Robert Peston On Wonga
Everybody and especially politicians of a certain colour, love to hate Wonga. I have little time for them, every since I saw a presentation by one of their founders at an Internet awards ceremony.
But Robert Peston in this article on the BBC web site, asks whether we look at Wonga through the wrong set of glasses. This is the first two paragraphs.
In many ways Wonga.com is an impressive, even admirable business (and please resist your temptation to send me hate mail – I am feeling delicate).
It is, for example, funded exclusively with equity capital, or £100m genuinely at risk of being lost if things go wrong.
The article also says that as it takes no deposits, it can’t suffer a run and be bankrupted, as effectively happened to Northern Rock. And will probably happen to other banks in the near future.
Remember, I used to part-own a finance company and did a lot of analysis of the dynamics of the loan business. Hence my admiration for the Zopa model, which I think is very stable. I said that here in a lot of detail.
Obviously, Wonga did a lot of analysis on their data and this has led them to their success, as they have the right model and technology. Peston says Wonga’s technology is world class. If banks such as RBS, Northern Rock and Bradford and Bingley had had world-class technology, they might not have gone bust.
Most of the comments on the article, seem to say Wonga and their ilk should be banned.
But you’re going for an easy target, that plays well in the media.
The real problem with Wonga, is the appalling level of financial education in this country, which means that people succumb to the charms of the likes of Wonga.
If people knew how to manage their money better, there’d be no need for Wonga. But that doesn’t happen to people until they’ve had at least one financial crisis!
A Take On Bankers Worth Reading
This blog post on bankers is worth reading. Two of my least-favourite politicians get the treatment with no holds barred.
Read it! If I paraphrased it, I’d reduce the quality of the criticism.
Nespresso Is The Apple Of Coffee
Not my statement, but something that was hinted at in an article in The Times.
I don’t drink much coffee and I always wondered about Nespresso, with its expensive advertising. If it was that good, why don’t I see more machines in peoples’ houses.
It looks like they’ve got a marketing philosophy based on a cheap machine and expensively-packaged coffee.
I tend to avoid machines in the kitchen, as you have to wash them up and except for my cooker, microwave and fridge, I only use three pieces of electrical equipment; a kettle, a toaster and a Kenwood chopper, which was heavily promoted by Delia. I do have a dishwasher, but I don’t use it, as it was wrecked by the tenants, who lived here before I bought the house. It just doesn’t get anything clean, whereas my Mark One hand and a gammy one, perform the task well.
So when I see that Nespresso, a subsidiary of Nestle are involved in a legal spat with Mondelez, who in my book are still called Kraft, as I do here on Reuters, I know that there can only be one winner, the lawyers. And the poor old consumer will pay for it all in higher prices. So Nespresso is a product to avoid!
Incidentally, both companies are on my avoid lists, as they don’t in my book publish full and detailed information on gluten about their products. I also don’t like Nestle’s stand on powdered milk for babies and who would buy anything from the company that made its name with sliced cheese. Other companies in my avoid group are Mars and in fact any company, where you can’t find the gluten-free information easily on their web site, or if you’re in the shop, on the packaging.
I Know How Kevin Phillips Feels
It is being reported that Kevin Phillips penalty kick in the Championship Play-Off Final was worth £120,000,000.
I know to a certain amount how he feels today.
I was part of the team that sold Metier Management Systems to Lockheed for a similar sum in 1985., although with inflation it’s probably worth a lot more today.
As we went about the pre-sales process, we realised we had good methods and software, but everything was rather boring. So I was asked if I could create a version of Artemis with style and charisma. I did nothing else for six weeks, except write software, eat and sleep occasionally, but the result was that we received a lot more money, than we had decided we would accept.
It was the software and business equivalent of Kevin Phillips’s spot kick.
I also have two other characteristics that I share with Kevin. We’re both about the same height of 1.70 metres and we both performed our most important feats at just under forty years of age. He also is a man from North Hertfordshire, whereas I was brought up in that part of London, that used to have a Barnet, Herts postal address.
Google, Amazon, Starbucks Etc. And Tax
Google’s Eric Schmidt says he is perplexed in this article about the debate on his company’s tax status.
I’m not, as what these companies do is fraud.
Not necessarily on Corporation Tax, but with respect to VAT.
If say I go into John Lewis and buy say a television, I will pay VAT on the purchase. If I buy it from Amazon, I’ll probably pay some fiddled VAT rate, which will make it cheaper.
My belief is that by doing transfers like this, companies like Amazon are hurting genuine UK businesses. Andy Street of John Lewis is saying just that here.
So it should be that if you buy a television and it’s delivered in the UK, then the VAT rate should be 20%.
But Eric Schmidt is against this and is quoted in the BBC article.
The Google chairman has previously argued that corporate taxes should be paid on a company’s profits, not revenues, and should be levied in the country where it conducts economic activity and takes risks, rather than where products are consumed.
