British Gas which has got a lot of people though still a small minority of
the people in fuel poverty - but Npower for example, one of the biggest, has just 1,000
people on its social tariffs. That’s not really very good, is it?


SEDGWICK:                       But what each one of the companies do is that some of
them call them specifically social tariffs and others call them other things. Now one
of the issues here is that all of the companies of course have to make sure that they are
competing in the market and certainly all of the people that I represent, I very strongly
believe that they are doing a great many things. We need to continue to ensure
though that government also does things because that’s about income levels and about

                                             13
quality of housing.


LEWIS:                         Let me put that to Adam Scorer. Adam, the competitive
market has kept prices under control and certainly many people believe that’s the way
to deal with this.


SCORER:                        Well I think we need to burst this bubble.             The
competitive market is not delivering for low income energy consumers.                 The
comparison with grocery is bogus and we have a number of low cost grocery stores
who are segmented and targeting that part of the market. The difference between a
pre-payment meter tariff and a direct tariff is around £130, £150 on average. It
penalises the people who have to use pre-payment meters and we also have the scope.
I mean if you take British Gas, they have an ambition or have a target of around
750,000 people on their essentials tariff. RWE Npower I think have around 4,500
people. You cannot live with this disparity between the best and the worst and we
need the government to come in and say well look, we just need some basic minimum
standards to understand what we mean by social tariff provision.




LEWIS:                         And Duncan Sedgwick, the government has said to us
the Department for Business Enterprise and Regulatory Reform in a statement … I
won’t read all of it, but it said it’s committed to lifting households out of fuel poverty.
“We encourage energy companies to consider vulnerable customers. We urge them to
do more and we would consider legislating if all companies don’t provide a
programme of assistance.” They don’t, do they, so you are going to get legislation?


SEDGWICK:                      Well I don’t necessarily believe we will, but that’s an
issue for government to decide. I think the important thing here is that there is a
competitive market for all types of customers. You know, there are competitive
markets for pre-payment customers just as there are for other sorts of customers. We
also have to look to the future about how we can actually make some radical changes
to the energy market and things like smart metering over the course of the next decade
could actually remove many of these problems as well.



                                            14
LEWIS:                          Okay no time …


SCORER:                         The one thing about smart metering …


LEWIS:                          Yes, briefly, very briefly.


SCORER:                         … both myself and Duncan would agree that requires a
government mandate and political intervention to make it happen. The same is true
for social tariffs.


LEWIS:                          Let’s see if that happens. We’ve no time to debate
smart metering, but Duncan Sedgwick of Energy Retailers and Adam Scorer of
Energywatch, thanks. And you can have your say on paying for electricity and gas on
our website, bbc.co.uk/moneybox. Bob Howard’s with me and, Bob, insurers rushing
to get their bonfire night press releases out to us.


HOWARD:                         Yes, Paul.    In time honoured tradition, we’ve seen
‘sparks will fly on Bonfire Night without home insurance’; ‘don’t be a victim of
bonfire night burglary’; loud fireworks are bang out of order’ - that’s from a pet
insurer. And my favourite: ‘remember, remember to protect your pets and home this
Bonfire Night.’


LEWIS:                          Thanks for that, Bob. That’s it for today. You can find
out more from the BBC Action Line - 0800 044 044 - and our website,
bbc.co.uk/moneybox. You can download the programme there, send us comments
and, yes, I do know data’s plural but it sounds really weird as a plural. And there’s a
special, web special on proposed changes to capital gains tax. See how well we did at
an award ceremony. Tune into Vincent Duggleby on Monday with Money Box Live.
I’m back next weekend. Today reporter Bob Howard, producer Lesley McAlpine,
I’m Paul Lewis.




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