HMV Collapse

Now that HMV has gone the way of Jessops and placed itself in administration, aside from the worries faced by the staff of HMV those with gift vouchers will also be worried.

As of today HMV have stopped accepting HMV gift vouchers. Whilst the administrators may choose to accept them at some stage in the future, there is no guarantee that they will. Additionally, if any part of the chain is sold to a third party the new owner is under no legal obligation to accept the gift vouchers.

Which? recommend that those holding gift vouchers in failed chains such as Jessops and HMV write to the administrators to ask for a refund (a process that offers no guarantees and may well take at least 12 months). Which? have a helpful Q&A section wrt failed retailers, which also has a link to a template for a letter asking for a refund of gift vouchers held.

Ironically, not everyone has done so badly out of the failure of HMV. A number of companies/individuals heavily shorted HMV in the days running up to its demise in the hope of making a killing out of its failure.

#Grexit Morphs To #Crexit

The eye of the storm moves to Cyprus.

FSCS £3M Campaign

FundWeb reports that the Financial Services Compensation Scheme (FSCS) is to spend £3M on a second advertising campaign to make consumers aware their savings are safe if banks go bust. The first campaign that cost £4M in 2011 was halted, after it failed to make a positive impact.

The campaign will be funded by banks and building societies, and will run until 31 March 2014.

The rationale for the scheme was explained by FSCS chief executive Mark Neale:

“Our research showed a lack of understanding and knowledge about the protection we provide. We want to reassure the majority their money and savings are safe, and warn those who unwittingly put their money at risk.

We need to build awareness over time and cannot wait for the next crisis to try to engage people. By then it will be too late and queues will already be forming.”

In other words the banking industry is scared stiff of a run on the banks as and when the next crisis occurs.

Advice To Bankers

Ethics is not a county just outside of London!

The PPI Ill Wind

The old saying "it's an ill wind that blows nobody any good" has been proved by some statistics released by the Financial Ombudsman Service (FOS).

The FOS, which deals with PPI claims when banks and their customers cannot agree a settlement, said it had increased the number of expected new cases for the 2011/2012 financial year to 375,000.

In view of this increased workload it has taken on 1,000 extra staff to deal with the backlog.

Jessops On The Verge of Administration

The Telegraph reports that Jessops the camera retailer is on the verge of administration.

As such there is a risk that, once in administration, Jessops's gift vouchers may no longer be accepted if the administrator decides they are no longer valid in the stores.

UPDATE

PwC has now confirmed that Jessops has now filed for administration.

The Emperor's Clothes of Banking

Kudos to Vernon Soare, executive director of professional standards at ICAEW, for exposing the emperor's lack of attire in yesterday's Parliamentary Commission on Banking Standards wrt the banking "profession" by noting that there:

"isn’t actually a banking profession".

Well said!

Eurozone Unemployment At All Time High

The number of unemployed people in the Eurozone rose to record levels in November, rising to 11.8% from 11.7% the previous month. Spain, at 26.6%, had the highest level of unemployment.

In total 18.8 million people were unemployed in the Eurozone, an increase of 113,000 from the previous month.

The seeds of the Eurozone's destruction have been sown, the only question is when will the harvest be reaped.

Basel III - Kicking The Can Down The Road?

Banks have been given several years to meet new rules governing the amount of liquid assets they must hold on their books to see them through a short-term market crash.

The Basel Committee on Bank Supervision has stated that banks would only need to have 60% of the necessary short-term funding in place when the rules become effective in January 2015, and would have until 2019 to fully implement the liquidity coverage ratio (LCR).

The new rules also widen the range of assets that banks can put in the buffer; these now include shares and retail mortgage-backed securities (RMBS), as well as lower rated company bonds. Despite the fact that these can only be included at a hefty discount, this is an indication that the Committee recognises that there are problems within the banks' balance sheets.

The rationale for this easing of the rules was explained by Sir Mervyn King, who told the Telegraph that it had decided to opt for a “graduated approach” to avoid “disruption to the orderly strengthening of banking systems or the ongoing financing of economic activity”.

In other words the Committee was worried that the rules would knock any nascent recovery for six. As to whether this slackening of rules actually helps banks and the global economy recover, or simply kicks the can further down the road, remains to be seen.

