What’s even more surprising is that the images of Sir Fred’s home are still available on Street View, unlike many images which have been removed at the request of homeowners or passers-by. (It was easy to find thanks to some newspapers which gave the name of his street, unlike the BBC and the police, which even gave the wrong area of Edinburgh for the address.)

Compare with photos in the media.

As much as I’m unhappy with the size of the pension Sir Fred is to receive, I can’t agree with this sort of criminal activity at all. I doubt the people who attacked his home are interested in economics. They are unlikely to be RBS shareholders or even disgruntled employees of the bank. Most likely, they are just thugs, using the news story as an excuse to commit vandalism. They might think they are outraged by top bankers’ remuneration, but as is so often the case with people who take “direct action”, they are actually far more of a problem for society than the people or organisations they attack. For a start, thanks to the vandals, even more taxpayers’ money will now be wasted providing police protection for Sir Fred and his homes. Even given Sir Fred’s much publicised income, I think the perpetrators should be made to pay for every penny of the damage, as is the only fit punishment for vandals. The sooner they are caught the better, otherwise how soon until they attack the wrong house – Google Street View to help them or not?

I would have thought Lloyds BOS is a sensible name. It’s been a long time since TSB merged with Lloyds, and the bank is usually referred to as simply Lloyds. As for HBOS, Halifax officially became a division of Bank of Scotland plc in their reorganisation last year. There are also the Scottish fears about losing one of their two national banks, so it seems likely that they will want to retain Bank of Scotland as part of the new name.

Of course, company names aren’t always sensible. When Price Waterhouse merged with Coopers & Lybrand, they named the company PricewaterhouseCoopers (with the case as indicated). So could it be LloydstsbHbos, or even LloydsTSBHalifaxBankofscotland?

On the other hand, they could thwart the cybersquatters by choosing an entirely different name. The merged Norwich Union and Commercial & General changed their name to Aviva, although it later emerged that this was already the name of a ladies’ clothes shop in Norwich, a short walk from the firm’s head office. I hope the Lloyds and Bank of Scotland executives have a walk around to note the names of local shops before making a decision.

One possible advantage of the merger for Halifax customers could be that Lloyds seem to have a better taste in music. When kept on hold by Halifax, callers used to be subjected to a rather annoying instrumental version of the Tom Jones song that’s used in the bank’s adverts. If this were replaced by the music from Elena Kats-Chenin’s Wild Swans, as used in Lloyds’ adverts, that would be welcome.

I’ve deliberately stuck to writing a light-hearted post about names, rather than join in the doom and gloom about how not subjecting the merger to the usual competition controls will be bad for consumers. However, I must say that the merger, creating Britain’s biggest bank, really has given Lloyds a licence to print money.

It’s difficult to see how the government could have thought it a good idea to change taxes so that everyone gains except those who earn £15,000 or less a year, who will lose out by anything up to £150. This is obviously very unfair, and hits those people for whom £100–150 is a lot of money.

The desire to simplify the taxation system is a worthy one. However, removing one band of income tax wasn’t really the best place to start. What makes the tax system too complex is the system of tax credits, which is supposed to compensate people who have been failed by the system in the first place. Surely it would be far better to have a fairer base system of taxation, rather than having tax credits as corrections – which are so difficult to understand that millions of pounds go unclaimed each year. Unfortunately, the “compensation” which the government has promised people who have lost out following the abolition of the 10p rate will undoubtedly be yet another type of tax credit (if it materialises at all).

Perhaps a better solution would be to raise everyone’s tax-free personal allowance by £750. That would mean everyone would gain £150 that would otherwise have been paid in tax at the 20p rate. To recoup the loss in revenue, the government could lower the threshold at which the higher rate of tax is paid – the actuaries will have to figure out that one, as it requires knowledge of the distribution of salaries across the whole population. This solution would result in an equally simple system of tax thresholds (0, 20p, 40p) but be fairer in that those on the lowest incomes would pay a little less, and high-earners a little more.

