Internet and Phone

Multi-channel banking has led to a huge increase in phone and Internet banking in the last couple of years with a corresponding rise in volumes of one-off automated payments.

Bacs Direct Debit

A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice of the collection amounts and dates.

It's a convenient way for you to pay household bills or make regular payments to any organisation that accepts Direct Debit payments. It saves time, is more convenient and gives you greater control over your money.

The Direct Debit Scheme also protects you and your money by means of the Direct Debit Guarantee. All banks and building societies that take part in the Direct Debit Scheme operate this Guarantee.

Cheque & Credit Clearing

Cheques are written orders from account holders instructing their banks to pay specified sums of money to named beneficiaries. They are not legal tender but are legal documents and their use is governed by the Bills of Exchange Act 1882, and the Cheques Acts of 1957 and 1992.

Bankers' Drafts

Bankers' drafts are cheques drawn directly on the account of a bank rather than the account of a customer. They provide added assurance as the bankers’ drafts are unlikely to be returned unpaid due to lack of funds. However, it is important to note that they do not provide a guarantee against fraudulent use. For example, they may be lost or stolen and then used fraudulently.

Cheque Clearing

There is often confusion about how the clearing system works and the time it takes for a cheque to clear. In November 2007 the 2-4-6 changes to the cheque clearing system came into force, giving customers increased clarity and certainty.

The clearing does not operate on Saturdays, Sundays and Bank Holidays — as settlement across Bank of England accounts can only take place Monday to Friday.

Cash

More than 2,500 years after the first use of coins as payment tokens and over 300 years since the first Bank of England banknotes were issued, cash remains the most common payment method. Although the proportion of payments made by cash is in slow decline, in 2009 there were still around 21.2 billion payments made in cash, accounting for two-thirds of all payments by volume. The value of these payments was around £266 billion, representing 23% of all payments made by consumers.

Cash payment volumes are expected to continue to decline slowly and migration to card and automated payments are likely to be important influencesThe most popular method of obtaining cash to make purchases is from a cash machine. 71% of the cash acquired in 2008 came from cash machines. Other sources such as wages and benefit payments are reducing in importance.

There are many players in the cash cycle in which notes and coin are transported after having been printed and minted, supplied to businesses and consumers, paid into accounts and processed prior to reissue. These include cash processing centres, secure carrier centres and vehicle fleets, branches of financial institutions, retailer outlets and other service providers such as the vending and transport industries.

CHAPS

CHAPS Sterling is a same-day automated payment system for processing sterling payments made within the UK, between its member banks.

The main benefit of CHAPS is that it is fast as the money is transferred the same day. Unlike other forms of payment such as cheques, CHAPS payments are irrevocable.

CHAPS Sterling is one of the largest real-time gross settlement (RTGS) systems in the world. Banks themselves use CHAPS to move money around the financial system, but it is also used regularly for other types of payments including:

• business-to-business payments;

• by solicitors/licensed conveyancers to transfer the purchase price of a house between the bank accounts of those involved;

• by individuals buying or selling a high-value item, such as a car, who need a secure, urgent, same-day guaranteed payment.

Faster Payments

Faster Payments is the first new payments service to be introduced in the UK for more than 20 years. The world leading service enables phone, internet and standing order payments to move within a few hours - almost at the touch of a button.

13 banks and building societies were founding members of the new service in 2008. Other financial institutions are able to join, either as members, or to access the system through agency arrangements with a member - just as they do with other payment systems.

The development of the Faster Payments Service was a massive and complex project involving significant investment. The infrastructure was launched on 27th May 2008 and the volume of Faster Payments made has been undergoing rapid growth ever since. By the end of 2008 around two-thirds of phone and internet payments were processed through Faster Payments and since the start of 2012, all internet and phone payments have been sent via Faster Payments.

The new service runs alongside existing UK payment schemes, Bacs (for Direct Debits and Direct Credits) and CHAPS.

Ex.6. Read the text about the types of accounts offered by the banks in the UK.

While reading look for the answers to the following questions:

• What are the reasons for opening a bank account?