Accountancy Age's Financial Power List 1013: Big Hitters

I have been placed 25th on Accountancy Age's Financial Power List 2013: Big Hitters, a rundown of who the magazine thinks will be the biggest players in accounting and finance during 2013.

25 Ken Frost, serial blogger and HMRC agitator
A long-time thorn in the side of the ICAEW in his blogging capacity, Frost has found that HMRC's travails have taken up a bigger chunk of his social media efforts. Not that the institute is out of his line of vision, but his probing questions and good contact base make http://hmrcisshite.blogspot.co.uk an amusing and revealing read.

Happy Fiscal Cliff Day

Good luck to the people of the world relying on American politicians not tipping the USA back into recession today!

The #economia50

My thanks to those who voted for me in economia’s (the official magazine of the ICAEW) list of the top 50 most influential sources of finance news and information in social media.

I am number 30 on the list.

As per economia:

“We asked, and you responded. Here are the top 50 most influential sources of finance news and information in social media, voted for by economia readers and ordered by PeerIndex…

As part of the Global Finance 50 project, this month economia asked readers for their go-to sources for financial news in the world of social media.

Using the hastag #economia50, readers sent us their nominations, we counted the votes and ranked them according to influence in association with PeerIndex, to reveal the economia Finance Twitter 50.

Topping the list is Michel Barnier, the EU commissioner who oversees financial regulation. The bilingual bureaucrat’s presence at the top of the list suggests the significance of the ongoing EU audit debate as well as the general uncertainty over the eurozone.

Aside from the influence of Europe, the list is dominated by journalists, with Newsnight’s economics editor Paul Mason coming in at number seven. The energetic tweeter offers insight to the UK economy and the political machinations behind it.

Flying the flag for chartered accountants in the top ten is Richard Murphy, founder of the Tax Justice Network and an advisor to the TUC on taxation and economic issues. A sometime columnist for The Guardian and Forbes.com, he offers his followers forthright views on the profession.

Never afraid to express his opinions on HMRC or the profession in general, Ken Frost rounds out the top 30. Frost writes regularly on his own website and blogs for Metro.

Given her role as chair of the Public Accounts Committee, which has spent the last month lambasting tax avoidance schemes used by large companies in the UK, it’s no surprise that MP Margaret Hodge features on our list at 37.”

The full list can be seen here economia.

UBS Fined $1.5BN

Last Friday I wrote that UBS was to be fined $1Bn for its role in the LIBOR rate fixing scandal.

I was wrong, UBS has in fact been fined $1.5BN.

Mea culpa!

RBS and NatWest To Refund £10M

It appears that some bank customers when withdrawing cash from an ATM are a tad forgetful and, believe it or not, don't actually take the cash dispensed from the machine.

What happens then?

The ATM sucks the cash back in and recredits the customer's account.

Well that's how most banks treat it, except NatWest and RBS which don't; instead, up until now, they have been crediting a "dump account".

However, that seems set to change as Finextra reports that Royal Bank of Scotland and NatWest have set aside a £10M reserve to refund up to 300,000 customers who made a withdrawal at the ATM but walked away without the cash.

The bank is apparently checking its records over the past seven years and will repay the money, plus the interest earned on the sum, to customers who forgot their cash. 

 

This brings a whole new meaning the phrase "bank error in your favour".

Cyprus To Default

According to Cyprus Finance Ministry Secretary Christos Patsalides Cyprus is going to default within days unless it receives Euro300BN.

Oddly enough there are some people who have been taken by surprise by this development.

I don't understand why, in August I wrote the following:

"Cyprus has barely managed to sell Euro23.1M of government bonds.

It achieved a "bid to cover ratio" of 1 (ie there were only just enough "punters" prepared to buy them), at a yield of 7% (the last auction in June achieved a yield of 6.25%).

A yield of 7% is "the point of no return"; it is the level at which Greece, Portugal and Ireland went with their begging bowls to others asking for a bailout.

Why is Cyprus having problems?

Around 40% of its largest banks' exposures are to Greece."

Therefore this should come as no surprise to anyone.