Why the Met Chief is out of line about online fraud
FOR the chief of the Metropolitan Police to suggest that customers, not banks, should take the rap for online fraud – as he did last week – is outrageous. For those who missed his provocative comments, Sir Bernard Hogan-Howe said banks should no longer consider refunding most fraud victims because the current set-up rewards those who are slack about internet security. In other words, more personal responsibility, less nanny-statism from the kind banks.
Fine up to a point, Sir Bernard, but you fail to understand that most customers are ‘victims’ of online fraud not as a result of their own slackness but because of the failure of their bank to run secure online banking services.
Last month, we published an exclusive interview with a notorious (but reformed) hacker who in his youth managed to break into the online systems of the CIA in the US and the Serious Organised Crime Agency in the UK. He told us that the security of the UK banking system was ‘fundamentally flawed’.
So I don’t think the elixir we’re looking for lies in blaming those who have been forced to carry out their day-to-day banking on the world wide web – many of whom have seen their accounts fraudulently drained through no fault of their own.
Last year, personal finance reporter Laura Shannon – as internet-savvy and securityconscious as anyone I know – saw her current account plundered by someone on a spending spree in Florida.I’m not sure that making her accountable for the £1,000 stolen – through no fault of her own – could ever be judged fair.
Banks are tasked with looking after our money. That is why they exist. It is up to them to install cyber-security fit for purpose. Of course, there is more we can all do to stay safe online – and we will continue to bang that drum in our personal finance pages.
But Sir Bernard’s remark that the current banking system ‘rewards bad behaviour’ is so far off the mark, his dart doesn’t even hit the board. It is the UK’s profitobsessed banks that need to make internet banking safe and secure. Not their customers. IN AN investment world where the focus is increasingly on short rather than long-term performance, it is fantastic to see The City of London Investment Trust notch up its 50th year of consecutive annual dividend increases.
For its army of income hungry shareholders, it must seem like manna from heaven – especially given the challenging economic backdrop, the pressure that many UK companies now find themselves under to maintain dividend payments and the meagre returns to be had from cash deposits.
Indeed, an annual dividend increase of 3.9 per cent for the financial year ending July 2016 looks even better when compared with inflation – the scourge of savers and investors. It is currently trundling along at 0.3 per cent.
A few further observations on this trust’s extraordinary investment record are in order.
First, no other investment trust has built a half-century’s worth of consecutive annual dividend increases although a few are not far behind (Bankers and Alliance, both on 49).
So hats off to both investment manager Job Curtis (15 years in the job and still going strong) – and the trust’s board that has made dividend growth a key goal. A long-term objective, not a short-term one.
Second, investment trusts such as The City of London are able to grow their dividends because – unlike rival collective investments such as unit trusts or openended investment companies – they have far greater control over how income generated from their holdings is then distributed to their shareholders.
It means they can hold back income in the good years to top up payments to shareholders when the country’s biggest companies are struggling to maintain their dividends.
It is a form of ‘smoothing’ that actually works – as opposed to the smoothing of payouts on withprofits investments that insurers used to wax lyrical about, before undermining the concept by applying horrible ‘market value adjuster’ penalties to investors’ smoothed returns.
Finally, as its name suggests, The City of London is steeped in City tradition. It’s not flash but stay with it and the trust will make you money – over the long term – and pay you a decent income on top. TALKING of making money, please take time out this Easter weekend to read our special eightpage report on how to grow your savings, tucked inside the award-winning Sport section.
It is packed full of useful information on how to invest for the future.
Digest like a yummy Easter egg and then put some of the sound financial advice contained within into action.