• What facilities are provided for a basic account holder?

• What features does a current account have?

• What types of account are used by those who wish to save?

• What should a customer consider to choose the “right” bank account?

Types of bank account

There are two types of bank account for managing everyday money: a basic bank account and a current account. Banks also offer a range of accounts designed for medium or longer-term savings. Savings or 'term' accounts usually pay more interest than current accounts.

Basic bank accounts

Basic bank accounts offer a convenient place to keep money you need for everyday use. You can arrange to have wages, State Pension and benefits or tax credits paid into one. You can also pay in cheques or cash free of charge, and set up 'direct debits' which pay regular bills automatically from your account.

With a basic bank account you get a cash card which you can use at a bank machine to withdraw cash. Some also offer a 'debit card' that you can pay for items with, and get 'cashback'; but with a basic account these will only work if there's enough money in your account.

You don't get a cheque book with a basic bank account, and you can't take out more money than is in the account ('go overdrawn'). For this reason basic bank accounts are useful for anyone worried about overspending.

Current accounts

Current accounts have more features than basic bank accounts. For example, they usually offer:

• cheque book

• cheque guarantee card (acts as a 'guarantee' so makes cheques more widely acceptable)

• debit card (some allow payments without checking your account)

• direct debits (automatic bill payments direct from your account)

• standing orders (regular set payments from your account to someone of your choice)

• BACS (Bankers' automated clearing service) - the facility to accept payments directly into your account (eg from your employer), or for you to make one-off payments to someone else out of the account

• overdraft facility - the bank may allow you to go overdrawn up to a certain amount; but you need to arrange this in advance and charges apply (you pay extra charges if you go overdrawn without an agreement)

Some current accounts pay interest on money you leave in the account, but the rate is usually low.

Savings accounts

Banks offer a wide range of savings accounts. The main differences between them are how quickly you can get at your money, the minimum amount required to keep the account open and the type and rate of interest paid.

Many credit unions offer savings accounts, where you can pay money in and take money out. You can also have your benefits or wages paid straight into some Credit Union accounts.

Some Credit Unions offer budgeting accounts, where you pay in a set amount each week/month and they then pay agreed household bills as they become due.

Bank accounts and your rights

The Financial Services Authority (FSA) regulates the way bank and building societies do business with you. You can get a copy of their guide 'Your bank account' from the FSA website or your bank or building society.

The FSA also ensures that banks and building societies are financially sound. You may be protected through the 'Financial Services Compensation Scheme' up to a set limit if your bank collapsed.

If you want to make a complaint, banks and building societies must help by having internal procedures and belonging to the Financial Ombudsman Service (an impartial service that can help settle disputes).

Choosing the right account for you

When choosing which bank account is right for you, make sure you know which questions to ask.

Think about charges

Banks typically charge you if you go overdrawn without arranging an overdraft first, or if you exceed your limit on an arranged overdraft.

These charges can, in some cases, add up to hundreds of pounds. To avoid big charges you should:

• know how much money you have in your account

• keep track of things like direct debits and cheques which may take you by surprise

• switch to a cheaper account if you think your banks charges are too high

Below is a summary of the different accounts offered in the United Kingdom and the benefits of each type of account:

• Standard Current Accounts: Customers receive a cheque-book, cash and debit cards, overdraft facilities, monthly or quarterly bank statements. Internet access and telephone banking facilities are often available. For a monthly fee, some current accounts can provide extras such as roadside assistance or medical support

• Simple Cash Accounts: Customers do not get a cheque-book, Internet or overdraft facilities

• Savings Accounts: Note that interest on savings is taxed

• Accounts for High Earners: Tailor made options and personal banking support

• Children's Accounts

• Student Accounts: Similar to standard current accounts, students may benefit from interest free overdrafts

• Graduate Accounts: Graduates can benefit from lower mortgage rates and cheaper overdraft facilities

• Foreign Currency Accounts

• Euro Accounts

• Special Accounts: These cater for certain religious beliefs

There are many different types of accounts and each bank offers different rates and perks to try to attract customers. One of the most important factors for any potential customer when choosing a bank is to decide what they want from the bank, and what kind of account they need.

