Loans and Finance

Loans and Finance

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News and information about loans, money, debt, finance and business issues.

Tuesday, September 29, 2009

Advice To The Co-operative Bank II

Despite forwarding the Co-operative Bank with a copy of my piece the other day about being bombarded with calls from their automated dialler, and despite pressing the correct buttons on my phone to remove my number from their database, they persist in calling me and asking for an unknown female.

Are these people completely incompetent?

I am very glad that I do not have an account with them, but wonder what it will take to get them to stop ringing me?

Monday, September 28, 2009

Shutting Stable Doors

Listen very carefully and you will hear the sound of a stable door being slammed shut by Darling and Mandelson.

Ahead of Alistair Darling's Labour conference speech outlining new rules to curb bankers' bonuses, Lord Mandelson spoke on BBC's Radio 4 programme.

He noted that Gordon Brown, as Chancellor, had introduced new legislation that "sorted out a ragbag of different regulatory processes" in financial services to make them "much leaner, meaner and more efficient".

Aside from the obvious point that the Tripartite system was hardly "leaner, meaner and more efficient", it is clear that if Darling is now having to introduce further regulations, it is clear that Brown's regulations weren't up to the job.

Mandelson will say later today that we rely too much on the financial services industry.

Fair comment, except this has been known for many years.

What exactly will he replace it with?

Later today Darling will outline plans to:

-End automatic bank bonuses year after year.
-End immediate payouts for top management.
-Defer any bonuses over time so they can be clawed back if they are not warranted by long term performance.

All very well.

However, as can be seen with the change of HQ for the CEO of HSBC, bankers will simply up sticks and leave.

The stable door may now be slammed, regrettably the horses have long since bolted!

Friday, September 25, 2009

HSBC Moves CEO

HSBC is relocating Michael Geoghegan, its chief executive, from London to Hong Kong as from February next year.

HSBC state that there are no plans to move the company's domicile from the UK.

However, as the G20 ponder what they intend to do to punish bankers for their hand in the economic mess and as the UK 50% tax rate kicks in, doubtless the fact that Hong Kong has a 16% tax rate may well have a bearing on future plans for the location of HSBC.

Thursday, September 24, 2009

Advice To The Co-operative Bank

Yesterday I was plagued by calls from this number 08453550305.

An automated system kept calling with a pre recorded message, allegedly from the Co-operative Bank, asking for an unknown lady (not myself or anyone known to me) to press a button in order to speak to an operator.

Not unreasonably I hung up each time, as it bore all the hallmarks of a scam.

However, on conducting some research into the matter I see that in fact this is the preferred means of contact that the Co-operative Bank employs when chasing its customers (I am not a customer of the bank).

The fact that many people have complained to the bank (see this site for examples), telling them that it sounds like a scam, and as such they hang up, appears to matter not one jot to the bank.

They continue to use this system; plaguing their customers and non customers (such as myself) morning, noon and night.

My advice to the Co-operative Bank is simple:

1 Do not use automated systems to contact your customers.

2 Listen to the complaints for your customers, and innocent third parties.

3 Take my phone number off your database.

In the event that you are plagued by calls from the Co-operative Bank, call 0161 837 8769 and ask for the Chief Executive's Office.

Wednesday, September 23, 2009

Turner Gets Heavy

Lord Turner, chairman of the Financial Services Authority, last night at the Mansion House launched another attack on the banking industry.

Turner said that bankers faced a future stripped of profitable businesses:

"British citizens will be burdened for many years with either higher taxes or cuts in public services because of an economic crisis ... cooked up in trading rooms where many people earned annual bonuses equal to a lifetime's earnings of some of those suffering the consequences."

He added:

"Top management, in particular of banks involved both in complex trading and retail banking, needs ... to be willing to recognise that there are some profitable activities so unlikely to have a social benefit they should voluntarily walk away from them."

I would make a number of observations:

1 The higher taxes, needed to plug the fiscal black hole, are in part due to the fact that Brown failed to "put something away for a rainy day" during the "years of plenty". Instead he chose to "spend, spend, spend".

2 Where was the FSA during the period of "reckless" lending, when banks "cooked up" these failed schemes?

3 The financial catastrophe is in no small part down to the failure of regulation, emanating from the "bugger's muddle" of the tripartite regulatory system created by Brown.

