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MONEY BOX

Presenter:	PAUL LEWIS


TRANSMISSION:	28 OCTOBER 2006  1200-1228 BST    BBC RADIO 4



LEWIS:		Hello.  In today’s programme, hope of 
compensation this week for 100,000 people who’ve lost their pensions: 
the High Court has said it will consider whether to force the 
government to pay up.  But we learn some campaigners now risk losing 
even more.  Bob Howard’s been watching cash machine thieves.

HOWARD:		That’s right, Paul.  The banks admit that only 
one in four cash machines on the streets is protected against fraudsters.

GOODWIN:	Unless you are completely familiar with the 
appearance of your cash machine, this will fool a lot of people and does 
do so.

LEWIS:		Twenty years ago the Stock Exchange left the 
Victorian era behind, but did Big Bang really benefit savers and 
investors?  And how to get a lawyer to draw up your will but pay them 
nothing.	

First though, Money Box has learned that some pension campaigners 
who’ve lost company pensions now face losing even more if they fail in 
a court challenge.  They are asking the High Court to make the 
government pay compensation to up to 100,000 people who lost money 
when pension schemes were wound up.  The government is refusing to 
act on a report by the Parliamentary Ombudsman, which says it was 
guilty of maladministration and should sort out adequate compensation.  
Now four of these pensioners have persuaded the court to hear their 
case, challenging the government’s decision.  They see it as the first 
step towards victory.  Ros Altmann has been advising them.

ALTMANN:	I think it’s excellent news that we have now 
finally got a date for a judicial review of the government’s response.  
It’s just very sad that we’ve had to get to the point where we’re having 
to take the government to court.  The only outcome that we’re seeking 
is the compensation that these people deserve having believed and 
trusted the government and believed and trusted our pension system, 
done what they were told, played by the rules, and found that their 
money has been taken away from them.  We want this restored.

LEWIS:		But if they don’t win, they could lose more than 
their pensions.  John Halford, a public law specialist with lawyers 
Bindman & Partners represents the four pensioners taking the case.  He 
explained first why it was important.

HALFORD:	There have only been four of these special 
reports that have had to have been made to Parliament.  In each of the 
previous three occasions, the government has ultimately acted to put 
things right, but the key thing is that no court has ever examined 
whether the government is entitled to reject findings of 
maladministration as opposed to recommendations.

LEWIS:		So this is a key test case on what I suppose 
might be called a constitutional issue: can the government ignore the 
Parliamentary Ombudsman?

HALFORD:	Absolutely.  And obviously that has 
ramifications that go far beyond this particular case, although it’s a very 
important one in itself, because if the government is right in what it 
says about being able to pick and choose between Ombudsman reports 
and whether or not it’s going to take account of them, then individuals 
can have no real confidence in complaining to the Ombudsman because 
they know that their complaint may be upheld and then ultimately 
dismissed by the government.  

LEWIS:		Now you’re acting for people who by definition 
have very little money.  What about if you do lose because the 
government has got presumably very large costs in defending this case?  
Who’s going to pay those?

HALFORD:	Well that’s a very serious concern.  Historically 
government departments and the Department of Work and Pensions, in 
particular, has not sought costs from people who’ve brought public 
interest cases, who typically are on low incomes or in receipt of welfare 
benefits.  But in this case, the government has said no and has refused 
to give us that assurance.

LEWIS:		So potentially, if your clients lose, they could 
lose what little remains of their pension and possibly their homes as 
well?

HALFORD:	There’s that risk and it’s obviously troubling 
them greatly.

LEWIS:		What could the costs end up at?

HALFORD:	It could be in the region of £100,000 if the case 
were to go to the Court of Appeal, or perhaps more if it were to go to 
the House of Lords.

LEWIS:		John Halford.  Well listening to that is one of 
the people taking the government to court, Andrew Parr, who’s lost 
most of his pension after his company scheme was wound up.  Andrew 
Parr, no doubt good news for you the courts are going to hear your 
challenge, but it is a high risk strategy; it could be a personal disaster. 

PARR:		It could indeed and I am spending most of my 
time with my fingers crossed.