Ex.7. Act as an interpreter for A and B:

A.:	What’s the difference between a current account and a deposit account?
B.:	Коротко кажучи, поточний рахунок використовується для повсякденних операцій з грошима, в той час як депозитний рахунок передбачається для заощадження грошей. Ось чому навіть діти можуть відкрити його.
A.:	So an adult can have both then?
B.:	Так, це вірно. Ви фактично робите регулярні заощадження, переказуючи повну суму грошей кожного місяця з Вашого поточного рахунку, на який нараховується процент. Ви можете це зробити за допомогою постійного доручення.
A.:	How does a deposit account work?
B.:	Коли Ви відкриваєте рахунок ми надаємо книжку зарахувань внесків на рахунок з нею (pay-in book). Ви можете покласти гроші на депозит в будь-якому відділенні, але якщо вона не з Вами, можна використати кредитний ордер (квитанцію про переказ грошей) будь якого з відділень Жиро банку.
A.:	And what about when I want to take money out of my account?
B.:	В цьому випадку Ви використовуєте ордер-наказ про зняття коштів з рахунка (withdrawal slip), але не забудьте надіслати повідомлення за тиждень вперед. Якщо Вам терміново потрібні гроші, ви втрачаєте процент.
A.:	Are deposit accounts a good form of investment?
B.:	Для тих, хто робить короткострокове заощадження в нашому банку, наприклад 6 місяців, можна відкрити спеціальний ощадний рахунок.
A.:	Why is it special?
B.:	Якщо гроші знаходяться в нашому банку як мінімум 6 місяців, ми виплачуємо Вам 1% вище номінальної, або базової ставки, яка встановлюється Банком Англії.
A.:	What about other kinds of investment?
B.:	Це дуже складно. Це залежить від того, скільки грошей Ви бажаєте інвестувати і на який термін. Також можливо при деяких формах інвестування втратити гроші, в той час як депозитні та ощадні рахунки надійні. Але взагалі, чим вище ризик, тим більше прибуток. А якщо Ви мені розповісте про Ваші фінансові справи трохи більше, я спробую допомогти порадою.

Ex.8. Read the following text and explain the meanins of the following words and word combinations. Make detailed presentationof the text, the following questions may be helpful.

1. What two kinds of borrowings are possible?

2. In what circumstances an overdraft on current account is permissible?

3. How are personal loans usually repaid?

4. Will you pay back more than you borrowed? What will the difference be?

5. What information will the manager require for a per­sonal loan?

6. What information will he require for a business loan?

7. What other things will be taken into account?

8. What will he need from you to make the loan safer for him?

9. What does a businessman mean by his expected rate of return?

10. Why might this be important to the bank manager?

11. What kind of things might you offer as collateral for a personal loan?

Banks make their profits by lending the money which customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently available at some time in their lives.

To be a borrower you must be a customer of the bank be­cause the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account — to overdraw. The second, and the normal way of borrowing larger amount is or for a long period of lime is the loan.

If a manager permits an overdraft on current account he is likely to set a limit lo the size of the overdraft and may stipu­late a date by which the account is back in credit. Businesses whose payments and receipts are often irregular will frequently need to use overdraft facilities and they are often granted to private customers as well particularly when the manager knows that regular payments are made directly into the account.

If a loan is granted it will be a fixed sum immediately avail­able for a fixed period of time. The principal and the interest on it may all become due for payment at the end of that pe­riod but for personal loans it is common to arrange that the loan and interest are repaid in equal regular installment over the period of the loan. A separate account is opened to record the repayments as they are made.

Whether you are seeking money for business or personal reasons there are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan, a business loan is likely to help you make profits out of which the loan can be repaid with interest and he will wish to judge for himself whether or not this is likely. Personal loans usu­ally have to be repaid out of an income which will not get any bigger and the manager will be particularly anxious to ensure that you are not being loo optimistic. In deciding this he will be considerably assisted by his knowledge of you and his esti­mate of your character.