4 Labour was happy to "schmooze" with the City during years of plenty, and had its fingers in the till earning billions in tax from the profits and pay of the banks/bankers.

5 The country did well out of the years of plenty, we are a far wealthier and more advanced nation than we were 30-40 years ago. This is a direct result of globalisation and freeing of currency flows. The current financial crisis has not set us back 30-40 years; ie we are still better off.

There will always be financial crises, each one different from the other. Turner and the G20 are unlikely to find a panacea that will prevent the next.

Tuesday, September 22, 2009

A Slap On The Wrists

The Office of Fair Trading (OFT), having spent four years investigating public sector construction tender rigging, have fined the construction industry a trifling £129.5M.

This fine represents no more that 2% of each business's turnover.

Seemingly the OFT was worried that a larger fine would push the construction industry further into recession.

Maybe so, but what about the millions of pounds of public money that has been wasted because of this tender rigging?

Monday, September 21, 2009

A Dose of The Clampis

The Times warns that there is a highly sophisticated Trojan virus, Clampi, on the loose that steals online banking log-in details from infected computers.

The Clampi virus is spreading rapidly across hundreds of thousands of computers in Britain and the US.

The virus captures log-in and password information wrt financial sites, and sends it to a server run by the cyber criminals. They can then tell the compromised computer to send money to accounts that they control, or they can buy goods with the stolen credit card details.

The virus has a list of more than 4,500 finance-related websites that it monitors, including British high street banks.

Security experts warned that it was one of the stealthiest and most pervasive threats to computers using the Microsoft Windows operating systems.

Monitor your accounts closely.

Friday, September 18, 2009

Tax Relief on Lap Dancing

I see that Harriet Harman is trying to abolish tax relief on lap dancing, whereby she claims that the VAT etc expended on corporate entertaining in a lap dancing club can be reclaimed as a legitimate business expense.

Since when was she made Chancellor of the Exchequer?

Will this proposed tax change apply to only female lap dancers or males as well?

Will it apply to establishments classed at restaurants where there is a cabaret performance that may, or may not, include a lapdance/striptease?

Oh, one other small point, client entertaining is not an allowable deduction when calculating corporation tax.

Maybe she could find something else to apply her "talents" and energy to?

Thursday, September 17, 2009

The Final Nail in The Coffin

It would appear that the unions and management of the Royal Mail "service" are determined to destroy the business as it now stands.

The Communication Workers Union (CWU), representing 120,000 Royal Mail staff, has said that it would distribute ballot papers for a vote on a national strike.

The Royal Mail service has already been severely disrupted over the last few months, as a result of wildcat strikes across the country over complaints about pay, job security and services.

Needless to say these strikes cause numerous problems for individuals and businesses who rely on the mail.

The result will be that people simply look for alternatives eg; email, BACS, direct debit, phones, private delivery services etc etc.

Thus the Royal Mail will implode, and the remaining rump will be bagged up into neat portions for privatisation.

Given the fact that there is a recession, it is quite remarkable how pig headed both the unions and management are being over resolving their "issues" in a sensible manner.

Let us be rid of this 19th century anachronism once and for all!

Wednesday, September 16, 2009

Lloyds May Give Up Halifax

The European Commission, in the guise of Neelie Kroes (the Competition Commissioner), has warned that Lloyds Banking Group may have to split off Halifax as punishment for the state aid that it received in 2008.

Gordon Brown waived competition rules in September 2008 in order to allow Lloyds to take over HBOS in a rescue deal. Although this will be deemed yet another personal blow to this deal that he orchestrated (ie he twisted arms to save his political skin), splitting off Halifax will increase competition within the banking sector.

Doubtless Sir Victor Blank, ex Chairman of Lloyds, who was conned by Brown into merging with HSBC and also paid a price as he was forced to stand down as chairman, will not be shedding any tears for Brown's hurt "pride" if the EU get their way.

Tuesday, September 15, 2009

Named and Shamed

The Financial Ombudsman Service (FOS) has finally had the guts to name and shame the worst offending financial services companies in the UK, being those companies that have logged the highest number of customer complaints.

Congratulations to the five major high street banks, which account for the majority of the complaints.

The big five have managed to notch up a staggering 38,286 complaints, out of a total of nearly 70,000 received by the ombudsman in the six months to 30 June 2009.

- Lloyds (which includes HBOS) came top to the league of shame with 15,233 complaints.

- The Royal Bank of Scotland group scored 5,533 of the complaints received by the ombudsman.

- Barclays scored 8,283.

- Abbey scored 2,493 complaints.

- HSBC group scored 2,363 complaints.

- Alliance & Leicester scored 1,786.

The chairman of the FOS, Sir Christopher Kelly, was more than unimpressed. He is quoted:

"I will now be writing to the chairmen of the financial businesses that generate the largest proportion of our complaints workload, to ask them to consider very carefully both their own complaints performance – as reflected in the data we are publishing today – and the complaints performance of their competitors."

As I have noted many times before, the financial services sector in the UK treats its customers appallingly.

Why does it use the word "services" in its moniker, given that "service" is the one thing that it doesn't provide?

Monday, September 14, 2009

The False Dawn

The Ernst & Young Item Club has warned that the recent rise in house prices may in fact be a false dawn, they go on to say that property values will not return to their 2007 peak for at least another five years.

However, The Council of Mortgage Lenders (CML) report that the number of loans granted for house purchase in July was 19% higher than in July last year.

Seemingly, in the eyes of CML, this is the "first material annual growth" since early 2007.

The CML do admit that banks are still rationing the amount that they lend:

"The scarcity of mortgage supply and tough lending criteria is making it particularly difficult for first time buyers to enter the market.

Given that they typically purchase cheaper properties, this will have significant implications for those looking to trade up, clogging up the market and limiting the number of transactions taking place
."

The banks, as they have always done, will only ever look after their own interests. Only if it is in their interests to kick start the property market, by loosening their lending conditions, will they do so.

Friday, September 11, 2009

Snouts In The Trough

It would seem that it is not just bankers and politicians who can't resist putting their snouts into the trough, seemingly the ex directors of MG Rover could not resist taking a dip either.

A report into the collapse of MG Rover, which cost 6,500 people their jobs, stated that the four directors (aka "The Phoenix Four") and CEO (Kevin Howe) awarded themselves "unreasonably large" payouts.

Their self indulgent largess "earned" them pay and pensions worth £42M which, needless to say, was "out of all proportion".

The Phoenix Four and CEO have reacted by calling the report a "witchhunt" and a "whitewash for the government".

Quote:

"Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover."

That may well be the case. However, the size of the remuneration (given that the company did collapse, and that it was beyond the norm in the industry and the mens' previous lives) is clearly beyond what was deserved.

Lord Mandelson criticised the men for not showing "an ounce of humility".

The 830-page report took four years to produce and cost about £16M. It does not contain much in the way of criticism directed at the government.

The directors would do well to remember that their excessive rewards may have been justified had the business succeeded, but were most certainly not justified in the face of failure.

Thursday, September 10, 2009

RBS Cuts Charges

RBS (the taxpayer funded bank) and its NatWest subsidiary have, admittedly by implication, admitted what everyone knew all along, namely that bank charges for bounced cheques etc are simple profiteering.

RBS and Natwest have announced that they are cutting the fees they charge customers who go overdrawn without agreement, or exceed their overdraft limit.

As from 1 October, charges for a "bounced" cheque, direct debit or standing order will fall to £5, down from £38.

Other charges such as maintenance charges for overdrawn accounts and the paid referral fee will also be reduced.

Clearly, were the administration costs to the banks really that high then these cuts would never have been made.

Currently eight lenders are challenging the right of the Office of Fair Trading to decide if overdraft charges are fair or not, in the face of a million claims by hapless bank customers for the return of their unauthorised overdraft charges.

As to whether other banks follow suit remains to be seen.

Wednesday, September 09, 2009

Boom and Bust Are Inevitable

I am amused to see that Alan Greenspan, the former US Federal Reserve chairman, is quoted in The Times thus wrt the recent/ongoing financial crisis:

"It's human nature, unless somebody can find a way to change human nature, we will have more crises and none of them will look like this because no two crises have anything in common, except human nature."