Monthly bank charges would hit low earners

Also in the news this week was that UK banks have lost the first stage of the case against account penalty charges. The judge has ruled that the Office of Fair Trading can decide on the fairness of charges. As I have said before, if penalty charges are outlawed completely, the banks might respond by introducing monthly account charges, which would be bad for all customers.

As has been reported in the last week, people on low incomes would be hit hard by the abolition of the 10p starting rate of income tax. For those people, the loss of £100 or so per year is highly significant. Therefore, if they suddenly had to pay £10 per month simply for having a bank account, that would hit them just as hard. Yet that could be the result of the “crusade” against penalty charges. The result could be that people will be forced to close their bank accounts, dividing the population into two classes: those who can afford bank accounts, and those who can not. That seems far from fair.

It simply isn’t the case that people on low incomes currently pay penalty charges and those on higher incomes don’t. Many people on low incomes manage their money extremely carefully and avoid going overdrawn, just as their grandparents did before living off credit seemed the norm. It isn’t fair to penalise people just because others have been careless enough to incur account fees.

I still hope that a ruling against penalty charges by the Office of Fair Trading will not result in monthly account charges for everyone. However, if it does, we could see people on low incomes being hit just has hard as they have been by the abolition of the 10p income tax rate.

Nationwide have apologised for the error, and have, quite rightly, said that if anyone goes overdrawn as a result, they will not be charged. Yet some people still aren’t happy, and have complained that it’s too much money to take from their accounts at once. Yet if they don’t have the money still in their accounts, it’s money they’ve spent twice over, which rightly belongs to the bank.

Why didn’t people notice that the money hadn’t been taken from their accounts? If people are in real hardship because Nationwide are claiming their money, the amount in question must be a significant sum to them. So why weren’t they suspicious when they suddenly had that extra money to spend? If on the other hand, the cash withdrawn is only a small amount to a particular customer so that they didn’t notice, it’s also too small an amount to make a fuss over when it has to be repaid.

This had been going on for more than three months, yet it seems none of the customers affected reported it to Nationwide for a long time. Surely they will all have received at least two monthly statements during that time, so should have noticed the discrepancy? Some of them must have been hoping the bank wouldn’t find out, and they’d get to keep the extra money. As for the rest, they probably don’t even look at their statements. People should really get into the habit of checking their bank statements – after all, next time around, it could be that the bank has debited the withdrawals twice. It’s in the customer’s interest to check that all the transactions are correct.

Under the current system, people who go overdrawn – borrowing their bank’s money without permission – are charged fees. Some commentators have suggested that if these fees are found illegal by the courts, banks will have to find other ways to maintain their excessive profits, possibly by charging fees that all customers will have to pay, including those who manage their finances carefully and keep their accounts in credit.

My article in favour of the current system of charges drew criticisms from some readers. However, I have always had a sneaking suspicion that there is a silent majority in the UK who wouldn’t dream of going overdrawn, and who never have to pay penalty charges to their banks; and that these people naturally would not want a system of universal account service charges.

Today, the BBC reported the results of a YouGov poll where people were asked whether they would prefer the current system of penalties; a monthly account fee for everyone; or a fee per transaction. The vast majority of people said they would like to keep the current system. Only 9% said they would prefer fees that everyone had to pay.

In addition, the BBC ran its own poll alongside the article. At the time of writing, 60% of respondents have said they would prefer the current system of penalties to remain. Only 11% wanted a monthly fee, and 9% would prefer a charge per transaction. The remaining 20% wanted “alternative charges”, but with no indication of what those might be.

While the exact percentages above could be disputed, it is clear that the majority of people approve of the current penalty charges, and do not want bank fees that everyone has to pay. Given this fact, I think it’s time that supposed consumer champions such as MoneySavingExpert.com, Moneysupermarket.com, and indeed the BBC, jumped off the anti-penalty charges bandwagon, and realised that most consumers will not benefit from the changes their campaigns could very well bring about.

