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Friday, 31 October 2008

Money it’s a drag


Are you fed up hearing about the “credit crunch”, Governments bailing out the banking system? If you are – sorry ‘cause I’m going to bang on about it.

My mother in law died earlier this month and I’ve been going through her personal papers in order to sort out her estate.

She didn’t own her own home – lived in a council flat for 56 years and she and her late husband weren’t high rollers. He was a postal worker and she was a housewife. Yet she had managed to save enough to exclude her from claiming most benefits. She received a widow’s pension of less than £1,000 a year and a state pension.

Most of her savings were with Barclays. The Woolwich as it was.

In 2000 she decided to do something with her savings and a Woolwich tied financial advisor “advised” her on her savings.

I’ve seen the financial advice documentation. It’s a travesty. ISAs and National Saving were completely discounted. Despite being tax free and offering a good rate of return. Instead this advisor recommended investing in Woolwich OpenPlan. A saving account and current account – even though she had a current account with the Alliance and Leicester.

She invested slightly more than £30,000 – you could invest £33,000 tax free in National Savings and ISA and get the interest paid monthly. This financial advisor‘s recommendation was to place it in the aforementioned Woolwich product. The Woolwich was taken over by Barclay’s in 2006 and accounts became “Barclays Flexible Savings”.

I received the closing statement following her death. The interest she was receiving from Barclay’s was 2.40% per annum. Inflation is at 5% and as a pensioner her personal inflation was around 8%. Barclay’s were robbing her.

No wonder Barclay’s are prepared to borrow £5 billion at something like 12.5%. With customers like my late mum in law they’re coining it!

And Barclay’s and their ilk claim their stability in the current turmoil is because of their large retail base. Not something to crow about I would have thought if they treat their customers as badly as my mother in law.

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