I agree, humans always delude themselves into thinking that boom times can be perpetual; they never are.

Even our "respected" and "decisive" prime minister was deluded, being on the record as saying that he had put an end to "boom and bust".

I wonder what other delusions he holds?

Tuesday, September 08, 2009

Barclays Incompetence

Barclays, the bank that once boasted of its record breaking size, has been fined a record breaking (the eighth largest ever) £2.45M by the Financial Services Authority (FSA) for "serious" breaches in its reporting of trades.

Barclays managed to fail to report/incompletely report a staggering 57.5 million transactions.

From 1 November 2007 to 31 October 2008, 100% of Barclays' reportable transactions from every 'core asset class', except cash equities, were either reported inaccurately or not reported at all (84% of cash equity transactions were affected).

A staggering display of incompetence by Barclays.

Saturday, September 05, 2009

Truly Dismal

Should anyone need convincing as to how badly served the people of Britain are by the financial services industry then all they have to do is to look at the figures covering complaints made to the Financial Services Authority (FSA).

During the period 2006 to 2008 the overall number of complaints increased by 5.7%, from 1.4 million to 1.48 million (8,000 per day!).

The worrying aspect being that these are just the complaints that have been registered by consumers, there are many more.

The British consumer is ill served by the financial services industry.

Friday, September 04, 2009

In Denial

Alistair Darling has rejected claims from the Organisation for Economic Cooperation and Development (OECD) that the UK economy will not pull out of recession until 2010.

The OECD claim that the UK economy will record zero growth in the final quarter of this year, while the eurozone and the US will score two quarters of growth.

Darling, on Radio 4, said:

"The OECD has made predictions in the past ... Some have turned out not to be spot on

My prediction in the budget was that this country would come out of recession around the turn of the year. I hold to that view
."

The trouble is that this government has been remarkably inept in "predicting" this crisis, in reacting to this crisis in a timely manner and in ensuring that there were sufficient reserves to manage this crisis.

Why should their predictions be any better than the OECD?

Why should we believe them?

Gerson Lehrman News

I write articles covering business issues for Gerson Lehrman News, and am an Accounting & Financial Analysis Council Member (AFA Council Members include CFOs, former top regulatory body officials, partners from the world's leading accounting firms, academics, forensic accountants, and other financial executives).

The news articles can be accessed via this link Gerson Lehrman News.

Thursday, September 03, 2009

Lagging Behind

It should come as no surprise to learn that the Organisation for Economic Co-operation and Development (OECD) has predicted that Britain will lag the other leading industrialised countries as they come out of recession.

The OECD expects the UK economy to contract by 4.7% this year, compared with a predicted Euronzone contraction of 3.9%.

The OECD predict that Canada will contract by 2.5%, and the US by 2.8%.

The OECD predicts that the US and eurozone will return to economic growth during the third quarter of 2009. However, the laggardly UK will not return to economic growth until 2010 next year.

This poor performance is somewhat "embarrassing" for Grodon Brown in the run up to an election.

Wednesday, September 02, 2009

Amber Alert

Full credit to John Browett, chief executive of DGS (owners of Curry's and PC World), for offering to take a 25% cut in pay.

Shareholders will vote on the plan today.

However, they may not be so pleased with the other part of the plan whereby Browett receives share options which apparently are not related to the performance of the company.

The Times reports that the Association of British Insurers has issued an "amber top" alert, seemingly the proposal may breach its guidelines on best corporate governance practice.

Board members' remuneration should in part (eg bonuses/options) be linked to the performance of the company as measured by key performance indicators (KPI's), as agreed upon by the shareholders and an independent remuneration committee.

Tuesday, September 01, 2009

The Last Gasp

In the last gasp of a dying government, Gordon Brown attempted to play to the gallery and divert attention from the fallout of his 50% tax rate, by calling for an international debate on a possible cap on bonuses in the financial sector.

Debate there may well be.

However, there isn't a cat's chance in hell of their being a unified international agreement on a cap.

This ploy by Brown is designed to take people's eyes off the flight of capital and skilled resources from London, in response to his 50% tax rate and higher NI contributions.

Brown has bankrupted Britain, and is crippling London's role as the centre of the global financial services industry.