In the ease of a business the manager may well want to see well prepared, relevant docu­ments such as profit and loss accounts and balance sheets for the most recent years. He would also ask about the expected return from the use of the money and want to see some fig­ures upon which you have based your calculations. For a busi­ness good security might be one or more of the assets of the business whilst personal loans are often secured by such things as life insurance policies on which the bank is making regular payment for you or the deeds of your house.

Ex. 9.Agree or disagree.

1. When a bank's manager considers an application for a loan, he usually requires some information aboul the items shown on the applicant's balance sheet.

2. The manager is not concerned whethel- any of the applicant's assets have already been pledged as security.

3. The bank often asks the applicant to pledge part of his assets as collateral security to the bank's loan.

4. One cannot apply to a bank for an extension of a loan.

5. To grant a loan the bank must be sure that the applicant can repay it.

6. The bank will never wish to offer a larger loan than the applicant asks for.

Role Play

1. You are a bank manager and you were asked for a loan.

2. Consider the things you will worry about the loan and the questions you will want to be answered; you should give particular consideration to:

• whether you will have sufficient funds to make this loan;

• whether you think the customer will be able to repay the loan and interest;

• whether you would offer all or part of whal is being asked;

• whether you need any further evidence of the crcditworthiness of your customer and how you would get it;

• what sort of security would you accept,

• what kind of term would you offer.

3. Conduct the interview:

1. if you refuse the loan, write to the client setting out the reasons why you have done so;

2. if you grant the loan, write to the client setting out the precise terms of the loan.

Ex.10. Task1. Read the text and suggest an appropriate title. While reading look for the answers to the following questions.

1. Why is it the best way to buy stocks and shares through a bank?

2. How much does the bank charge for the investment ser­vice?

3. What is the best way of keeping valuables safe?

4. In what way may the bank help individual tax payers?

5. What measures can be taken to protect your life and possessions?

6. What are the advanlages of writing a will?

7. Why do many people appoint the bank as the executor of their will?

Investment in stock and shares can be made through any branch of the bank on behalf of its customers. All quoted Stock Exchange securities can be bought or sold with maximum security and minimum formality through the bank. Being in constant touch with leading stock brokers in London and the country, the bank is in a position to obtain information regarding all classes of stocks and shares in which customers may be interested. Shares may be bought or sold without any charges beyond those payable to a stockbrokte and the bank is responsible for the collection of the proceeds of a sale and for the delivery of the certificate on a purchase. An investment report service is also often available for the customer who needs a second opinion on a portfolio being managed personally. In addition, professional advice can be given on investments in foreign stock not quoted on the London Slock Exchange.

Share certificates, documents, jewellery and other valuables can be stored in the strong rooms of the bank. They will be safer with the bank than at the customer's home hut it is his responsibility to insure them.

The hank also provides a continuing service for personal income tax payers, checking tax liabilities and generally assuming the main burden of work involved in the preparation of tax returns and claims. Because if the sources of income and allowances are complicated, it is not easy to know for the individual if he is paying the right amount of tax. The bank helps the customer on particular problems resulting from Capital Gains Tax and Capital Transfer Tax. It may be able to point out ways in which the customer can quite legitimately minimise the effect of these taxes.

Insurance need not be a problem for the bank's customer either. Insurance cover for life, house, accident or anything else may be effected through any Bank Insurance Service which employ highly experienced brokers in this field. They can usually arrange to oblain the best possible terms consistent with absolute safety.

No matter what the customer's age it is a wise and considerate precaution to make a will. When one dies, it will be his executor's responsibility to protect, to account for and to distribute all his "worldly goods" in accordance with his last will and testament. Therefore the choice of an executor should be carefully considered. One of the best answers to this problem is to appoint the bank's trusl company sole or joint executor. The appointment of the bank as the will executor ensures that the estate will be dealt with promptly, efficiently and in strict confidence.

