BBC Radio 4 explores ways to fix Britain’s broken banking system

On Saturday afternoon BBC’s Radio 4 reached the halfway point in a new series looking at what is wrong with British banking and how it might be repaired.

‘Fixing Broken Banking,’ presented by Michael Robinson, is an often wistful look at British banking’s past, present and future.

While the series’ first episode explored the emergence of contemporary British banking stained by scandals and a mechanical drive for efficiency and profit, the second episode, aired on Saturday, showed the personal touch still can thrive and prosper.

‘Fixing Broken Britain’s first episode explored the recent scandal of Payment Protection Insurance (PPI).

Theoretically existing to protect borrowers who find themselves unable to make loan repayments because of unexpected events, PPI was quickly transformed  from a form of protection into a hugely profitable form of attack – on the public.

Banks targeted the sick and the self-employed who were never eligible for payout  in the first place. Deliberately complicated fine print hid badly structured policies that many were unaware they actually bought. Bank customers handed over up to £5.5 bn per year for the High Street banks at its peak in the mid-2000s.

‘A fire hose of money coming in then going straight out,’ is how one PPI insider describes the practice.

‘I always thought the point of insurance was to protect people,’ says one interviewee. ‘Instead, it became a kind of insurance racket.’

Related article: Streets paved with gold: the Council that works for banks

Radio 4’s ‘Fixing Broken Banking’ places the responsibility for the scandal at the feet of a rotten banking management culture and automation.

A former consultant with McKinsey described how the drive for efficiency saw computers outflank decision-making by local bank employees with a knowledge of their customers.

While the financial regulators finally intervened in the PPI market in 2007 after finding evidence of harm done to consumers, the reputational damage to British banks was already done, Robinson argues.

In the second episode, aired on Saturday, Robinson travels to North England and Germany to find possible remedies for the reputational damage. There he finds banks successfully toiling under the ‘local banking for local people’ banner.

From Cumberland Building Society in Cockermouth to Handelsbanken, a successful new arrival from Sweden which now has 132 British branches; Robinson discovers that small and local can often thrive.

The success of Cumberland Building Society, which reportedly sailed largely unscathed through the financial crisis, is due to it following ‘one of the old rules of banking,’ Robinson says: ‘ Really knowing who you lend to.’

Eschewing the automated lending assessments of High Street banks, banks such as Cumberland and Handelsbanken use trained individuals to decide loan applications.

Travelling to a town in southern Germany, near Stuttgart, Robinson praises another El Dorado of ethical financial services where ‘nearly everybody banks locally.’

‘I’m not allowed to go outside my area to solicit customers,’ says the German local bank manager before adding, ‘I compare it to going to your doctor. You have to take down your pants. It’s the same going to your bank.’

The rationale is simple. While Plato may have written ‘Know Thyself,’ the aphorism to successful modern banking appears to be ‘Know Thy Customer.’

Fixing Broken Banking continues on Saturday 18 August at 12:00.

Written by  of  The Bureau of Investigative Journalism.

Online dating scams cheat Brits out of £37bn

Love-sick Brits hunting for romance online are being cheated out of around £37 billion through sating sites, research has revealed.

Fraudsters are targeting emotionally vulnerable Britons looking for love, by grooming them in a similar way to methods used by paedophiles grooming children.

The increase in the number of online dating sites is likely to result the number being scammed increasing, researchers predict.

Fraudsters lead those looking for love to believe that they are beginning a romantic relationship and then swindle them out of large sums of money over periods of a few months.

Professor Monica Whitty of Leicester University said: ‘Scammers create a fake profile on dating sites and build up an intense relationship with their victim, grooming them before testing the waters to see of they can make some money out of the “relationship”.

‘It’s almost paedophilic. They get into a close relationship, getting emotionally close to them and, like paedophiles do when grooming their victims, gain their trust before pouncing. The victims become reliant on this closeness and are often infatuated by scammers who create attractive profiles.