LEWIS:		Well that’s not going to do much good if you 
lose though, is it?  Why is it so important to you that you’re prepared, 
having lost a lot of your pension, you’re now prepared to put a lot of 
other money that you probably can ill afford on the line?

PARR:		Well the loss of the pension effectively is a 
disaster for the rest of your life and taking the risk of losing even more 
doesn’t actually make that much difference to how you’re going to live 
the rest of your life.  It’s the difference between being broke and being 
very broke and that really doesn’t affect your lifestyle that much.

LEWIS:		Yes and I suppose you’re buoyed by the fact 
that if you do win, you’ll not only be helping yourself but you’ll be 
helping potentially up to 100,000 other people?

PARR:		Indeed, yes.

LEWIS:		The government though has put a financial 
assistance scheme in place, hasn’t it?  It hasn’t admitted liability, but it 
has put a scheme in place to give you and others who’ve lost money at 
least something.  Why is it so important to try and make them give 
more?

PARR:		Well the financial assistance scheme is a very 
limited scheme.  It only helps people within 15 years of retirement.  The 
amount of money that you get is up to 80% of your entitlement.  That’s 
not 80% of your expected pension; it’s 80% of what you were entitled 
to at the moment that you were made redundant.  And it’s not protected 
inflation; there’s a very low cap.  There are lots of problems with it.

LEWIS:		Yes and not everyone is getting anything at all, 
are they – a lot of people?

PARR:		No, anybody over 15 years from retirement will 
not get a penny.

LEWIS:		Now this is going to the High Court in 
February, which according to the court is a sort of fast track process, 
and then there could be more months before the Court of Appeal and 
the House of Lords.  It could go on for years and cost, as we’ve heard, 
more than £100,000.  How’s that going to be for you and the people 
waiting?

PARR:		Well one of the things this does is absolutely 
dominate your life.  You spend all of your days, all of your nights 
thinking about how you’ve been robbed of your pension.  I mean my 
wife and I just simply want to get on with the rest of our lives.

LEWIS:		And very briefly, a message to the government 
on costs?

PARR:		It worries us, but I think it would make a very 
good story in the media that government gets costs off broke 
pensioners.

LEWIS:		Let’s hope they avoid it.  Thanks very much, 
Andrew Parr.  Now the Department for Work and Pensions wouldn’t 
come on the programme, but told us, it hasn’t opposed the matter going 
to court because it recognises there’s very strong feeling about the 
decision and it would be useful for the matter to be argued in court.  It 
added though that it was “confident of its position and will defend the 
case robustly”.

Now the introduction of chip and pin was supposed to tackle plastic 
card fraud, but Money Box has learned that cash machines are still 
vulnerable.  Millions of pounds is still being stolen by gangs who attach 
mini cameras and a device to copy cards to ATMs in a crime known as 
‘skimming’.  Bob Howard reports.

GOODWIN:	This is a cash machine skimmers kit.  It contains 
a pinhole camera and a false slot, which fits over the slot of the machine 
itself, and you can see … (voice fades under)

HOWARD:		Detective Inspector Graham Goodwin is 
showing me the equipment gangs are still using to skim cash machines 
despite all our cards now carrying chips.  ATMs read the magnetic 
strips on cards rather than just the chip, so that foreign visitors who 
don’t have chip and pin can continue to withdraw money. For the same 
reason, we still have a magnetic strip on our cards so we can use them 
abroad.  Cash machines are a tempting target because even if it’s 
difficult to copy the chip, a card with just a magnetic stripe will still 
work in some UK ATMs and many others abroad.  Inspector Goodwin 
showed me secret filming, which demonstrates how quickly the gangs 
work.

GOODWIN:	This is central London.  There’s the cash 
machine.  Already after a few seconds the actual front has been attached 
to the machine.  The guy to the right of the main person has got the 
pinhole camera bar and he passes that across just there.

HOWARD:		I mean the audacity is incredible because there 
are literally scores of people wandering past.

GOODWIN:	Not paying any attention at all.  And I think in a 
minute you’ll see there’s a queue of people waiting to use the machine, 
and be victims straight away.

