Friday, 26 July 2013


Attention class – today’s topic is payday loans. We all acknowledge something must be done, but what?

Problem with payday loans is they are very expensive. Solution?

“Ah, ummm, could it too simple. Er, no, you've got me there.” *class shrugs*

Oh come on class it's not that difficult! Welby, what do you think?

“Er, might competition work if we sort of bolstered it? Just a thought.”

Anyone else? Wheatley?

“I've powers to limit the cost but I'm not at all sure using them to, er, limit the cost would, er, limit the cost?”

You at the back, Gibbons, thoughts?

“Please sir, could we cap the interest rate, making the cost lower and driving usurers out of business?”

Class rolls on the floor with laughter.

“Cap interest rates! Gibbons u fule, that would and end the problem! Then where would we all be??”

Dry, thorough, balanced, and inconclusive - 2010 OFT paper on evidence for and against credit cap worth reading

Thursday, 18 July 2013


Nearly five million customers of LloydsTSB and C&G will be moved to a new bank this summer when the bank splits into Lloyds and TSB. The change has been forced on Lloyds by the European Commission as the price for approving £17 billion of state aid in March 2009 after Lloyds bought the loss making HBOS.

A total of 631 branches are to be hived off into a separate company. The branches come complete with 4.6 million customers, eight million accounts and 7500 staff. A sale of all the branches to Cooperative Bank for £750 million was planned but fell through in April 2013. The branches are all to be rebranded TSB and will now be floated on the stock market as a separate company called TSB Bank plc. The rebranding will happen from September 2013 and the sale is expected to start in the middle of 2014.

You can check if your branch is going to TSB here and check which local branches will remain as Lloyds or become TSB here

The bank has written to all its customers – those who will move to TSB and those who won’t – explaining the changes and what they mean. But there remains some confusion. Hence this blog.

My branch is changing to TSB
Your account will shortly become a TSB account on exactly the same terms and conditions. Your sort code, account number and Internet login details will remain the same. Payments into or out of the account will not be disrupted and you will not have to inform anyone of the change.

However, you will be getting a new debit card and if you have a Lloyds credit card that will be replaced too. The new cards will have entirely new 16 digit numbers and expiry dates. The first four digits indicate the new bank TSB. The cards will not be branded TSB until after the brand is formally launched in September 2013. The newly branded cards will be rolled out as they expire or are replaced.

Some people have reported problems using these cards. That should not happen but a new bank identity can sometimes cause confusion especially abroad until systems have all been updated. Lloyds says it is working with Visa to resolve this problem. Take a second card with you at all times (a good general tip anyway).

If you have booked a holiday or a ticket with the old card you may be asked for it to validate the purchase when you collect the tickets or go to a hotel. Banks generally advise destroying old cards for security reasons. But you could keep the old card and take it with you as well even if it no longer works – about four weeks after the new one was issued. Make sure you have photo ID with you. If you are expecting to collect tickets from a machine allow more time to find a human and try to explain.

Loans and mortgages associated with the account will move too and become TSB branded. Again, the Terms and Conditions should not change. A couple who had separate LloydsTSB accounts could find one is with a branch that moves to TSB and the other may be with a branch that does not. A joint loan or account or mortgage would go with the branch where it was opened jointly.

My local branch isn't my home branch
Your LloydsTSB branch will normally be the one where you first opened your account. Since then you may have changed address – people move house far more often than they change banks. At the moment you can use any local LloydsTSB or Bank of Scotland branch to do your banking including paying in cheques, arranging finance, or making enquiries. In future that may not be possible.

1.       If your original branch becomes a TSB and you continue as a TSB customer then you will not be able to use Lloyds or Bank of Scotland branches once TSB has fully separated and been sold. Some people will find that there is not a TSB local to them and may have to travel a lot further to do face-to-face banking. But all C&G branches will become TSB and are now available to TSB customers.
2.       If your original branch is staying as a Lloyds you may find the local Lloyds you have been using will become a TSB. You will not be able to use that branch to do Lloyds banking once TSB has been sold.

In both cases Lloyds says you will be able to use the same branches as you do now for a while – even after TSB branches are separately branded later in 2013. But once TSB is sold the inter-operability of Lloyds or Bank of Scotland with TSB will end. That is expected to happen after the middle of 2014. It is still possible that Lloyds and the new owners of TSB will agree that customers can do some things at each other’s branches. Lloyds customers may be able to use C&G branches until the final transfer to TSB occurs in 2014.

I want to stay with Lloyds
Some people are not happy about the forced move and want to stay with Lloyds. They can do so but not easily. If your branch is transferring to TSB you can fill in a form to let Lloyds know you want to stay as a Lloyds customer. You will have to apply to Lloyds almost as if you were a new customer. Lloyds will take account of your previous history with the bank but in theory it could reject you if your credit rating has changed for the worse. Lloyds says that is very unlikely.

You will have to choose a current account from the present range. That could mean paying for an account which at the moment you get free. Of course, Lloyds does have fee-free accounts. But if you get insurance or overdraft deals on your present Lloyds account you may find that you have to pay for a current account to get similar deals once you become a new Lloyds customer.

If you do become a Lloyds customer again, you will have a new sort code and account number and will have to register afresh for online banking. Lloyds will transfer direct debits and standing orders. But you will have to give the new account details to an employer, pension provider or anyone else who pays into your account. Any ‘credit footprints’ due to the change will be removed from your credit history.

I am with C&G
As a C&G customer you will already find your branch is offering more services such as current accounts. As C&G is changed to TSB it will become part of a fully independent bank offering loans and credit cards as well. You are in a different position from a Lloyds customer and can only move to Lloyds by becoming a completely new customer.

I live in Scotland
All Lloyds branches in Scotland are becoming TSB. That will leave some people hundreds of miles from their nearest Lloyds. If you are remaining a Lloyds customer – because your original branch is in England – then you can use Bank of Scotland as your local branch and will be able to do so in future. If your original branch is becoming TSB then you can use the TSBs in Scotland. But after TSB is sold you will not be able to use Bank of Scotland branches.

I want to leave Lloyds
If your own branch is not moving to TSB but you live near a Lloyds branch that is changing to TSB you may find it easier to move your Lloyds account to TSB. Again, you will be treated pretty much like a new customer but the bank will take account of your history with Lloyds. You will have to choose from the range of accounts TSB then offers. Your sort code and account number will change. Any ‘credit footprint’ due to the change will be removed from your credit history.

Others may choose to move their account to another bank altogether. Now may be the moment to forget loyalty and choose your bank from scratch – because of what it offers, its customer service record, its charges, or its business principles. You would be able to make the move and keep your Lloyds credit card.

When to move
If you do decide to move your current account it may be worth waiting a little while. In September it will become a lot easier to move your current account from one bank to another. The new Current Account Switch Service will guarantee that the move will happen within seven days and payments into your account will be moved as well as those out of it. There will also be a free redirection service which will capture any payments into the old account and divert them into the new one for 13 months. The Switch Service is expected to start mid-September. More here

I live abroad
If you live outside the UK you may still have a bank account in a UK branch of Lloyds. If it is converting to TSB your account will be moved to the new bank and everything will remain the same. People who live abroad with no UK address cannot open a UK bank account so you will not have the option of remaining with Lloyds or moving your account to another UK bank.

Who chose?
Lloyds Banking Group did not want to give up more than 600 branches and nearly five million customers. No bank would. So the European Commission laid down strict rules about which branches it chose and how it dealt with the customers in them. The branches chosen could be no worse than the ones left behind. Their location was spread out geographically. Their position in the town or village and their size had to be no worse than those Lloyds kept. Their customers also had to be at least as good quality as a typical sample of LloydsTSB customers. Many permutations were tried until this list – once called Project Verde – was agreed.

All the 185 LloydsTSB branches in Scotland will move to TSB, all the 164 C&G branches (which Lloyds bought in 1997) will change to TSB. And 282 of the remaining LloydsTSB branches in England and Wales will become TSB.

A branch includes all its customers and their accounts. Lloyds is very constrained by European rules about what it can do with customers who want to remain with the bank. The arrangements described above have been agreed with the European Commission and Lloyds cannot deviate from them in any significant way.