Wednesday, 16 April 2014

Co-operative Bank worries

From David McWilliams' blog
Well, it looks like it may be curtains for the Co-operative Bank. This is a worrying thing for society in general, since it leaves us with a lot of other free market capitalist banks, many of which have had to be propped up by the government. I don't know why that doesn't prove capitalism is rubbish and a disaster for us all, but clearly Those With Bigger Brains understand and we should leave it all to them (wink). 

Here I shall consider what to do if you have a little money in a Co-op Bank account. 

I have banked with the Co-op for a lo-ong time, and I would be very sorry to see them go. They were always polite and pleasant when I phoned up in a tizzy about my finances. They made me feel like a thing like whatever I had managed to do could happen to anyone, and they would waive the fees and tell me exactly how to sort it out if I had gone accidentally past my overdraft limit. 

I am a lot better with money now, cuz I have read Alvin Hall. Anyway, I'm not worried about the money in my bank account, because: 

From i-tunes.
A) I haven't got any. It's true that they might come and reclaim the money I owe them, but this is not much. The reason it's not much is that a short while ago, they made me repay most of my overdraft. I was a bit meh about having to find the money to do so, except that they were so polite. At the time there was a lot of banking trouble going on elsewhere, with people being lured into massive credit they couldn't afford. And I said to myself I was lucky reelly, to be with a bank which would make sure I kept within responsible limits for credit. They explained clearly to me that they had identified me as likely to run into difficulties, because although I always had a little money flowing through the account, it had not been in credit for a long time. I just would pay off a bit of the overdraft, then run it up again. "Get into credit sometimes," they said firmly. "Then we will be happy to let you keep the smaller overdraft you've now got and even get a bigger one again." I thought that was sensible, so I get into credit but now I just keep the small overdraft instead of asking for any more credit and I am paying my small overdraft off too.

B) I know that the government have guaranteed all savings accounts up to £85,000 if anything happens to a bank. I wish I had that much for them to pay me back! So, my £0.55 savings account is safe. 

From BBC article on scrapping of the scheme.
One thing I was wondering about was Piglet's child trust fund. If your piglet was born between 2002 and 2011, you'll have received a £250 voucher to invest for it, then a later top-up payment to add to their fund. Piglet actually has a bigger investment fund elsewhere and I decided to put her baby bond into an ethical fund. There was only one - being run by the Co-operative. It was a great education. One year it went down in value and I wished I had put the money into a safe but low return savings account. Now it's actually worth quite a bit more than it originally was, it does as well if not better than the gun-running investment accounts. The other day I sat down with Piglet and explained it to her, telling her about the difference between an investment fund, a savings account and why I had chosen this particular fund. Mostly she was interested in the fact that she had amounts of money tucked away which could buy seriously large bars of Dairy Milk chocolate. However I hope some of the issues about where you invest and how that impacts on the rest of society will come back to her one day.

A Finance Expert Mum has explained to me over coffee at music college that Piglet's savings are separately protected under the Financial Services Compensation Scheme. Should the Co-op fail, Piglet's money will probably have to be moved into another fund, which would be annoying as there are no others which guarantee that her money is not being invested in the arms industry and whatever. However, since the investment funding bit of the bank are doing reasonably well, they are likely to be picked up by someone-else who will continue to run them, let's hope along the same lines.

There we are. I am not agitated about Never In My Back-pocket of used fivers. However I am really sad about the implications for society if the only alternative high street bank disappears.

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