HOWARD:		He was right.  What really shocked me as I was 
watching this footage is that the queue to use the cash machine had 
already started to build up even before the criminals had finished fitting 
the device.  The gang took it off after ten minutes, but that was long 
enough to get the card details of a dozen unsuspecting customers.  This 
gang was caught and sentenced to between 2 and 4 years in prison.  I 
asked Inspector Goodwin how easy it is to spot a machine, which has 
been tampered with.

GOODWIN:	There aren’t any real tell-tale signs.  You know 
unless you are completely familiar with the appearance of your cash 
machine, you use it regularly and you know that it looks different that 
day, then this will fool a lot of people and does do so.

HOWARD:		There are moves to defeat the fraudsters.  The 
banks are installing anti-skimming devices at cash machines in 
locations which they think are vulnerable to attack.  I’m at a 
supermarket in South London, which has four machines outside.  
They’re all operated by Sainsbury’s Bank, which is investing £3½ 
million into making their machines tamper proof.  Kevin Barrett is 
responsible for cash machine security.

BARRETT:	As I’m putting the card in the machine, it’ll 
make sure that any transaction that’s going forward will be encrypted, 
so that then the reader that has been attached to the device won’t be 
able to download that data.  There are certain ways of doing it.  You can 
either make the card vibrate quite a lot or there’s other sort of technical 
IT pieces.

HOWARD:		So even if I physically could attach the camera 
and the front to this machine, I couldn’t actually read the data from 
your card?

BARRETT:	The criminal needs two bits of information: 
both the pin number and the card data on the magnetic stripe.  We’re 
able to make sure that with these anti-skimming devices, even if the 
criminal has the pin number the data is not transferred from my card 
through to the device on top of the machine.  

HOWARD:		This should stop skimmers like the one 
Inspector Goodwin showed me from copying card details and other 
supermarkets and banks are fitting them.  But Ross Anderson, Professor 
of Security Engineering at Cambridge University’s computer 
laboratory, says the criminals will always be trying to keep one step 
ahead.

ANDERSON:	I don’t have a huge amount of confidence in it 
because you can get the data not just from the mag strip but also from 
the chip.  There are many ways of doing it and even if you jitter the 
card on the way in, it’s a relatively straight forward signal-processing 
task to undo that jitter.  Now the real problem in Britain is that we don’t 
have a law requiring banks to disclose to their customers when there’s a 
security breach.  In the USA, the law requires the supermarket or ATM 
operator write to everybody who used that ATM; that they should check 
their accounts and if they’ve got a complaint they should send in the 
bill.

HOWARD:		The banks say chips can only be copied in a 
laboratory, not by skimmers.  But however the details are obtained, the 
reality is that many customers only discover the misery of cash machine 
fraud when their accounts have been drained and they must appeal for 
refunds.  So should the banks be writing to potential victims when they 
know one of their machines has been compromised, as they do in the 
US?  Sandra Quinn from Apacs, which represents the banks, says that’s 
not practical and it’s up to customers to be vigilant.

QUINN:		There are no obligations on banks who own 
cash machines to let customers know.  The bank who owns that cash 
machine doesn’t know the customers of that cash machine.  What 
we’ve done is alert customers in general about the security they need to 
look out for at cash machines, coupled with the fact that you must 
check your statements on a regular basis.

HOWARD:		Unfortunately, it looks like this fraud has scope 
to continue.  Whilst cash machines inside premises are much less 
susceptible to tampering of those on the streets and owned by the banks, 
only around one in four have had anti-skimming devices fitted.  This 
week Money Box was told there are no industry wide plans to upgrade 
the rest, so potentially thousands of machines will remain targets for the 
fraudsters.   

LEWIS:		Thanks, Bob.  And you can join the debate on 
cash machines and fraud on our website, bbc.co.uk/moneybox.

Twenty years ago this week, the Stock Exchange in London tore up 100 
years of rules and traditions.  No more would share traders shout out 
prices and make secret signs to each other.  Instead all share deals 
would be done openly on computers.  Here is how Money Box reported 
this momentous change in a special programme in 1986.

ACTUALITY:	 STOCK EXCHANGE BELL

DUGGLEBY:	Well that was the Stock Exchange bell ringing 
in the start of trading at 9 o’clock this Monday morning, October 27th.  
On the face of it things seem much the same as they always have been - 
the sixteen hexagonal pitches where the dealers are buying and selling 
shares are a hive of activity - but there’s a sense of excitement mixed 
with relief that at last the Big Bang has finally happened.

LEWIS:		Vincent Duggleby witnessing the moment when 
the stock market finally emerged from the 19th century in 1986.  Well 
Vincent’s with us now.  Vincent, take us back to that historic day.  How 
big, how important was it?

DUGGLEBY:	Well I was 20 years younger for a start, Paul.  
But, yes, it was a momentous day.  But I have to say that it’s much 
easier to see now what the effect was than we were able to predict at the 
time what was going to happen.  I mean I had quite a lot of difficulty in 
selling the idea to Radio 4 of a one hour outside broadcast from the 
Stock Exchange, the gallery of the Stock Exchange with access to the 
floor, because it was a bit of a difficult thing to do, you know they were 
a bit suspicious of us broadcasters.  But I managed to pass all that and 
then hopefully you know the programme not only got through the 
importance of the event, but hopefully also the small investors learned 
that things were going to change.  And, in particular, I have to say that 
it was on the back, remember, of Nigel Lawson’s Chancellorship when 
he had declared 1986 “the year of popular capitalism”, and I think from 
the small investors’ point of view, what with all the privatisations and 
things, that was what was important.

LEWIS:		Yes, shareholder democracy is the phrase I 
remember from the time.  Now those sixteen dealing points you 
mentioned - they disappeared very quickly, didn’t they, though some 
people thought they never would?

DUGGLEBY:	They did indeed, yes.  I mean I think the city 
was quite surprised at how quickly the idea shifted from trading on the 
floor, which continued for a few weeks and months, to actually going 
back to the offices.  I also think we need to remember that technology 
wasn’t really quite as advanced as some people now think it was.  I 
mean I remember the Money Box office, Paul.  We had a couple of 
typewriters and we had a filing cabinet; we had an old Extel city wire, 
which chattered away in the corner.  And, joy of joy, we actually got 
two Amstrad word processors, which were the height of modernity!  No 
mobile phones, no computers, nothing.

LEWIS:		Indeed.  And the Stock Exchange system had a 
bit of a glitch on the day, but worked very well.
DUGGLEBY:	Indeed, yeah.

LEWIS:		Also with us is Paul Killik who runs 
stockbrokers and financial planners Killik and Co.  Paul, you were also 
there at the time, but even before Big Bang you were already helping 
small investors buy and sell shares.

KILLIK:		Yes, we opened share shops in Debenhams 
department stores.  I was with Coulter Goodison at the time and that 
was quite a landmark occasion for our industry.  Up to that time, private 
client stockbrokers had largely looked after old money; and it was the 
introduction, as Vincent has said, of popular capitalism under the 
Thatcher government - the privatisations of Cable and Wireless and 
then British Telecom. 

LEWIS:		And how did Big Bang help you with that?  Did 
it make it cheaper, quicker, easier to sell and buy shares for individuals 
with modest amounts of money?

KILLIK:		The main component of Big Bang that had an 
effect upon the private investor was the abolition of fixed commissions.  
Prior to Big Bang, the Stock Exchange fixed its commissions, and 
whether you were an institutional investor, the Pru dealing, or a private 
investor dealing, the Stock Exchange laid down the amount of 
commission you had to pay in relation to the size of the transaction that 
you were undertaking.  The introduction of Big Bang, or the event of 
Big Bang, saw the abolition of fixed commissions and that allowed the 
introduction of what we term discount houses and execution only 
broking firms, of which the first two large ones were Sharelink and 
Fidelity.  And they then were in a position to go out and advertise and 
encourage private investors to come into the stock market.

LEWIS:		And of course competition brought down prices 
for those individuals.  But the Big Bang wasn’t just about making 
things easier and cheaper for people buying shares.  It was also about 
the economy.  Here’s another taste of that special programme from 20 
years ago.

DUGGLEBY:	Joining me now from our Westminster studio is 
the Secretary of State for Trade and Industry, Paul Channon.  Mr 
Channon, a lot’s been said about the huge salaries in the city, which 
have accompanied Big Bang.  What’s the country getting out of all this?

CHANNON:	Well I think the country’s going to get a lot.  
After all, there are a million people now employed in the financial 
sector of the economy; foreign earnings have been shooting up; and 
perhaps most important of all, we will be able to raise more money for 
industry in the future at perhaps more competitive prices.  That’s jolly 
good for everybody.

LEWIS:		Twenty years ago.  It sounds like a different era, 
doesn’t it?  Listening to that is Doug McWilliams from the Centre for 
Economics and Business Research.  Doug, have those economic hopes 
of the Big Bang been realised?

McWILILAMS:	I think what’s happened is something 
completely different.  What we’ve moved from is an economy in the 
UK that’s very dependent on industry to an economy that’s very 
dependent on financial services, on the City, and on business services, 
and it’s the big economic growth in the financial service sector that 
really has transformed the UK.

LEWIS:	Yes, there were concerns even then about the 
trade deficit in 1986 – that we were importing more than we were 
exporting.  The City has helped us out of that problem now as it did 
then.

McWILLIAMS:	What happens now is that the City earns about 
20 billion net in exports of financial services – things sold to people … 
mainly companies abroad – but also the City earns about 45 billion net 
in investment income and that’s really what pays for the deficit in 
trading in goods.  It pays for all the consumer goods we bring in from 
China, for example; it pays for the Volkswagen cars and things like that 
we bring in from the continent.  That’s paid for effectively by the 
earnings from the City.

LEWIS:		And has London remained the international 
financial centre in this time zone because of Big Bang?

McWILLIAMS:	London’s actually become the biggest 
international financial centre in the world and you can’t really imagine 
Big Bang not happening.  I think that trying to construct a sort of 
alternative of long liquid lunches and gentlemen  …

LEWIS:		A ‘what if’.

McWILLIAMS:	… is just a bit bizarre.  But if we hadn’t had the 
Big Bang, we certainly wouldn’t have had this growth.

LEWIS:		Doug McWilliams, thanks very much.  Now 
Paul Killik, before Big Bang the Stock Exchange really was working 
like it did in Victorian times.  It brought it into the 20th century in 1986.  
Is it now equipped for the next century?  What’s going to happen next?

KILLIK:		I don’t think it could have happened very much 
sooner than it did happen.  In America, they abolished fixed 
commissions in 1975, so they were 10 or 11 years ahead of us in that 
respect.

LEWIS:		And the future?

KILLIK:		As far as the future is concerned, I think one of 
the most exciting developments that we’re starting to see now is what 
we call direct market access.  People are now being able to log straight 
into the Stock Exchange order book through their own computers at 
home and enter the market.

LEWIS		(over) Cutting everybody, cutting all the 
middlemen out.  And Vincent Duggleby, you’ve been watching 
investments for more than the last 20 years.  Did Big Bang live up to its 
hopes for individual private investors?

DUGGLEBY:	Well I think to a certain extent, yes.  But one 
thing we haven’t mentioned so far is regulation.  I mean I remember the 
absolute shambles of regulation.  I’ve just dotted down a lot of 
acronyms which you’ll remember, Paul: ‘SIB’, ‘ISRO’, ‘IMRO’, 
‘LAUTRO, SFA’, ‘FIMBRA’, ‘PIA’, ‘FSA’.  It just went on and on 
and millions and millions were spent on regulation.  And I still don’t 
think it’s actually really that good and I just don’t understand why we 
can’t get a really thoroughly honest, decent system, which will cause 
small investors to know where they can turn for redress if things go 
wrong.

LEWIS:		Treating customers fairly, as the FSA says.  
Vincent Duggleby, thanks very much.  And thanks to Paul Killik and 
also Doug McWilliams.

Now most adults don’t have a will, which, if you don’t mind me saying 
so, is a bit silly because if you die your property may not go to the 
people you want it to.  Without a will, your estate is divided up 
according to complex legal rules that could result in your money going 
to your mother’s brother’s wife’s daughter … or even the government.  
The cost of making a will puts some people off, so in November 
lawyers throughout the UK are offering to draw up a basic will free.  In 
exchange you give a modest amount to charity.  Well live now to 
Taunton to talk to Peter Cooke of solicitors Stones.  Peter, why is it so 
important to make a will?  I mean I drew the sort of extreme case there, 
but normally your husband, your wife, your kids get the money 
anyway, don’t they?