Task 2. Say what is true and whal is false. Correct the false sen­tences:

1. Registered bonds are non-negotiable.

2. The bank is not allowed to pass any information on the Stock Exchange securities.

3. The market value of common stocks is stable.

4. The bank is not responsible for the collection of the pro­ceeds of selling shares.

5. Bonds at maturity can be presented for redemption only through your bank.

6. Only a bank may be named executor of an estate.

7. Businessmen usually keep their securities in safe-deposit boxes.

7. You can take out only one life insurance policy.

8. The will must be probated by the proper court.

10. Life insurance is a good investment.

Ex.11. Match terms to their definitions

1. Mortgage	A document which states how a person wishes his estate to be divided.
Collateral securiry	A sum of money payable in case of loss of life.
To pledge	The actual return of a particular investment.
Principal	A legal agreement by which a bank or similar organization lends you money to buy a house, flat,etc. or land and you pay the money back over a number of years.
Installment	To promiss as security.
Balance sheet	The pattern of investmants held by a bank.
Profit and loss account	Some security in addition to the main security for the money lent.
Portfolio	A statement of the assets and liabilities of a business which shows its position on a particular date.
Life insurance	A payment towards a larger sum usually made at regular intervals.
Yield	A statement which gives details of all a company’s income and expenses for a particular period and shows if it has made a profit or a loss.
Will	The amount of the loan itself without before any interest is added.

Ex.12. - Have you ever practiced interned banking? What do you know about this bank facility?

Read the text about internet banking and say what its pros and cons are.

What is internet banking?

Many, if not most, banking transactions can and do take place on the internet. Most major banks provide an internet banking service and there are also some internet only banking companies who offer all their services online and do not have high street branches. Some of these companies provide a range of accounts to choose from, some specialize in just one.

Online banking through traditional banks enable customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests, and some even offer online loan and credit card applications. Account information can be accessed anytime, day or night, and can be done from anywhere. A few online banks update information in real-time, while others do it daily. Once information has been entered, it doesn't need to be re-entered for similar subsequent checks, and future payments can be scheduled to occur automatically. Many banks allow for file transfer between their program and popular accounting software packages, to simplify record keeping.

Why have an internet account

Benefits

• Accessibility – Internet and internet accounts are usually accessible 24 hours per day, seven days a week.

• Ease and convenience – Those who find it difficult to get to a branch within working hours and those who travel frequently will find internet banking a practical alternative.

• Value – Internet only banking services often offer best value as they have less running costs.

Considerations

Despite the advantages, there are a few drawbacks. It does take some time to set up and get used to an online account. Also, some banks only offer online banking in a limited area. In addition, when an account holder pays online, he/she may have to put in a check request as much as two weeks before the payment is due, but the bank may withdraw the money from the account the day that request is received, meaning the person has lost up to two weeks of interest on that payment. Online-only banks have a few additional drawbacks: an account holder has to mail in deposits (other than direct deposits), and some services that traditional banks offer are difficult or impossible for online-only banks to offer, such as traveler's checks and cashier's checks.

Please note that with internet accounts, however secure your password and other details are, you need to be vigilant about scams such as phishing, where fraudsters pose as your bank, often by email and encourage you to give them crucial details of your account. It is always worth checking with the provider to see what measures are in place to reduce the possibilities of this happening. Banks will never usually ask you to confirm any confidential details via an email so you should be suspicious if you receive such an email.

Choosing an internet account

Security is an important issue for internet accounts. Internet banking can be highly secure but you need to be aware of safety precautions to take. Always take the time to read the small print too – it takes a few minutes, but it should help you understand the service.

Types of internet bank accounts and services include:

• Current Accounts – All the conveniences of a regular current account, including credit and debit cards, cheque books and regular statements

• Current Accounts – with specific benefits (for instance, roadside recovery) and a small monthly fee to pay

• All in one and off-set accounts

• Student accounts

• Loan approval

• Savings Accounts – Favourable interest rates because the overheads are reduced.

• Savings Accounts – Including those with tiered rates depending on the savings amount

• ISAs and mini-ISAs

• Mortgages

• Share Trading

• Ethical Investments

• Insurance Services

• Business Bank Accounts

Ex.13. Prepare a brief summary of the text: