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Sept00_Dec00 Saturday, 16 December, 2000, 13:02 GMT
Money Box Live/Phone In Monday 4 December 2000

Tape Transcript by JANE TEMPLE


Presenter: Paul Lewis

Guests Mike Harris, David Emery, Alpesh Patel

TRANSMISSION 4th DEC 2000 1500-1530 RADIO 4

ANNOUNCER : Now it's two minutes past three - time for MONEY BOX LIVE with Paul Lewis

LEWIS Hello and today MONEY BOX LIVE answers your questions on doing your finances over the Internet. If you're a complete beginner or a bit afraid of trusting the Internet, then we can advise on easy it is to deal with your bank account or credit card over the web, and of course how safe - almost all the major Internet banks have had least one security breech. Then there are the good deals you're offered on savings and credit cards - some of these are now Internet only. Are people who don't use the web in danger of being left out? And when you look up information about costs and interest rates, can you trust it? - how complete is it? How impartial? If you want to do share dealing over the net should you rely on keeping your portfolio information in what could be a very public place? And how useful are Internet discussion groups for getting good rather than bad information. Call us now 08700 100 444 My panel of experts is here to answer your questions about managing your money over the Internet and they are David Emery who's spent the last few months glued to his computer he tells me looking at financial websites to update his book - The Good Web Guide to Money, Mike Harris who's chief executive of the on-line bank Egg, and Alpesh Patel, editor e.Shares magazine and an expert in on-line investing. And the first question is from Jan in Winchester - Jan hello your question:

JAN Hello. I've banked with one of the big five banks for over 30 years. I haven't ever borrowed from them. I have an immaculate record with them as far as I know. If I changed to an Internet bank do I shoot myself in the foot?

LEWIS In what way?

JAN Well I shan't have any past record if I go to a new bank and if I wanted to borrow from them they won't have any record of my past behaviour.

LEWIS Well it's a fair question Jan and I think one a lot of people ask Mike Harris isn't it - because most people don't change from one of the big High Street banks to an on-line bank like yours. Is Jan in danger if she moves to Egg?

HARRIS Well the short answer to that Jan is no problem at all. Credit decisions are all taken automatically based on a statistical system that we use these days and what you'll find is if you apply to an Internet bank I'm sure all of them will be queuing up to - to lend you money. And so I'd say really that is a problem people worry about but it's - it's more past in the past where credit decisions were taken on personal relationships and they're not really anymore.

LEWIS So even credit decisions are done by computer now Jan. How confident would you be though of going for an Internet bank - of putting your trust in the Internet in one of these newcomers?

JAN Well I'm not terribly happy about the fact that the system breaks down periodically but the computers drop off the hook - and I'm also a bit worried about the security aspect.

LEWIS Well I know we have a lot of people asking about security - but David Emery briefly is it safe to do our finances over the Internet now?

EMERY I think it probably is - we have very strong encryption which means that the information that you relay over the Internet is encoded and it's very expensive to break that kind of code.

LEWIS So if somebody taps into the line they just get gobbledygook - they can't translate it into the details of your bank account?

EMERY Yes that's about it.

LEWIS That's what we're told of course - we're not always sure we believe it - but anyway. Okay David thanks very much - and thanks for your call Jan. Moving on now to John who's in Penzance - John?

JOHN Hello

LEWIS Hello John yes your question?

JOHN Well it's very difficult for us - we being pensioners and we're slightly over the basic pension so therefore we can't get help in anyway but how do we get on - we can't even - can't afford to get on to this website - all this modern gubbings?

LEWIS Do you have a computer John?

JOHN No no

LEWIS So you're afraid you're being left out of this revolution?

JOHN That's right - we're left out in the cold. I just can't afford it and all the charges - I mean we're on - we're on the basic pension my wife and I - and you know there's no - there's no way that all this extra charges -you've got the Internet - the website or whatever they call this - you've got digital

LEWIS You have to pay for telephone calls and things like let me put that to Alpesh Patel

JOHN Yes but also can I just bring in - you've also got this digital TV coming in - and all these charges coming on now - for example they say I know we've jumped a bit they say - or you people say - how can I - yeah you go on - I'll get my thoughts together

LEWIS I think - Alpesh Patel - digital television is supposed to be a cheap way into the Internet - is it going to be?