COOKE:		No, not always.  I mean it’s always thought that 
what will happen if you pass away is it’ll pass to your spouse or to your 
partner, and in fact the reality is that the law sets out some very 
complicated rules and can surprise a lot of people.  You’ll find that a 
number of people will actually think it’ll pass across to my wife or my 
common-law partner who I’ve been with for many years and in fact 
that’s not the case.

LEWIS:		And if you want to make a will - as I said, 
people get put off by the cost - in November lawyers are doing it free or 
some are.  What do people have to pay to charity to get that free will?

COOKE:		Well for a straightforward will – and it’s part of 
the scheme called Will Aid – then there’s a fixed fee of £110 donation 
for a couple and £75 for a single, but of course people can offer more to 
donate to charity if they wish to, but that is the suggested donation.

LEWIS:		Yes and that’s for a fairly simple will, I 
presume.  If you’ve got a really complicated set of financial affairs and 
you need complicated provisions, lawyers are still going to charge you 
a bit on top of that.

COOKE:		Well certainly and that’ll be explained at the 
time.  I mean if someone’s circumstances require some inheritance tax 
planning or trusts involving more complicated matters, that’ll actually 
be explained and taken through.

LEWIS:		And why do you lawyers do it because you’re 
not renowned for giving stuff away, are you?

COOKE:		Certainly there’s a feeling that lawyers are 
always after the money side of things, but in fact lawyers are human too 
and they actually would like to do something positive to bring back; 
and the charities from British Red Cross, Christian Aid, NSPCC – some 
excellent charities involved.  And of course if you can make a bit of a 
difference as well and to meet new clients, it’s well worthwhile.

LEWIS:		Yes you meet new clients and I suppose you do 
get some new customers in a long-term relationship out of this, so you 
get something back for it?

COOKE:		Absolutely and you can develop a relationship 
with clients and that hopefully will grow over the years.

LEWIS:		And how much have you raised over the years 
from Will Aid?

COOKE:		Well certainly since 1988 when the scheme 
started over £6 million has actually been donated by the general public.  
And actually last year it was £675,000, so it’s certainly sort of building 
up over the years but we hope this year’s going to be even more 
successful.

LEWIS:		And what if people want to go to a lawyer and 
make the appointment, what should they bring with them because they 
can speed things up, can’t they, if they get it right?

COOKE:		Absolutely.  I mean if you go onto the Will Aid 
website, which is willaid.org.uk, then there’s actually a planner on there 
that you can set out your wishes, your thoughts, and certainly make the 
whole operation a good deal easier and more straightforward for you.

LEWIS:		Okay, Peter Cooke of Stones, thanks very much.  
And if you have more questions about making a will, that’s the topic for 
your questions on Money Box Live, Monday afternoon at 3pm.  And 
finally, Bob, thousands of people may have been mis-sold insurance 
policies they didn’t need or couldn’t claim on by the loans firm 
advertised by cricketer Phil Tufnell.

HOWARD:		That’s right, Paul.  This week loans.co.uk was 
fined £455,000 by the Financial Regulator for failing to treat its 
customers fairly when selling payment protection insurance on their 
loans over most of last year.  More than 14,000 people may have been 
mis-sold because the firm’s staff didn’t give customers enough 
information about the insurance they were being sold over the phone.  
Loans.co.uk has now agreed to contact customers who were put at risk 
and refund them if appropriate.  The firm says it put new selling 
practices in place six months ago.  

LEWIS:		I’m tempted to say ‘owzat’.  And if you have 
had a loans.co.uk loan, you can always contact the company yourself to 
make sure that you haven’t been mis-sold insurance. 

That is it for today.  You can find out more from the BBC Action Line 
– 0800 044 044 – and of course our website, bbc.co.uk/moneybox, 
where you can contact us, listen to the items on the programme again 
and read about two awards we won this week and of course have your 
say on cash machine fraud.  Don’t forget that phone-in on wills at 3 
o’clock Monday afternoon.  I’m back next weekend with Money Box.  
Today the reporter was Bob Howard, the producer Chris A’Court and 
I’m Paul Lewis.