Banks using 'pseudo' solicitor firms to make debtors pay up

Threatening legal letters from what appear to be solicitor firms are actually coming from a department of Lloyds or NatWest

• Rupert Jones and Patrick Collinson
• The Guardian, Friday 4 July 2014 07.00 BST

High street banks use in-house solictors to send letters to struggling customers who may believe the letters were sent by a third party.

Britain's high-street banks are routinely issuing legal demands from what appear to be independent firms of solicitors designed to make struggling borrowers pay up. Yet the firms are not regulated by the legal profession's watchdog, and are simply names used by banks' in-house lawyers.

Royal Bank of Scotland and its NatWest arm have been using Green & Co Solicitors in Telford; Lloyds Bank uses SCM Solicitors in Hove, East Sussex, and, until January this year, HSBC used DG Solicitors in Edgbaston, Birmingham.

But a search of the register run by the Solicitors Regulation Authority (SRA) reveals that none exist as an entity supervised by the regulator.

The practice is legal because the letters are signed by a lawyer who is individually regulated by the SRA. Yet they give the impression to borrowers that their case has been escalated to a third party, using legal language such as "We are instructed by our client" and "We are likely to be instructed to commence court proceedings". The letter heading is near-identical, too, to that of an independent firm of solicitors, and typically uses a different address from that of the bank concerned.

Critics claim that the letters can be confusing and a scare tactic designed to harass people into paying up. But the good news for consumers is that since Guardian Money and others began probing the issue, the SRA has revealed that it will soon issue guidance after receiving a number of complaints that had given it "cause for concern".

And on Thursday, RBS disclosed that after a review of the letters it sends, it was stopping the use of any solicitor or debt-collection brand names that "could cause confusion".

The banks use a form of wording in the small print of the demands that identifies the solicitor "firm" as a unit of the bank. RBS says Green & Co is the "practising name of solicitors employed by the Royal Bank of Scotland Group", while Lloyds says SCM is "part of the in-house litigation department of Lloyds Banking Group".

Some will be surprised to learn that a company can explicitly use the word "solicitors" in its name and yet not be regulated as a firm by the SRA.

The SRA said that SCM Solicitors, for example, ceased trading as an independent regulated law firm in 2011, adding: "The firm is not a firm as an entity – it's just a trading name."

That, arguably, is a somewhat confusing distinction that may well be lost on the panicking recipients of the letters.

The tactics banks use to persuade people to pay up have come under the spotlight after the already notorious case of payday lender Wonga.

Last week it was ordered to pay £2.6m in compensation after it sent letters, to customers in arrears, from bogus law firms – such as Chainey D'Amato & Shannon – leading customers to believe that their outstanding debt had been passed to a law firm or another third party. There is no suggestion the banks are acting in the same way as Wonga. The crucial difference is that Wonga sent letters from fake lawyers, whereas the individuals signing the letters from the banks are authorised and regulated by the SRA.

But there is concern that, unless the people who receive the letters study the small print, they may feel duped into believing that their bank has escalated their case to a third-party firm, and that proceedings are imminent.

In a statement, Lloyds said: "Letters to our customers identify the qualified solicitor of record and make clear that SCM Solicitors forms part of Lloyds Banking Group's in-house litigation department." It pointed out that every letter sent out bore the name of a solicitor within the department who took responsibility for that letter. The correspondence also confirms the solicitor is authorised and regulated by the SRA, and gives that solicitor's registration number.

A spokesperson for RBS told Money: "Our customers should never be in any doubt about who they are communicating with. We have reviewed our policies in this area, and will stop the use of any solicitor or debt-collection brand names in correspondence with our customers that could cause confusion."

The bank said Green & Co had not taken any new business since 2012, and had only "a handful" of cases open, though it acknowledged that "we must make it clearer" to customers that it is an in-house RBS team.

It added that Green & Co "is a legitimately established law firm, registered with the Law Society, and its solicitors are regulated by the SRA".

HSBC said that in January this year it abandoned sending out legal warnings under the name of DG Solicitors and now just uses the HSBC brand.