PATEL Well the only problem is the hardware cost - of course with digital TV the idea really is that you're able to interact with the TV - what's gonna happen is we'll get a convergence between television and websites. In other words you might be able to get the Internet through the television and not have to pay local phone call charges - the problem is and that's going to be expensive and computers.

LEWIS What the television is going to be expensive?

PATEL The television set - and also the monthly fees - it does cost more than the annual licence fee at the moment of course, and I think it's about time possibly that government initiatives or local government initiatives starting looking at the Internet almost like a right - in the same way TV is pretty much now considered almost as a right - given that the low cost, and ways around this problem are even - even when you consider computers are as low as £600 - that's still a lot of money to a lot of people - is perhaps going to a local library - or going to an internet café where the access cost can be low, and everything's set up for you as well of course, because one of the greatest complications is that it's very difficult to set these things up as well.

LEWIS But if you're living on less than £100 a week which many pensioners are even paying £1 or £2 an hour to deal with your finances is a big cost on top isn't it?

PATEL That's right - it's about as cheap as it is at the moment to get access and the simple solution- it might be that if Internet access becomes more widespread through libraries it might be free.

LEWIS David Emery do you think there's a danger that people and not just pensioners but other people who have little money might be left out of this Internet revolution and be paying more for their products?

EMERY Well I think there's a bit of - there are a few myths floating around and one is that the Internet is necessarily the cheapest source of financial products, and it's not clear to me that it is - for example in general insurance, home insurance, motor insurance, pets and travel and so on, my own personal experience is that my own motor insurance renewal came in much cheaper than anything I could find - find on the net, and in any event price is not everything. I don't think you should necessarily feel left out - the Internet is not as revolutionary as it's sometimes made out to be.

LEWIS But some of the best deals on savings accounts for example and on credit cards if John wants one - they are on Internet only accounts aren't they?

EMERY Well some of them are but - but I think that basically - these - the question is finding them and the question is - the real problem is actually having some sort of search engine that you can use to find these deals and of course you will be excluded in that respect. That's a real problem

LEWIS And of course searching takes time on the phone and that is costing money. And briefly Mike Harris from Egg - what are you doing to try and address this big group of people who may not be as familiar with the Internet as you are?

HARRIS Well we've done quite a lot of education of people who aren't familiar with the Internet but can afford to connect. I mean I - I guess the problem here is people who really can't afford to connect however much help you give them, and I think that's a problem for public policy - and you know if you project forward a few years and perhaps feel that the Internet's as vital as the telephone is today, then public policy does address that - it does make telephone available to almost everybody under one form or another. I think it's going to have to deal with that for the internet as well.

LEWIS Right Mike Harris thanks very much for that. John does that - does that answer your question - do you still feel a bit left out?

JOHN Yes I do feel left out. Now we'll go back again to before this digital suddenly took off and went mad as I would call it

LEWIS Digital television?

JOHN Digital television and all this Internet and everything - websites and so forth. If you wanted to watch satellites - and TV - and TV- to watch all those channels you're talking about £500 a year - and for someone who can't watch all these programmes - you can only watch one at a time and you're not gonna spend all day and all night watching these .then you've suddenly - what happened was I - my TV packed up

LEWIS John we're moving a bit off Internet finance - I'm going to cut you off there and perhaps should just say that of course you can watch all the BBC channels for nothing once you've got your TV licence. Let's move on to Mike from Hoddesdon who's got a question about share dealing.

MIKE Hello there. I've recently been on the webwise course from the BBC at local college - so I'm now on the Internet and I'm very new at the game. I'd like to know about share dealing on the Internet - I've got one company Pep but I'd like to do some share dealing - can you give me any advice on finding it on the Internet?

LEWIS So you already have some shares and you want to buy and sell over the Internet?