‘The criminals tell them they love them and victims often haven’t had that experience before so they rely on them for happiness entirely.

Professor Whitty said they test to see if the besotted victim will hand over money by suggesting they would like a small gift.

‘This small gesture grows, with some asking for more expensive gifts like airplane tickets, with victims agreeing because online relationships are more intense and online daters often more strategic in what they say.

‘We’ve heard a lot from people at airports saying they see these victims waiting for their lover to turn up, only to realise they are not coming.

‘They will then make up an excuse for why they didn’t show up – car trouble getting to the airport for example – then still continue asking for money so they can try and visit again.’

This fraudulent activity does not just relate to money, some victims are sexually abused or convinced to strip on webcams in order to keep the relationship going.

The figures were gained from a YouGov survey of 2,028 Brits who were questioned about their experiences with online dating fraud.

Benefits fraudster had £90,000 in the bank

A FRAUDSTER claimed over £30,000 in benefits – despite having a nest egg of more than £90,000 in 26 separate bank accounts, a court was told.


Inam Ul-Haq, of Walsall, West Midlands, falsely claimed income support over a period of five years.


Nayan Patel, prosecuting, said the 46-year-old had made a legitimate claim for income support in May 1996 on the basis that he was unable to work due to ill health.


Walsall Magistrates Court heard on Monday that he was only entitled to claim the benefit if he did not have capital exceeding GBP16,000.


The claim became fraudulent in August 2003, and he was still falsely claiming benefits until August 2008.


It came to light that he had access to 26 different bank accounts which had contained cash totalling around GBP91,000.


During an investigation led by the Department for Work and Pensions, Ul-Haq was quizzed about the cash in the bank accounts.


Mr Patel, prosecuting on behalf of the Department for Work and Pensions, said he was overpaid GBP31,116.06.


He added: “There was a condition to notify the Department for Work and Pensions if there was any change in circumstances.


“He claimed the money belonged to his father-in-law and he was holding onto it.”


During his appearance at court on Monday, Ul-Haq, represented by Julian Derry, admitted one charge of failing to notify the Department for Work and Pensions of a change in circumstances.


Mr Patel said the case was deemed too serious for magistrates and it was committed to Wolverhampton Crown Court, where Ul-Haq is due to be sentenced on January 17.


He said Ul-Haq would also be taken to a proceeds of crime hearing in a bid to recover the money he had falsely received. He was given unconditional bail.

Fraudster mum of nine claimed £63,000

A GYPSY mother-of-nine has admitted claiming over £63,000 worth of fraudulent benefits as a single mum – while living with her partner in their caravan.


Chavelle Price, 33, claimed she was a single mum when she was actually living with her husband Patrick on a travellers site which featured on Channel 4’s ‘My Big Fat Gypsy Wedding’ last year.


Department for Works and Pensions investigators revealed Price had claimed income support saying she was unable to work due to a shoulder injury and also stating that she was single.


But she was caught out when planning applications made to South Staffordshire Council to build private gypsy caravan sites for Patrick’s family at a site in Wolverhampton were made in both her and her husband’s name.


Price also claimed that she was living in her parent’s caravan and had split up with her husband in 1997. However all of her nine children had Patrick listed as the father on their birth certificates between 1997-2008.


Appearing at Wolverhampton Crown Court yesterday Price pleaded guilty to fraudulently claiming benefits between June 3 1999 and December 10 2010.


In a three minute hearing Price, wearing a blue long-sleeved T-shirt, blue jeans and black shoes, with her brown hair tied up in a clip, spoke only to confirm her name and plead guilty.


Malcolm Fowler, defending, requested the case be adjourned for a pre sentence report to be produced.


Price, who has previous convictions for fraudulently obtaining goods in 2003 and 2001, will be sentenced on October 12.


Harbinder Lally QC, prosecuting, indicated the prosecution will be looking for compensation under the proceeds of crime act.


Judge John Warner. said: “I understand the amount is over £63,000.