"HSBC stopped using DG Solicitors in January 2014. All customer letters from DG Solicitors were compliant with the OFT debt recovery rules, and made clear that the firm was a trading name of HSBC and that its people were HSBC employees. To allow HSBC to be more flexible in how it works with customers in arrears, all legal correspondence to these customers is now under the HSBC brand."

A Guardian Money reader raised her concern about SCM Solicitors after it sent demands to her former tenant in Cambridge, saying that it had been instructed by its "client", Lloyds Bank, to demand he repay the outstanding debt on his current account. If payment was not received within 14 days, "legal proceedings may be issued against you", it continued.

The name of SCM Solicitors is prominently displayed in bold type at the top of the letter. In small type at the very bottom, it states that SCM Solicitors is part of Lloyds.

The woman contacted the SRA to find out more about the firm – only to be told that it had closed in June 2011.

The SRA says bank legal departments are able to operate under a trading name, even though the entity is not formally a legal firm in the sense of it having separate SRA regulation, professional indemnity and so on.

In an email to the bank, the Guardian Money reader said she was astonished that it could "apparently be permitted to use a non-existent firm of solicitors to mislead and intimidate its customers into action. I thought our ex-tenant was the bad guy – he's not bad, more hopeless. Lloyds Bank are not hopeless, and you have the capacity to fully understand and select the means by which you operate."

She added that the woman who signed the letter was a registered lawyer, "so for her to represent that she is a member of a solicitor's firm that is threatening legal action but which doesn't, in fact, exist, is rather odd".

In an email to the woman, a senior member of the banking group's legal department described the use of the name SCM Solicitors in letters as "a style for correspondence … the use of the style is one that has been reviewed and deemed appropriate by the SRA".

In a separate email, the woman in Lloyds' legal department who signed the letter appeared to indicate that she was not entirely happy with the way the SCM name was being used. She said she inherited the arrangement when she joined the bank, adding: "At my instigation ... the model is being actively reviewed."

In a statement to Money, Richard Collins, the SRA's executive director, says: "We can confirm we are currently looking into a number of complaints on this theme which have given us cause for concern. We will shortly be issuing guidance for in-house solicitors on our existing requirement that publicity must not be misleading. This will make it clear that they cannot use forms of words that give the impression they are an independent law firm and not employed solicitors."

The debt collectors that aren't what they seem

It's not just banks sending out demands made to look as if they are from a third party. Those from some utility companies and parking firms appear to be from a separate debt collection agency, when the "firm" has been invented as a way of pressurising people to pay up.

Typically, there's small print to the effect the debt recovery firm is a "trading name" of the bank/utility company.

This week the Student Loans Company (SLC) – a government-owned organisation – was found to have sent thousands of letters to graduates appearing to be from an independent debt agency, Smith Lawson & Company Recovery Services. Some began: "We are instructed by our client ..." In fact, Smith Lawson is a trading name of the SLC. On Tuesday, after an outcry, the SLC said it had "suspended all use of Smith Lawson-branded correspondence".

Meanwhile, many customers of Royal Bank of Scotland and NatWest have received letters from "Triton Credit Services", whose address is given as a post office box in Basildon, Essex. Some stated that Triton had been "instructed" by RBS/NatWest, though the small print said Triton was a trading name of the bank. This week RBS said it had decided to "phase out the use of the Triton brand", adding: "In future we will ensure it is much clearer to customers who they are communicating with."

Marijuana shoppers flock to Colorado for first legal recreational sales

'This is going to be a turning point in the drug war,' says one customer at a cannabis dispensary, 'a beginning of the peace'

• Rory Carroll in Denver
• theguardian.com, Wednesday 1 January 2014 20.23 GMT

Sean Azzariti, an Iraq war veteran, makes the first legal recreational marijuana purchase in Colorado from Betty Aldworth. Photograph: Theo Stroomer/Getty

The debut of the world's first legal recreational marijuana got off to a smooth and celebratory start with stores across Colorado selling joints, buds and other pot-infused products to customers from across the United States.