MIKE Yes I do yes

LEWIS Well Alpesh Patel is the ideal person to advise you - Alpesh?

PATEL Well to give you a very quick run down - of course the easiest way to go about it is you've got to open an account with an on line broker - so you visit the broker's website - a good website to find out where to find the best brokers - a site which actually lists and ranks the brokers is one called Gomez - it's and they rate the brokers - you can decide which is the best broker for you whether you're going to be an active trader, or it sounds more like a novice long term investor. The next thing is you print out the application form - you fill it in - you send it off - they give you a user name and a pass word which you use to log in the next time you're on the site, but the real problem is not so much opening the account, it's actually knowing what to buy and sell. And for that it's the good old non Internet things which - which will help - which will be buying a lot of say trading books or taking trading books out from the library and doing a lot of research. It is very difficult and you mustn't assume that simply because on-line trading exists that you should therefore necessarily keep your own counsel - it might be better off to be investing through an investment trust or a fund manager or an advisory broker instead.

LEWIS And David Emery - it's going to cost you money anyway isn't it? - is it cheaper to deal over the net?

EMERY Well it probably is cheaper to actually deal over the net but the dealing is the end of the process rather than the beginning - the beginning of the process is invest in education and there are now broker sites that actually specialise in teaching you the fundamentals of share investment - Stock Academy is one - they're also now sites that help you to screen out compatible stocks by a variety of criteria - 2 sites are Self Trade and UK Invest also has a very good stock screener and then you have all the research on line and finally at the end of the process we do the transaction. Unfortunately you don't get the full package on one site and I think it's a major short coming of the system at the moment.

LEWIS So it's important to realise that the Internet is just a means - it's a way of buying and selling which maybe cheaper - it maybe quicker. But it's no good doing that unless you have the basic knowledge about which shares are a good deal, and of course we always have to say shares can go down as well as up and you can lose money over the Internet - perhaps even more quickly than in any other way. Okay Mike thanks for that call - and now John is calling from Nedmanham: - Sorry Judy from Nedmanham?

JUDY Hello there. I get very worried when I have tried to - well I have tried to sign on to a couple of websites to a) for a credit card - for an Egg card and b) to sign on to a local supermarket that might deliver to me. And when I've signed on and I'm filling in my details with them there is a flash message that comes up that says this is an unsecured server. This worries me because I'm putting in a lot of details -

LEWIS So you're putting in a lot of information before it tells you it's not secure?

JUDY Yeah exactly but I mean this is - this was for a) it was for you know an Egg card - a credit card and b) it was for a supermarket which I'm going to be paying for obviously with - with a credit card over the - over the website.

LEWIS Well Judy let me stop you there because we have got Mike Harris, chief executive of Egg here

JUDY Yes and I would love to know

LEWIS Mike right over to you - why do people get warned that things are insecure after they've given you a lot of information?

HARRIS I'm not actually sure what's happening there to be honest. I suspect it could be the way your browser is set up - or you may not have the very latest version of the Internet explorer - you're using Internet explorer?


HARRIS It may just be something to do with that - I mean my advice would be certainly as far as Egg's concerned to pick up the phone, call the number on the website where it says call us here, and talk it through with one of the people on the phone. They are very used indeed to helping people configure their browsers correctly to deal with the 128 bit security and keep it completely secure.

LEWIS Now we've used a number of terms there - browsers, configure - 128 bit security - are they things that need explaining David Emery?

EMERY Yes they need explaining - but I think you can probably - it's probably more complicated to explain 128 bit .

LEWIS But 128 bit security is the safest way of transmitting details and it's possible that Judy's Internet explorer - the thing she uses to access the Internet isn't set up to do that?

EMERY Well I'm not a technical expert - I think I'd rather have Mike answer that one - but I really have no explanation about why - why these messages should appear

LEWIS Alpesh?

PATEL If you are worried that it could be that the edition of Internet Explorer you've got then one of the easiest ways is to go to the Microsoft website and download the latest version or very often if you buy any Internet magazine from the newsagent they'll have a CD on the cover which will have the latest edition - it's always good to keep up with the latest edition because they have the most secure software there - it might not be the browser though.