The trouble with Google, is there is no alternative, to some of the things they do.
On the other hand, I don’t use Amazon, Apple, Starbucks and quite a few other companies.
Bankers Don’t Get It Do They!
My bank, Nationwide, has just made me an offer. If I pay them ten pounds a month, I get a special account, which gives me the following benefits.
- Free worldwide travel insurance for you and your family, including winter sports, golf, wedding and business cover
- Free Worldwide mobile phone insurance
- Free UK & European breakdown cover
- 3% AER (2.96% gross p.a.) variable in-credit interest on balances up to £2,500
Is this a joke?
They say it’s designed to make my life simple.
Let’s take each point.
Starting with the travel insurance.
I don’t have any family, who are dependent on me. I don’t do winter sports or golf. I don’t have any plans to get married and my business, if I have anything is enjoying myself.
I suppose I do need some form of travel insurance, but at the moment, I’ve no plans to go outside of an area, where I get decent healthcare on my EHIC.
The mobile phone insurance is irrelevant, as I use a £10 phone for my communications. If I lost it, I’d just buy another in the nearest O2 shop for a tenner.
Is the third point about breakdown insurance serious? I don’t have a car.
But I reserve my highest condemnation for the derisory interest rate on savings. I’m getting a safeguarded five percent on over a hundred thousand pounds with Zopa. So it’s not government guaranteed, but the company is run by people with intelligence and not a wunch of bankers.
There is no mention of the features I would like.
- Text messages every time, a transaction over a particular amount happens on a credit card or bank account.
- Annotated statements, that allow me to comment on transactions. Taken to its logical conclusion, you could even add a cost code, which could then be used by software to create a simple set of accounts.
- Full tracing on cashpoints, I’ve used. I’ve noticed that the records of those I used in Switzerland are much more detailed than the one I used yesterday in Islington.
- Customisation of my bank account, so that I set levels for alerts, withdrawals etc.
There is an opportunity out there and the first bank to go that way, gets my business.
The Anti-Fraud Advantage Of Sites Like Zopa
If you wanted to get money out of someone else’s bank account, all you need to do is login to their computer and have the equipment necessary to perform a transfer.
My bank account is probably as secure as any other, but I never keep my card reader and the card together. Admittedly, all card readers for Nationwide are the same, but my passwords are only written in my brain.
But if you did manage to login, you could perform a transfer to your bank account, but it would probably require me to give in to threats to release the passwords.
But with a site like Zopa or Ratesetter and probably many others, where the only transfer out of the account can be to the bank account, where the money came from in the first place, you’d have quite a problem getting round the security measures. The very fact, that they exist, would probably mean you’d try to crack a more mainstream system, like an account with one of the major banks.
It illustrates how often a simple absolute rule, is often a much more secure method of protection, than something based on complicated hardware and tortuous passwords.
Giles Andrews On Zopa
I found this article on Wired, which is an interview of Giles Andrews, the CEO of Zopa; the peer-to-peer lender.
Read it, remember the salient points and if you don’t swallow the message about the banks, you don’t deserve to have your savings protected. Take this statement from Giles.
A lot of banking is in a black box and consumers don’t really know what happens. Give your money to Barclays, in a savings account, and god knows that happens to it. Is it going half way round the world to buy some weird book of securities, or is it being lent to a small business in Sheffield?
A lot of people put their money in the Co-operative Bank because of reasons like this.
Do Banks Design Systems To Trap Us Into Extra Payments?
Twice now in the last three months, I’ve been late with credit card payments. Nothing serious, but I got an extra charge of £12.00. I think it happened, as did the other one, because I tend to pay my credit cards all at the same time at the end of the month, when my American Express Card comes in and I’ve just had my pension payment.
So as I was flush at that time, I paid off most of the debt on the card. But apparently, I paid too early in the last accounting period or something.
The last time, it happened on another card, they phoned me to say why hadn’t I paid. When I said what about the extra payment they gave it back.
But how many of us, get caught out by rules, that need to be read by a lawyer with a fine tooth comb?
What would help, would be the ability to define your payment date on your credit card. I seem to remember doing this many years in the past. Zopa incidentally, allows this when you borrow and even allows you to change the date, due to a change of circumstances.
In some ways I’m getting my own back. For travel, hotels and large purchases, I now use my American Express card and for small ones, I now use cash. The problem is Waitrose, where their self-service tills don’t take cash. Marks and Spencer and Sainsbury, who both have better tills, do.
Peer-to-Peer Lending In The Times
There is a good review of peer-to-peer lending in The Times today. One of the most significant things of the piece is that Google has taken a small stake in Lending club. There’s more on the Google deal here.
The banks might not like it, but the writing is on the wall.
Today, I’ve started to move my working deposit account to Zopa.
The Anonymous Widower 