“I am adjourning your case until 12th October so that a pre sentence report can be produced.


“If you do not appear back here then you may be liable to be prosecuted again.


“You are free to go on unconditional bail after you have seen the probation officer.”


The investigation came to light after the DWP received an anonymous tip-off from a member of the public claiming she was married.


Price married Patrick Dunne in October 1995 but she claimed they wed in February 1997 – also claiming their marriage only lasted two weeks.


And when confronted by investigators as to why Dunne was listed as the dad of all nine children, she replied that she had permission from Patrick to put his name down as the father – due to their strict Catholic faith.


Welfare Reform Minister Lord Freud said after the case:”Benefit thieves are costing the taxpayer almost GBP1billion per year.


“This money is intended to help those most in need not line the pockets of criminals.


“We will continue to tackle this problem at the front line but also at the root by reforming the benefits system to make it less open to abuse.”


A report in a local newspaper also reported how an application for the gypsy site in the Coven Heath site was granted on appeal to “Patrick and Chavelle Dunne for green belt land.” following a six-year battle with the council.


The family also won a fight to keep a permanent kitchen, bathroom and dayroom built on the site, local media reported.


After the Coven Heath site was featured on the Channel 4 show My Big Fat Gypsy Wedding, the site was by terrorised by attackers who drove two stolen lorries through their site smashing up mobile homes.


Mr Dunne, who was quoted at the time as having nine children, said: “This is attempted murder. We are fortunate to get away with our lives but I fear it was just a warning.”

Bogus financial adviser jailed for tax fraud

A bogus financial adviser who fraudulently manipulated his “clients’” pension funds to avoid paying tax of over ?1.9 million has been jailed at Hull Crown Court for three years.

Colin Pearson (47) used the proceeds of the fraud to maintain a lavish lifestyle, driving expensive cars and owning luxury homes both in the UK and Cyprus including a villa on an exclusive golf resort.

Bob Gaiger. from HM Revenue & Customs, said:

“Whilst Pearson was living a life most people could only dream of, he left the individuals he conned out of pocket and without the pension funds they expected.

“HMRC will not tolerate this type of blatant fraud and will investigate and prosecute those found to be involved in stealing from the public purse. If you have any information about tax fraud please contact our 24 hour hotline on 0800 50 5000”.

Colin Pearson, who previously worked for the Food Standards Agency and held a McDonalds franchise, claimed to be a financial adviser and persuaded his “clients” to release over ?3.4 million from their pension funds. Pearson completed UK pension transfer forms on behalf of his clients to falsely claim that the funds were going abroad to avoid paying tax due on the pension withdrawals.

He provided fake documentation to register two overseas pension schemes. He then submitted the fake documents using false names, addresses, references and signatures to ensure the pension funds were released without suspicion or delay, to bank accounts that he controlled. On occasions he even made telephone calls to the UK pension companies posing as the policy holder; during one telephone call he attempted to disguise his voice with a Cypriot accent to give the impression that he was calling from overseas.

To add further legitimacy to the scam, he used articles from the internet to create a PowerPoint presentation to explain and sell the scheme to unsuspecting UK clients. He then took a cut of the funds before passing the balance onto the pensioners. In total Pearson persuaded over thirty UK pension holders to make unauthorised transfers of £3.4 million to avoid paying tax of £1.9m

On sentencing Pearson, His Honour Judge Richardson QC, said:

“You are branded a criminal, your life is utterly destroyed, and you are totally dishonest in your deceitful actions.”

He went on to say that the investigating officers did a thorough job which made the case easier to understand.

HM Revenue & Customs investigators arrested Colin Pearson in September 2009, he pleaded guilty to cheating the public purse at an earlier court hearing.

Property developer jailed for £25m VAT fraud

A Middlesex man who evaded £25m in tax by submitting false VAT repayment claims for 15 different companies has been jailed for eight and a half years after an investigation by HM Revenue & Customs (HMRC).

Charles Victor Scarrott (61) who was the sole director of 15 property development companies, pleaded guilty to 15 counts of cheating the revenue at Kingston Crown Court and was sentenced to eight and a half years on each of the counts to run concurrently.

The investigation uncovered evidence that between 2003 and 2008, Scarrott submitted 178 fraudulent repayment claims totalling more than £25m. He provided false purchase invoices, bank statements and other business records to support the claims and used the proceeds of his crime to purchase luxury items which included:

  • £1m penthouse in Teddington, Middlesex
  • £500,000 holiday home in Dorset
  • Flats for his two children
  • £36,000 attending sporting events
  • £42,000 on private school fees
  • £40,000 on dental work
  • Over £80,000 on holidays
  • Maserati luxury car

When passing sentence, His Honour Judge Hopmeir said: “You played with high stakes, you have now lost and must pay the price. Those that cheat the Revenue cause direct and indirect damage to the community. Those that pay their taxes are effectively victims of those like you that cheat the system. As a result of careful and conscientious work by customs officers, your fraud has been detected.”

John Cooper, Assistant Director of Criminal Investigation for HMRC said:

“Scarrott stole from the pockets of innocent people and deprived the nation of vital funds needed for public services whilst funding his own extravagant lifestyle by claiming fraudulent VAT refunds. The sentence Scarrott received yesterday will act as a deterrent to anyone considering carrying out this type of crime. HMRC investigators will look to recover the profits made from these illegal activities.”

Confiscation of assets is being sought.

£2 million VAT fraud brothers jailed

Two brothers, who stole more than £1.6m through tax fraud and by stealing from their employees to finance their luxury lifestyles, have been jailed at Croydon Crown Court today for six years, following a complex investigation by HM Revenue & Customs (HMRC).

Haris and Adam Mukhtar, from Ilford, made £1.3m worth of fake VAT claims for various bogus companies, from chauffeuring to importing rice. Haris Mukhtar also told 200 of his own staff that £330,000 cash taken from their debit and credit cards was for national insurance and tax payments; Haris, described in court by the judge as “thoroughly dishonest” and “totally bent”, pocketed some of the cash for himself. HMRC specialist investigators prevented a further £320,000 being paid in other fraudulent VAT claims.

Haris and Adam bought themselves Lamborghinis and a hand-built Mercedes McLaren with their ill-gotten cash. The brothers, who shared a home, filled it with high-spec televisions, buying one for every room in the house.

John Pointing, Assistant Director of Criminal Investigation for HMRC, said:

“Criminals such as this are menaces who steal from honest taxpayers. HMRC is cracking down on fraud and the Government has made a further £900 million available to us for tackling evasion, avoidance and attacks by criminal gangs.”

Confiscation proceedings against both brothers are ongoing.

Insurers blacklist drivers based on postcode


Premiums are soaring as honest motorists foot the bill for the ‘fraud epidemic’ sweeping the country, which has lead to insurers secretly to blacklist certain postcodes.

Many car owners have seen a rise of up to forty per cent in insurance premiums over the past year, insurers are blaming an increase in fraudulent claims

An investigation has shown blacklisted areas of the UK where concentrations of fraudulent activity have taken place. These claims have lead some insurance companies to flat-out refuse some motorists insurnace in some areas.

The most popular fraudulent incidents include staged accidents, bogus injury claims and fronting, where parents claim they are the main driver for heir child’s car.

Top ten areas for fraudulent claims; Birmingham, Liverpool, Bradford, East London, Manchester, North London, Bolton, Blackburn, Southall and Oldham.

Birmingham tops the list with a staggering one in ten suspicious claims, with B8 – east Digbeth being one of the worst spots followed by B15 – Edgbaston

James Heath, head of counter fraud strategy at Keoghs, says: ‘We are now seeing what can reasonably be described as a fraud epidemic across the UK.

‘It is clear from these results that fraud is no longer restricted to the country’s most heavily built-up areas.’

See how your postcode affects your car and home insurance at