LEWIS But you see Mike Harris this puts people off doesn't it

JUDY .can I just interrupt here - that is still very very worrying - I mean although we had you know we've got the latest type computer as far as I'm concerned you know we've got - we've got everything that Mike Harris has just said that we should have -

LEWIS So it could perhaps be to do with the Internet service provider you're using

JUDY But why - why is it - yeah - so why you know why - yeah but why does this worry me? - it worries me because this flash message is coming up

LEWIS And it worries you because it's coming up after you've given a lot of information - so.

JUDY Exactly

LEWIS so you're concerned where that has gone - Mike Harris?

HARRIS Yeah I mean these sort of messages that come out of Explorer can bewilder people and it's one of the big problems that one always has to deal with. I can only repeat the best thing is to pick up the phone, talk it through with people - it probably said something like warning you're about to be redirected to a non secure connection or something like that - is what it said, so it gave you the choice to carry on or stop before you were actually redirected.

LEWIS do there is a help line - it is free, and Mike we have got questions about this - whether we'll get around to them but is it - does it cost you £2 to ring the Egg helpline?

HARRIS No not at all - it never did - we used to charge £2 for a transacting on the phone - we don't charge anything now - phone calls are completely free.

LEWIS So to sort out problems like that you can ring the number given and it's completely free.

HARRIS Yeah absolutely

LEWIS Let's move on to Hamish near Sterling in Scotland who's got another question about trading in shares - Hamish?

HAMISH Yes hello - really it was a result of my own experience I suppose in 98 I started trading more actively in shares as opposed to buying and holding. However it was sometime in fact must have been 18 months I guess before I actually discovered some very good trading courses and I think this is one of the things which the retail investor particularly doesn't yet use the Internet for sufficiently which is actually getting to grips with price action particularly - and finding trading information - and there is also with the notable exception of you guys I know but - technical analysis is something which is given scant consideration by most financial journalists.

LEWIS Okay let's just stop at those 2 points Hamish and ask Alpesh - price action and technical analysis - explain them first and then tell us where we can find out more?

PATEL Certainly - technical analysis is another word for charting - looking at price charts so what you're doing there is you're plotting the prices or the price action of a stock and then the websites will conduct certain complicated mathematical operations and they'll give you buy and sell signals - all it's really doing is telling you when to buy, when to sell

LEWIS But if it was that easy we'd all be rich wouldn't we?

PATEL Well it's about probabilities - that's the problem - it's not about certainties - it's not - that's when you certainly should buy or certainly sell and on terms of the on-line education about technical analysis - if you're interested in technicals the opposite of which is fundamentals - that's when we look at the accounts, we look at price earnings ratio - the valuations - those traditional things - there's three great websites which are free and which provide a lot of education about this - a new one just released last week is called - another one is and finally and these give a wealth of information and also the great thing is unlike books they're interactive so you can- you really do get a greater learning experience.

LEWIS Now another thing we find on the Internet are these chat rooms - bulletin boards where you can e-mail messages to each other and we've had examples haven't we of share prices being moved by often false information through those - David Emery how can you trust information on the Internet?

EMERY Well in the context of bulletin boards and equities I don't think you can - you can at all - I think it's an enduring problem and I think that these sites are well aware of it. I don't know how you overcome that. But on the general point of - of information on the Internet - whether it's reliable or not, I don't think you can take it on trust - I don't think there's necessarily consistency of information across all types of - of Internet sites, and you have to use your good judgement and you have to check unfortunately on more than one site in order to - to .properly

LEWIS So it's the same as it always was isn't it - a City journalist I know who's been around even longer than I have had said people used to screw up bits of paper and drop them in the street so somebody would pick them up and think they'd found a secret, but in fact it was false information so false information can be everywhere. So Hamish go carefully I think is the -

HAMISH I think on that - on that business about false information and reliability of bulletin boards, I think that one of the things that people forget is that the Internet and these on-line sites can be very valuable to meet like minded people - people that are trading or investing - but at the end of the day as David Emery has suggested you can't trust somebody who you've never met and never seen but use the Internet as a way of making contacts - and a good example for me has been the website it's a very active bulletin board, thousands of users on it - but if you get to meet some of those people and indeed that's where I access my training from that can be very helpful in terms of guiding you in the right direction.