Throngs lined up from before dawn on Wednesday to be among the first to buy legal recreational marijuana at about three-dozen licensed stores, with cheers erupting when doors opened at 8am local time.

“It's a historical event. Everyone should be here,” said Darren Austin, 44, who drove from Georgia and joined a festive crowd gathered in falling snow outside Denver's 3-D Cannabis store. “This is going to be a turning point in the drug war. A beginning of the peace.”

His son Tyler, 21, held a sign saying “It's about time”. Like his father, he painted his face green. “I'm going to move to Colorado. Seriously,” said Darren.

Behind them waited Savannah Edwards, 21, a substitute teacher who drove overnight from Lubbock, Texas. “I'm here not so much for the marijuana as the history.” Just as people reminisced about Woodstock, she would be telling this story half a century from now, she said. “I've never been to a dispensary before. I don't even know what I'll buy.”

Colorado became the first jurisdiction in the world – beating Washington state and Uruguay by several months – to legalise recreational cannabis sales. Voters approved the measure in a ballot initiative in the November 2012 general election – a landmark challenge to decades of “drug war” dogma which could herald a shift as radical as the end of alcohol prohibition in 1933.

JD Leadam, 24, a bioplastics producer from Los Angeles, flew in just for the day. “This is the first time in the whole of the world that the process is completely legal. It's something that I can tell my kids about.”

After Washington, Alaska may follow suit later this year, with activists then targeting Arizona, California, Nevada and Maine, said Mason Tvert, director of communications for the Marijuana Policy Project. “Making marijuana legal for adults is not an experiment. Prohibition was the experiment and the results were abysmal,” he told a press conference.

Activists, customers and media gathered at the 3D Cannabis store for the first ceremonial sale. "It's 8am. I'm going to do it," said Toni Fox, the owner.

Tyler Austin, 21, who travelled from Georgia, held a sign saying 'It's about time'. 'I'm going to move to Colorado,' he said. Photograph: Ed Endicott/Demotix/Corbis

The first customer was Sean Azzariti, an Iraq war veteran who featured in pro-legalisation campaign ads. He bought an eighth of an ounce of an Indica strain called Bubba Kush and some marijuana-infused truffles. Total price, $59.74, including 21.22% sales tax.

State regulations insist every marijuana plant must be tracked from seed to sale but about 400,000 of the 2m tags sent in the post did not reach all stores in time. Authorities allowed licensed stores to sell regardless. The Denver Post called the glitch disappointing.

The three dozen stores that sold recreational pot on Wednesday will multiply in coming weeks. Regulators have issued 348 recreational pot licences: 136 for retail stores, 178 for cultivation, 31 for infused edibles and other spin-off products, and three for testing.

Cynthia Johnston, 69, bought two pre-rolled joints ($10 each) and an eighth of an ounce of Sour Diesel. “I've been working towards this moment since 1979,” she grinned. “Now, where can I smoke?”

Not in public spaces and not, according to notices which sprouted overnight, in many hotels. Pot must be consumed in private and cannot be transported over state lines, putting some restraints on the expected pot tourism boom.

Fears of joint-toking throngs in the street did not materialise by midday. Police said crowds were orderly and respectful. Denver City councilman Albus Brooks hailed their diversity and peacefulness.

As the first customers left the stores clutching their purchases jokes rippled across Twitter. “Curious if there has been a spike in Funyuns, Doritos and Taco Bell sales across Colorado today?” asked one.

Why the SC’s 377 verdict is actually a boon for the gay community

Jai Anant Dehadrai in the Times of India

Section 377 of the Indian Penal Code that criminalises homosexual behaviour is an archaic and cruel remnant of our colonial past, which ought to have been struck off from the penal-code decades ago. There are no two views about this.

But the question is, struck off by whom? Let us step back and assess the facts.

The Supreme Court’s verdict has left the LGBT community agitated and deeply hurt. Their expectation was that the Court would uphold the Delhi High Court’s verdict, which held Section 377 to be unconstitutional. To their dismay, this unfortunately did not happen.

The community has waged a painfully long battle against the extreme prejudice and cruelty they face in our society. Quite admirably, this fight for respect and equal rights has always been peaceful and dignified – never marred by the mindless violence that accompanies most ‘protests’ in India. No lives were lost. No buses were burnt. No riots were reported. Even post the verdict, the community assembled peacefully at Jantar Mantar, wearing black clothes as a mark of their disappointment.

In the immediate aftermath of the judgment, social activists and civil-rights lawyers have come out in unison criticising the Supreme Court. They are of the view that this verdict has stunted their efforts to bring equal rights for the Gay community. Some have even gone on to say that this decision, in one sweeping stroke, “has taken back the fight 100 years.” Senior lawyers, who shall not be named here, have also openly questioned why the Court “missed a crucial opportunity for reforming a societal prejudice.”

But the underlying message in Justice Singhvi’s 25 page judgment appears to have been lost in the din of voices competing to denounce the verdict. Some have termed it medieval and even immoral. But absolutely no one has challenged its legality. It is absolutely crucial that we uncover this subtle truth that we’re all missing.

For a truly lasting and meaningful change, the gay and lesbian community must realise that their means must justify the righteous end they seek. Had the Supreme Court struck down the offending Section of law and played to the galleries, the victory would merely have been a pyrrhic one. The community would have lost the ethical high-ground in their quest for respect and equality.

Here is why.

Simply put, the judiciary has no business to enter into the realm of law-making or policy formulation. It is only because our elected parliamentarians have been so busy doing everything else apart from their jobs, that the Supreme Court is forced to interfere and protect the common citizen. This sad trend has become so pervasive, that now we’ve come to expect it as the norm. This is absolutely unconstitutional and against everything Ambedkar – the original champion of civil liberties, stood for and fought for. Justice Singhvi’s judgment is a loud wake-up call for the entire country – reminding us that elected representatives sitting in Parliament on tax-payers money are tasked with the responsibility and authority to make or amend laws. Relying on the Supreme Court to decide these legislative and policy matters is akin to us giving a free pass to our politicians who would rather shirk their responsibilities than take hard decisions. 

The Supreme Court via this judgment has correctly shifted the spotlight onto our legislators and their shameful lethargy to evolve our legal systems. IPC 377 must certainly go – but it is the Union Executive which must rise to the occasion and effectuate this change. It is indeed shocking to hear national politicians like Rahul Gandhi  criticise the Court’s order – when it is in fact the job of his government to take the initiative and scrap the law. I am surprised that we’ve blinded ourselves to this obvious political hypocrisy.

We, as Indians ought to be grateful for a judge like Justice Singhvi, who displayed staunch moral courage in the face of contrarian public sentiment to do the right thing. His reasoning does not comment on the merits of the case – which is clear as day that the law ought to be changed by legislators. The judgment of the Delhi High Court completely ignored the doctrine of separation of powers between the organs of government, which frowns upon unnecessary judicial activism by over-eager judges.

Parliament must take into account the genuine grievances of the LGBT community and not only repeal this draconic penal provision but also put into place a policy framework to protect the rights and dignity of this crucial component of our society. 

Like Gandhiji said, ‘the means must justify the ends.’

Heroic Uruguay deserves a Nobel peace prize for legalising cannabis

The war on the war on drugs is the only war that matters. Uruguay's stance puts the UN and the US to shame

• 
• • Simon Jenkins
  • The Guardian, Thursday 12 December 2013 20.35 GMT

'Uruguay will legalise not only cannabis consumption but, crucially, its production and sale.' Illustration by Satoshi Kambayashi

I used to think the United Nations was a harmless talking shop, with tax-free jobs for otherwise unemployed bureaucrats. I now realise it is a force for evil. Its response to a truly significant attempt to combat a global menace – Uruguay's new drug regime – has been to declare that it "violates international law".

To see the tide turn on drugs is like trying to detect a glacier move. But moving it is. Wednesday's statute was introduced by the Uruguayan president, José Mujica, "to free future generations from this plague". The plague was not drugs as such but the "war" on them, which leaves the world's youth at the mercy of criminal traffickers and random imprisonment. Mujica declares himself a reluctant legaliser but one determined "to take users away from clandestine business. We don't defend marijuana or any other addiction, but worse than any drug is trafficking."

Uruguay will legalise not only cannabis consumption but, crucially, its production and sale. Users must be over 18 and registered Uruguayans. While small quantities can be grown privately, firms will produce cannabis under state licence and prices will be set to undercut traffickers. The country does not have a problem on the scale of Colombia or Mexico – just 10% of adults admit to using cannabis – and stresses that the measure is experimental.

This measured approach is still way in advance even of American states such as Colorado and Washington, which have legalised recreational as well as medical cannabis consumption, but not production. While the Uruguayan law does not cover other drugs, by depriving traffickers of an estimated 90% of their market, the hope is both to undermine the bulk of the criminal market and to diminish the gateway effect of traffickers pushing harder drugs.

Mujica's courage should not be underrated. His is a gently old-fashioned country, and two-thirds of those polled oppose the move, though this is up from 3% a decade ago. In addition some pro-legalisation lobbies object to his de facto nationalisation. An open question is whether a state cartel will be as effective as a regulated free market. But the drugs chief, Julio Calzada, is blunt: "For 50 years, we have tried to tackle the drug problem with only one tool – penalisation – and that has failed. As a result, we now have more consumers, bigger criminal organisations, money laundering, arms trafficking and collateral damage."

The response of the UN's International Narcotics Control Board has been to incant futile bromides. The move, says its chief Raymond Yans, would "endanger young people and contribute to the earlier onset of addiction". It would also be in breach of a "universally agreed and internationally endorsed treaty". Yet the UN admits that half a century of attempted suppression has led to 162m cannabis users worldwide, or 4% of the total adult population .

The 78-year-old Mujica notes the irony that many of his South American contemporaries agree with him, but only after leaving office. They include Brazil's Fernando Cardoso, Mexico's Ernesto Zedillo and Colombia's César Gaviria, all of whom have now called for the decriminalisation of the drug market so that they can begin to regulate a trade whose feuding operators are killing thousands of people each year. Thevalue of the drugs trade is second only to the trade in arms. Yet the US resists decriminalisation so it can continue to fight cocaine and opium production in Latin America and Afghanistan, to avoid confronting the real enemy: a domestic consumption that is out of control.

For all this, the futility of suppression is leading to laws crumbling across the west.Twenty US states have legalised medical cannabis. California this year narrowly rejected taxing consumption (turning down an estimated $1.3bn in annual revenue) and may yet relent. Drug use is accepted across most of Latin America and, de facto, Europe. Even in Britain, where possession can be punished by five years in prison, just 0.2% of cases prosecuted result in such a sentence. The most intensive drug users are said to be in the state's own jails. The law has effectively collapsed.

The difficulty now is to resolve the inconsistency of enforcers "turning a blind eye" to consumption while leaving supply (and thus marketing) untaxed and unregulated in the hands of drug traffickers. This is little short of a state subsidy to organised crime. Indulgence may save the police and the courts from the cost of enforcement, but it leaves every high street open to massive cross-jeopardy, from cannabis to hard drug use.

Ending this inconsistency requires action from legislators. Yet they remain seized by a lethal mix of taboo, tribalism and fear of the media. British policy on all intoxicants and narcotics (from booze to benzodiazepines) is chaotic and dangerous. The government on Thursday admitted its inability to control "legal highs", new ones being invented every week. It is running round back-street laboratories waving bans and arrest warrants like the Keystone Cops.

The catastrophe of death and anarchy that failed drug suppression has brought to Mexico and to other narco-states makes the west's obsessive war on terror seem like a footling sideshow. The road out of this darkness is now being charted not in the old world but in the new, whose heroic legislators deserve to be awarded a Nobel peace prize. It is they who have taken on the challenge of fighting the one world war that really matters – the war on the war on drugs. It is significant that the bravest countries are also the smallest. Thank heavens for small states.

Why do private-sector zealots choose to ignore the countless ways public money underpins daily life?

OWEN JONES 

Wednesday 13 November 2013

Free market capitalism is a con. The state is the backbone of modern British capitalism

 

 

Clutch your mobile phone close to your bosom, stroke it tenderly, and praise the Fairy Godmother of Free Market Capitalism that you’re not walking around with an obscene brick stuck to your ear, a breadstick aerial reaching towards the heavens. “Imagine what telephones would look like if the public sector had been entrusted with designing and making them,” as an opinion piece in theTelegraph had it this week, reflecting views widely held on the Right. “The smartphone revolution would probably be at least another couple of decades away.”

One tiny little flaw with this dystopic piece of counter-factualism: er, the public sector was entrusted with doing just that. Economics professor Mariana Mazzucato’s The Entrepreneurial State shows how – to take just one example – the Apple iPhone brings together a dazzling array of state-funded innovations: like the touchscreen display, microelectronics, and the global positioning system.

The governing ideology of this country is that it is the entrepreneurial private sector that drives human progress. The state is a bureaucratic mess of red tape that just gets in the way. But free market capitalism is a con, a myth. The state is the very backbone of modern British capitalism.

It begins with the state’s protection of property rights, which needs a costly legal system to protect. Patent law prevents companies having their products ripped off by rivals, and limited liability and insolvency law encourages investment by preventing shareholders being made personally liable for debts. As the economist Ha-Joon Chang has pointed out, in the early days of capitalism a businessperson would have to sell all their earthly possessions if they fell into ruinous debt, even facing the prospect of the debtors’ prison.

The state spends billions of pounds a year on research and development that directly benefits business: no wonder the CBI applauds “additional spending on research and innovation” that attracts business investment. Businesses depend on the billions the state lavishes on infrastructure, too. The CBI routinely demands more and more public dosh is thrown at roads and airport expansion. Our taxpayer-subsidised privatised railway network is a classic example of how our modern economic system works. The government splashes out several times more money than in the days of British Rail.

Recently, the House of Commons’ Public Accounts Committee denounced the Government for throwing a £1.2bn subsidy at British Telecom for building rural broadband. Fossil-fuel industries are granted effective subsidies, too, with generous tax allowances, and by leaving the state to deal with the costly environmental damage they inflict. A recent environmental committee of MPs found that nuclear power gets an annual subsidy worth £2.3bn, and arms exports benefit from government subsidies worth £890m a year.

Who do businesses depend on to train their workers? State-funded education, of course, and indeed there are those who advocate letting for-profit companies take over schools, which would mean taxpayers’ money subsidising shareholders rather than looking after children.

Many companies pay poverty wages, leaving the state to subsidise them with billions of pounds of tax credits, housing benefits and other in-work benefits. Businesses are even increasingly benefiting from free labour with the rise of so-called workfare, where they pay nothing to shelf-stackers and other workers, leaving the taxpayer to pay out derisory benefits instead.

Privatisation has proved a generous subsidy of the private sector, too, with £1 in every £3 of government spending on public spending going straight to profiteers. Like G4S, for example, which failed to provide the security personnel for the Olympics, leaving the state to come to the rescue. Or take PFI, where private contractors are paid to build schools and hospitals and lease them back to the state. The actual worth of the completed projects was £54.7 billion, but the taxpayer is projected to pay them £310 billion when it finally pays them off. And then there’s the financial system that all businesses depend on. It wasn’t free-market dogma that saved the banks: it was, of course, the state.

Free-market triumphalism is endemic among the British elite, but rarely challenged. It’s time to start exposing it for the sham it is. They demonise the state, but they are dependent on it. Perhaps they should be a bit more grateful.  

Rail privatisation: legalised larceny

Train operators invest little cash but take massive profits. This wasn't what the Tories promised

• 
• • Aditya Chakrabortty
  • The Guardian, Monday 4 November 2013 20.00 GMT

A London commuter train: no free seats, no free Wi-Fi – but good news for shareholders. Photograph: Dan Kitwood/Getty Images

"It needs access to private capital, access to private management, it needs more money into the business, and all this will become possible." David Cameron on Royal Mail, October 2013

As they flog our public assets, government ministers always promise one thing: that they will be better cared for by the new private owners. Sure, they may look like hedge funds out for a fast buck, but we must consider them investors, who will plough in their own millions to burnish the family silver.

Thatcher said it in the 80s; and now, during this second coming of popular capitalism, her grandchildren are saying it too.

While giving away Royal Mail at a bargain-basement price, David Cameron promised the result would be a flood of private cash. When a unit supplying the NHS with blood was handed over to private equity, Jeremy Hunt's officials pleaded the need for investment. And you'll hear that justification over and over again, as the coalition privatises a further £15bn worth of companies, departments and assets currently held by the public.

Never mind ownership, ministers will soothe us: lie back and think of the investment. So let's do that. Let's go back to the last great privatisation and see how much investment it yielded.

Tuesday marks the 20th anniversary of rail privatisation, the day when the government finally pushed through the legislation to break up and sell off our train services. Throughout the flotation process, successive transport ministers pointed at the goodies to come. Take this reliably bouffant pledge from Steve Norris: "There is not the slightest shadow of doubt that, freed from the constraints of public sector financing, train operators … will generate substantially greater investment in the railways because of the privatisation of British Rail."

Was he right? I asked academics at the Centre for Research on Socio-Cultural Change (Cresc) to calculate how much companies such as Virgin and First Group are investing in their services. They looked at their return on capital employed, which is to say the amount train operators made on the money tied up in their business. A low ratio would indicate an industry doing as Norris and his colleagues foretold: ploughing cash into delivering a better service. A really high ratio would indicate the opposite: barely any cash going in.

The figures are astonishing. In the financial year ending in March 2012, the train companies gained an average return of 147% on every pound they put into their business. Forget about high: that is stratospheric. It suggests that – despite all the promises made by the freshly rehabilitated John Major – the train operators are investing barely anything, but making bumper returns.

If you're a pensioner, imagine a savings account that promised to give you next year a 147% return on your cash, rather than the 1% you'll typically get now. If you're a first-time buyer, imagine selling up next year at a 147% markup – impossible even in primest, most central London.

Other businesses would kill for the kind of low-investment, high-returns that Arriva, Stagecoach and the rest are making from their train sets. Big supermarkets get about £1.08 back for every quid they put in: all that stock ties up a lot of cash. Even the supposed profiteers over at Barclays would punch the air at a 10% return. For every pound the railway barons put in, they get £2.47 back.

And that most recent figure isn't a fluke. The Cresc team went back all the way to the start of the electronic database in 2004, and found that year after year the pre-tax return on capital employed was never less than 100%. Just as remarkable are the train operators' dividends: pretty much all the profit after tax was paid to shareholders.

No wonder Richard Branson is a billionaire with his own private island. No wonder Tim O'Toole, boss of FirstGroup, and Brian Souter, head of Stagecoach, are on more than a million quid a year each. They are rewarded handsomely for handing over every spare penny to their shareholders.

But by the same token, no wonder passengers in cattle class can't get free Wi-Fi, or even a seat on the evening train out of Euston: there's no cash left to make the services worth the often excessive fares. The really big improvements, such as the west coast mainline upgrade now enjoyed by Branson's business, are funded by taxpayers. Heads they win, tails we lose.

A train lobbyist reading this (hi there!) will tell you that measuring investment by the operators is barking up the wrong tree. Arriva and the rest are essentially commissioned by the government to run a line. But that ignores three things. First, the industry never stops banging on about its role as an "investor". Second, free cash without having to pony up much actual investment is very welcome to the Branson empire, among others.

And finally, if the operators are merely there as middlemen, to sell us tickets and clip them, then why do we need them? Specifically, why is Cameron so desperate to give the publicly-run east coast mainline to the private sector?

Capitalism is meant to be about private firms taking risks and reaping the rewards. The rail network on the other hand is about the public taking the risk and racking up huge debts, even while the private firms reap excessive rewards.

Look at those investment return figures again: that isn't the triumph of liberalisation; that's legalised larceny. It hardly bodes well for the next wave of sell-offs.

Debunking the myths of your employment contract

Employment lawyer Philip Landau looks at some of the more common misconceptions about workers' contractual rights

Staff who familiarise themselves with their contract early on can avoid any nasty surprises further down the line. Photograph: Getty Images

Many workers are not aware of their contractual rights. Their written contract of employment (assuming they have one) is often only read in passing and they are consequently surprised – whether positively or negatively – when they have to rely on it. Here are several things that workers commonly believe, but are not actually true:

All the terms of my employment are set out in writing in my contract

A contract of employment is not necessarily one document; it can incorporate terms from a number of different sources, and can be written or verbal.

Express terms are those that are explicitly agreed between the parties (written or verbal), such as your hours of work, job description, notice, wages and sick pay. These terms could be found in a number of different documents such as a written statement of employment particulars, staff handbook, the job advertisement, payslips or, of course, the written employment contract itself.

Certain terms and conditions can also be implied into a contract of employment by common law or custom and practice. For example, both employer and employee have duty, trust and confidence implied into every relationship. If that fundamental trust is breached, a right of action could follow (in an employee's case, this would be a constructive dismissal claim). Other examples of an implied term can include an employer's decision to pay a bonus every year, or an enhanced redundancy pay, which could give rise to a custom and practice to receive such benefits.

My employer can't force me to relocate against my wishes

Yes, it can if you have a "mobility clause" written into your contract of employment. This would entitle it to move you to another location within the limits set out in the contract (unless your employer is acting unreasonably).

If you refuse to move, your employer may be able to avoid paying you redundancy.

If you do not have a mobility clause in your contract, you can generally refuse to move and still be entitled to receive redundancy payment. However, if the relocation is just a short distance (say a few miles) you could still lose this if you are seen to have unreasonably refused this suitable alternative employment.

My employer cannot vary the terms of my contract without my consent

Your consent may, in fact, have already been given when you entered into your contract of employment as there may be an express right reserved for your employer to make the required changes (a flexibility clause). This could apply, for example, to a change in job role or hours of work.

Such clauses are construed narrowly by the courts and your employer must act reasonably, but an employer will be in a far stronger position if the contract allows them to make this change. You may also have "impliedly" given your consent, especially if the imposed change is of immediate practical effect (such as a pay cut or change in commission structure) and you have continued to work without objection after the change. In these circumstances, there is unlikely to be a breach of contract by your employer.

My employer has to pay my outstanding bonus when I leave

If there is a clause in your contract of employment (which there often is) stating that you must be employed and not under notice "as at the bonus payment date", you may lose your bonus entitlement when you leave. Many are caught out when they resign and not aware of this clause.

Some employers purposefully choose to fast-track you out of the business to avoid you being employed at the bonus payment date – even if you have worked the full preceding year. They can do this by placing you on notice or making a payment under "pay in lieu of notice clause" in your contract. This is especially the case with bankers' bonuses, even where the announcement to make the bonus payments had been made many months beforehand.

I can work my notice when I leave my job

Once you resign or are given notice, you may think you would usually work that notice period. But assuming your employer has reserved the right in your contract, you could also be paid in lieu of your notice or put on garden leave.

Many individuals want to work for as long as possible as they consider prospective employers have more of a preference for candidates that are still employed. But employers will often want to cut ties early once a termination is on the cards – and pay in lieu of notice. You can't object.

If your employer elects to put you on garden leave, you are not required to attend work for the period of your notice, but are still contractually bound to your employer so cannot start a new job either. This is likely to have a greater impact, of course, if you have a longer period of notice.

It is always good to familiarise yourself with your employment contract so you can make the dealings with your employer work to your advantage when you need to. Or even better, try and negotiate more favourable terms before you sign it, as it will invariably be too late otherwise.

Are you familiar with the terms of your contract of employment? Have you ever regretted agreeing to certain terms or been surprised about what it contained?