Derry society survives storm: Belfast Telegraph
While several building societies have been hit by crisis, the City of Derry Building Society insists it is safe and “comfortably in excess of the statutory minimum” of capital reserves. The society is not merely the smallest in Northern Ireland, it is the second smallest in the whole of the UK.
In recent weeks, six building societies have been rescued - mostly because they loaned too much on commercial properties and for buy-to-let. But the City of Derry society has made no commercial property lending for five years, avoiding the property price bubble. Repayments on its buy-to-let mortgage lending – representing about 20% of all its loans – are performing better than average.
The society also has no borrowings at all from the wholesale market, excessive use of which destroyed Northern Rock. It funds all its mortgage lending from its savings accounts.
Colin Jeffrey, chief executive of the society, admits that the recession has caused problems. “Our arrears are nothing to boast about,” he concedes. But with provisions for bad debts in the society’s accounts at a mere £16,351 on a total loan book in excess of £28m, neither are they are a particular worry. Only 20 loans are regarded as being of concern.
Jeffrey is more worried about his society’s share of the costs of bailing-out financial institutions that went to the wall. City of Derry paid over £37,000 for last year towards the Financial Services Compensation Scheme, which guarantees savings in UK banks and building societies.
For a small society with just one branch – in Derry’s Carlisle Road – and an operating profit for last year of £170,851, this is a significant burden.
“Our profits were down 15% from what we targeted, mostly because of the FSCS,” says Jeffrey. He adds: “It seems ironic and unfair that institutions that have operated in the main – with one or two exceptions – a less risky approach to business are paying a proportionately higher contribution to the FSCS, because the levies are based on the [amount held in] savings accounts.”
Another irony is that recent events have eliminated what was at one time the society’s biggest problem – protecting it from ‘carpetbaggers’ trying to take over the society to demutualise it and pocket the windfall profits. Every single demutualised building society has now either gone broke or has been bought-up by another financial institution.
The legacy of that carpetbagging mania is that the City of Derry Building Society only does business with people living in Northern Ireland. In fact, says Jeffrey, “most of our business is within Derry”. “We don’t do business outside Northern Ireland for reasons of control,” explains Jeffrey. “Control is a key word for a business of our size.” The word ‘control’ is also code for preventing future attempts at demutualisation.
Although many financial institutions are merging, this is not on the cards for the City of Derry society, says Jeffrey. It is on good terms with Northern Ireland’s other building society, the Progressive, but there are no talks about merging with this, or with the Derry Credit Union. Recent changes in law permit mergers between building societies and credit unions for the first time.
“There have been so many changes in just the last six months that I don’t think we can say never to anything,” says Jeffrey, “but certainly we see our future as an independent building society.”
And as an independent society it is doing pretty well. Its Cash ISA is at the top of the Northern Ireland best buy tables, paying up to 3%. The standard variable rate on its mortgages is 4.99%, which is not exceptional, but is competitive. So, when things are going well, why change?
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The Londonderry Provident Building Society was established in 1876 and changed its name to the City of Derry Building Society in 2001. “It was not the greatest name in the world,” says Colin Jeffrey. An earlier, unconnected, City of Derry Building Society existed until 1987, when it was taken over by the Nationwide Building Society.
Money Talks: Time to buy holiday insurance: Belfast Telegraph
Get insured
It is summer holiday time – which means it is also time to make sure you have your travel insurance sorted.
What a bore, you might think. But let’s consider some things that could go wrong.
Your child eats a chicken burger at dinner. The food has not been properly cooked. During the night they vomit and sweat heavily – you get scared and rush them to the local doctor or hospital.
It may be ok in the sense that there is nothing seriously wrong, but then you have to pay the bill. You will then wish you had been properly insured.
Much worse could go wrong. What if one of your family is rushed to hospital and has to be flown home? An air ambulance from America could cost £40,000 or more – and the British Embassy will not pay!
One of your group might even die – and flying the body home is a financial cost that makes your grief even worse.
Check the policy
It is good to be insured, but lots of people find their travel policy is worth less than they assumed.
A frequent complaint is that policies do not always cover missed connections. One family who wrote to me were on holiday in the Channel Island of Sark, flying into and out of Guernsey. A freak gale prevented their ferry making the return journey on time: they missed their flight home and had to pay a fortune for late bookings on the next plane back.
Never mind they thought, we have travel insurance. No, said the insurer, we specify in the small print of the policy that missed connections in the UK don’t count for a payout. Hang on, says the reader, the Channel Islands aren’t in the UK. Look again, says the insurer, we say in the small print that we treat the Channel Islands as if they are in the UK.
Similar experiences are common. They certainly do nothing for the reputation of insurers. But a common factor of many complaints is that the policies are sold by the airlines. Often these policies provide limited protection, which may not be relevant to your holiday and circumstances - and which is over-priced compared to an annual travel policy.
What to insure
Your insurance cover needs to include medical treatment and any extra cost of returning home because of illness or accident. You should also be covered if you injure someone else by accident or your property is lost or stolen.
Most people will also want insurance against missing their flights; getting stranded for days if there is a strike; or if they have to travel home urgently because of a family illness. These risks are often not covered in standard travel policies. Depending on which country you are travelling to, insurance covering the cost of legal action may also be sensible.
Some favourite holiday activities may be excluded by your policy, unless specially arranged: jet skiing and motor biking, for instance. Accidents caused by misuse of alcohol and other drugs are excluded by most insurers. If you lose belongings through carelessness you may also have to meet the cost yourself, despite being insured.
Where to get insured
Getting insured online, perhaps using a price comparison website, is very popular nowadays – and often saves large amounts of money. But it may not be the best option for travel insurance, where your requirements will often be very specific. A good insurance broker will obtain the right policy for you.
If you do decide to buy an insurance policy using a price comparison website, through the airline, or going direct to an insurer check the policy cover very carefully before confirming the purchase. Beware of ‘off the shelf’ policies that do not take into account your personal circumstances
To find an insurance broker you should go to the website of the British Insurance Brokers’ Association – www.biba.org.uk – which also has excellent tips on buying travel insurance.
Get EHIC
The European Health Insurance Card (EHIC, previously called the E111) is very important for holidaymakers within the European Union – including the Irish Republic. It is free to obtain – you apply at a Post Office or on the internet, at www.ehic.org.uk – and this entitles you to free or reduced cost medical treatment across the EU and in Norway, Iceland and, with some exceptions, Switzerland.