LEWIS Thanks for that tip Hamish and you can't trust anybody you haven't met except when you hear them on Money Box Live of course. Now Richard from Budely has a question - Richard?

RICHARD It's the question is what safeguards are for the blind - not to be cheated by all these new systems you've been discussing for these last 20 minutes?

LEWIS Now just tell us how your own vision is - it's not good?

RICHARD I don't read

LEWIS You can't read?


LEWIS It's a great difficulty then doing things on the Internet at all - Mike Harris do you have any facilities for people who can't read - I mean everything else now has to be done like that - it has to be in Braille - large print - cassettes - when you go into a branch of a bank - but on-line trading it's hard to see how it could be done?

HARRIS We've got the off-line stuff obviously but the on-line no nothing special other than what people have arranged for themselves. I do know some people who have arranged access to technology for themselves. Indeed years ago when I was at Cable and Wireless we sponsored a project at Stanford University to give disabled people access to the Internet - but in - but special facilities - no we don't have any

LEWIS So I suppose Richard it's not so much being cheated by them - it's that you can't even get access to them?

RICHARD Well it is in the sense that if I encourage somebody to put their money in there and therefore they're left with no way of checking

LEWIS And how do you check written information - do you have a friend or ?

RICHARD Oh yes I mean a lot of blind people have a friend who will read their mail and do their letters - you find ways around it like that - that's why I've asked you see - there's all these you know .that keep being shoved through your letter box - to tell you how great and wonderful it all is out in the big wide world - have no information there about safeguards. It's all come in and join us.

LEWIS Well that certainly is an issue and I suppose as with any other printed information you can get people to read off a computer - off a computer screen - Mike Harris, just briefly safeguards. I think there is a general point Richard's making here - how can we trust that that information that's on the screen really is the state of our bank account?

HARRIS Well you can always get printed back up of course - we send printed statements out regularly and on request on all accounts. And the other thing of course is your bank itself will have excellent records that are backed up centrally and on the whole you know you can trust the bank to know where you are.

LEWIS Oh you don't listen to Money Box every Saturday do you ? - the problem is of course that if you had a dispute with the bank then all the records are held by one party and not the other. But let's move on because - not from you though Mike cos we have a particular question about - about Egg here from Malcolm in Maidenhead?

MALCOLM Well Mike I'm pleased to hear that the bank keeps records because perhaps they can solve this - because Egg transfers from my account are not being implemented. I made an on-line request on Sunday - got the message back that it was acknowledged. And it was received before 5 pm so I would have expected that to go out from my account during Monday - it did not - I repeated the request on the Monday - I would have expected it to go out on the Tuesday - it did not. I repeated the request on the Tuesday - it still didn't go out. So I e-mailed your help line on Wednesday - funny enough the withdrawal actually was made on Thursday. I received a reply form the e-mail on Friday saying the withdrawal had been made. Now why is it that these requests for withdrawal weren't made on the business day following the - when the request was made? I mean no use having an account if it's going to be unreliable.

LEWIS Mike people do expect Internet things to work quicker and better. This one doesn't seem to have done?

HARRIS No well that shouldn't have happened - the way Malcolm described it there - obviously there's a problem with the system which I can't comment on that individual case obviously but it should have been - it should have been actioned on the Monday for sure - but one - it will have taken 3 days after that though at least and that's one of the big frustrations of Internet banks - we have to plug into the existing clearing system that was designed many years ago for paper payments and still operates on a 3 day clearing cycle so we haven't managed to solve that yet and that is a big frustration for all of us, but as I say in this particular case that Malcolm raised obviously that was our problem - it should have happened on the Monday not the Thursday.

LEWIS So perhaps you can look into that later?