(Here is an article in The Times that agrees with me on charges, and gives an good analogy with borrowing money from a friend.)

In some countries, going overdrawn is actually illegal. After all, it is only just short of stealing someone else’s money. Yet UK consumers seem to think it is their right to overdraw their accounts without even arranging an overdraft first, and not be charged for it.

It’s clear that the banks are using the charges to make profit, and if the law currently says that penalty charges are only allowed to cover administrative costs, then I suppose the current charging regime is illegal. But I don’t think it should be. In the recent case, the bank had argued that it was actually charging fees for a service, rather than as a penalty. Hopefully, one way or anther, banks will be able to continue making similar charges.

Why am I so keen for banks to be allowed to charge their customers penalty fees? Well, it may come as a surprise to any readers from abroad, but in the UK, almost everyone still enjoys free banking. We don’t have to pay to keep a bank account, and can enjoy a cash card, debit card, cheque book, direct debits, internet banking, etc. without having to pay a monthly fee. Banks make up for this by charging higher penalties for people who go overdrawn. Now, let’s face it, the banks are never going to accept reduced profits, so if they are not permitted to continue charging these penalties, they are going to find other ways to take money from their customers. The net amount consumers pay is going to remain the same, it’s just how the payments are distributed between a bank’s customers that will change. The bottom line is, without penalty charges, banks may well introduce monthly fees for their accounts. There is already an increasing trend for “premium” bank accounts that incur a monthly fee, and one bank has announced a monthly fee for accounts with low balances.

Outlawing bank charges will not be better for the consumer at all. All it will mean is that everyone is paying charges, instead of just those people who are not very good at managing their money. There’s no excuse for regularly going overdrawn. The last thing this country needs – increasingly a country where people are piling up debt and haven’t a clue how to budget or look after their pennies – is a change to the banking system that makes life easier for the financially reckless.

One final note is that, while people may be pleased that they are receiving refunds for unauthorised overdraft charges, it actually only represents a small part of the extra profit the bank is making from them. The interest rate on an unauthorised overdraft is typically around twice that for an authorised one. Hopefully, if penalty charges are ruled illegal in a higher court, the banks will respond by tweaking their interest rates. That might enable those who prefer to save and not spend to retain the free banking they deserve.

A brief background to chip and pin: originally, all credit and debit cards carried information on a magnetic strip, and to make a payment, the cardholder had to sign the till receipt, which the cashier was then meant to check against the signature on the back of the card. Chip and pin is supposed to increase security two fold: information is stored in a microchip on the front of the card, which is harder to duplicate; and the cardholder must enter his or her four-digit personal identification number (PIN) to authorise the transaction, instead of signing.

When the system was introduced, I realised that the new system was only as secure as the PIN. If someone discovers the PIN, for example by watching the cardholder at the supermarket checkout, they can then use the card if they manage to steal it, and don’t even need to be good at forging signatures.

This latest fraud seemingly involves keypads in the petrol stations that have been tampered with so that they record the details of the magnetic strip – a form of fraud that has been around for a long time. The difference is that now the fraudsters are also able to record the PIN as it is entered. The information from the magnetic strip is used to make a clone card, which is then used to withdraw money from cash machines. Apparently, cash machines still read the strip instead of the chip as they haven’t been upgraded yet – presumably to reduce the banks’ costs. As the PIN used at the cash machine is the same as the one used for chip and pin, there is no barrier to withdrawing cash up to the cardholder’s limit.

Hopefully, the cash machines will eventually be replaced. But by then, maybe the criminals will have figured out how to read and reproduce the microchips. In the meantime, all the hapless cardholder can do is to be sure to shield the keypad when entering the PIN, and to check account balances and statements regularly. Alternatively, we could all go back to cash.