Protect our savings
JOHN Price, Frank Thornburrow and Dean Brown all have one thing in common: they were lured into a controversial investment scheme because they were desperate to squeeze a little more from their savings.
When they told us they’d lost thousands after being taken in by BinaryBook (see pages 38 and 47), my heart sank. How many other firms are cashing in on unwitting, well-intentioned British savers who have been stripped of any incentive to open traditional savings accounts?
it’s not difficult to see why someone might be suckered into binary trading. This type of investing has been branded a disaster by U.S. authorities — but our own snoozing watchdogs have done almost nothing to warn the vulnerable.
The salesmen behind the schemes often talk a good game. Their slick websites look too professional to be a con. The crucial ingredient, though, is the slender hope of a decent return at last.
The average one-year bond at a bank now pays just 0.79 pc — making them a waste of time for someone who’s put away £10,000 in the hope of relying on the interest.
That sum pays out barely enough, at just £79 a year, for a family restaurant meal — let alone keep the heating on. By whittling away interest rates the Government and big banks have sown the seeds of desperation. Now the idea of binary trading — gambling on the unpredictable rises and falls in shares, oil, gold and other investments — doesn’t sound quite as crazy as it might have done a few years ago.
Binary trading is just one of scores of schemes being used to part savers from their retirement cash.
in the past, savers knew something was fishy when a cold-caller offered 20pc returns; now someone only has to waffle on about 6 pc or so to sound both alluring and plausible.
How many more people have to lose their life savings before the authorities wake up?
The city watchdog should copy the Americans and condemn binary trading immediately and ban cold-calling by all financial firms.
The regulator must work more closely with police to investigate all scams reported to it (insiders say just a fraction of cases are probed at the moment). it must not rest until every single crook defrauding the vulnerable is behind bars. The Government can help by showing us that saving is still valued in Britain. Philip Hammond, the chancellor, should scrap all tax on savings interest and launch new deals paying decent interest.
He should also make isas simple again. There are now so many types — Lifetime isas, Help to Buy isas, Flexible isas and so on — that savers have given up entirely, with deposits down 90 pc in a year.
All the accounts should be bundled into a ‘Super isa’ with a £20,000 allowance and no restrictions on withdrawals.
if the Government wants to hand a boost to first-time buyers it can do that when youngsters use Super isa cash to purchase a home.
Should ministers wish to encourage retirement saving, they can offer a bonus when savers withdraw cash after the age of 55.
That action plan won’t solve Britain’s fraud epidemic overnight. in the meantime: ignore fancy schemes that claim to help you get rich quick, hang up on cold-callers and delete all unsolicited emails.
Scammers are crafty and will try to con you in every way they can.
Bravo for bonds
YeSTerDAY was the 60th anniversary of the launch of Premium Bonds.
incredibly, around 41,000 bonds from 1956 are still going today. One in three adults now holds the investments — and i have to say i don’t blame them.
Most of my spare cash is now in Premium Bonds for a simple reason: if i was lucky enough to win one of the four £100,000 prizes, let alone the millionpound jackpot, it would make a significance difference to me because it’d help pay off my mortgage — unlike the piddling interest on savings accounts.
So despite cuts to the returns on the bonds — they pay 1.25 pc a year if you have average luck — you should hold on to them if you don’t need a steady income.
The bonds are also worth bearing in mind as a thoughtful christmas gift for a youngster.
Cover photos
LAST week i wrote that at the top of my to-do list was switching energy supplier before the cold weather sets in. Scotch that — it’s been beaten into second place by an urgent reminder: ‘TAKe PicTUreS OF ALL THe VALUABLeS AT HOMe.’ Vivian Harris’s ordeal is a stark reminder of how insurers can wriggle out of claims. You can see why they ask for proof of purchase — firms must be sure you’re not making it all up. But in my house receipts sit in a drawer for a few months before going in the bin. That’s if the ink on the flimsy receipts shops hand out these days hasn’t already faded. i’d have a hard time finding the right bank statements for purchases made years ago — and in any case, like Vivian, my most treasured possessions are gifts. So spending just ten minutes taking pictures of your valuables a couple of times a year could save you a fortune if you need to prove they’ve been stolen.