HARRIS Of course

LEWIS There is a general point though isn't there - and I've come across this with Egg that when you -do something on the computer you think you're connecting direct to a computer - sometimes though a person has to look at that - do something with it and then connect to the computer - so there's a human in-between isn't there?

HARRIS Occasionally - on less and less cases now - in fact probably only one transaction that we have now operates in that way - all the rest are thoroughly implemented.

LEWIS Okay well Malcolm we'll get Mike to look into that - we've got your details here and other people who've had problems with Egg Mike has offered to take all your e-mails away with him so we've had about half a dozen. Let's move on now to Jane in Haver Hill?

JANE Oh hello. My husband and I are planning to go abroad for about a year and Internet banking seems ideal for keeping track of the finances in England but would it be reliable for international money transfers?

LEWIS Mike I think this has to be back to you?

HARRIS Yes Jane it is completely reliable for international money transfers. How you get the foreign payment to your bank will depend on where you're working and what the facilities are in that country, but the Internet banks are all geared up to receive them however they're sent so yes the answer to your question is yes.

JANE And could we use Internet - building societies?

LEWIS I don't know that anyone here can talk on behalf of building societies - Alpesh generally do you think it's reasonable to - I mean if you're abroad you can log on to the Internet from anywhere in the world - is it reasonable to control a UK bank from a foreign country?

PATEL Well the suggestion or the solution I was going to provide was I've been in this situation and a lot of UK high Street retail banks have corresponding relationships with their foreign banks so let's say for instance you're going to the States, then you'd have a relationship with a - a bank out there and they'll arrange in advance if you let them know -for you to have your credit card a bank account and money could be transferred far more easily that way - so it's - it's the off line solution and that might be the best solution.

JANE So we'd be better staying with one of the big High Street banks?

PATEL It's what I did - and of course you won't know the name of the US bank probably because it won't be for instance - it might not be Lloyds or whatever which you're familiar with here, but it'll be a reputable bank that they have a relationship with.

LEWIS Okay Jane thanks for that call and hope you - hope your job abroad goes well. Now a question from Mohammed in London

MOHAMMED Oh yeah hello - I've just got a question about on-line banking - if you're to invest some money on-line is there anything you would recommend - any sites you would recommend for Internet banking?

LEWIS David Emery where's the best interest rate on the Internet?

EMERY Well I'm not going to nominate a particular bank specially with Mike here in the studio but I think you're probably looking at the stand alone banks because

LEWIS These are not the High Street banks these are the new ones that are separate from their parents?

EMERY That's right - they see - they claim to be unencumbered by large branch networks and large overheads and they claim to pay the highest rates of return - just to name a few - Cahoot, Smile, FirstE - maybe Egg -

LEWIS Well you certainly can get six, seven and even slightly more than seven % on an investment Alpesh Patel can't you - which the way the stock market's going looks pretty good actually doesn't it?

PATEL It looks wonderfully good. If you're a saver you're of course -you want low fees and you want high yields and I've seen quite a few tables done of these comparative tables and Smile and Nationwide often come up near the top so they're probably worth having a look at first and foremost.

LEWIS Mohammed does that answer your question?

MOHAMMED Or should they charge anything you know - any extra rates or anything like that?

LEWIS Well the charges are often - well there's no charges on a savings account are there? - Mike Harris is shaking his head - anyway thank you for your call Mohammed - I think there that the answer is look on the Internet to find the best deals because you can do that - that's all we have time for though today. My thanks to David Emery who's author of the Good Web Guide to Money, Mike Harris who is chief executive of Egg, and Alpesh Patel, editor of E-Shares magazine. If you'd like more details of anything raised in the programme you can ring our action line 0800 044 044 Calls are free on 0800 044 044 You can visit our website which is and all the details of the websites we've mentioned will be on there but probably not now till tomorrow morning. I'm back at noon on Saturday with MONEY BOX for the top personal finance stories of the week and back here next Monday for MONEY BOX LIVE.

BACK ANNO That was Paul Lewis and the producer was Paul O'Keeffe.

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