More RBS Muddy Waters

Yet more muddy water involving banks and politics……who’d have thought it!

 

The Story......

 

Business Secretary Vince Cable has referred the state-backed (80% tax payer owned) RBS to the City regulator (Financial Conduct Authority) amid renewed allegations over its treatment of struggling business customers.

 

The Accusations……

 

RBS has engineered the transfer of a significant number of business customers into a specialist division which manages the bank’s problem loans in order to profit from the higher fees it can charge.

 

RBS frequently appoint favoured accountancy firms to oversee the work-out process, resulting in the outcome desired by the lender but which sometimes entails companies being placed in administration.

 

My Thoughts……

 

We can debate long and hard about the moral position (or lack of) within the banking sector, but ultimately they will push the limits to the extreme for the benefit of their bottom line.

 

The morality of banks is not the issue here……why has it taken a politician to refer this to the regulator? Why has the Financial Conduct Authority not uncovered this as the regulator?

 

There can only be two explanations: (1) The regulator is incompetent and / or (2) no rules have been broken.

 

Inexcusable either way.

Co-operative Flowering

It’s been quite a few days for the ex-boss of failing Co-operative Bank Paul Flowers.

 

Tabloid revelations suggest that he has been caught buying Class A drugs as well as having ‘relations’ with ladies of the night.

 

I do not approve or understand the need for either……but the biggest scandal and story is perhaps elsewhere……

 

How did a man with ‘very limited’ experience (and I am being very charitable here) end up in March 2010 becoming chairman of the Co-operative Bank - a bank with £50bn of assets, £36bn of customer deposits and 4.7m customers?

 

How did he ever meet the requirements of the Financial Service Authorities regulatory requirements of a 'fit and proper' individual?

 

Answers on a post card? Perhaps not……

 

Gordon Brown’s Labour were in power in March 2010 – the time when Paul Flowers needed to meet the ‘fit and proper’ requirements.

 

Coincidentally……Paul Flowers currently sits on Ed Miliband’s Labour Finance Advisory Group.

 

Very good of Labour to be so ‘co-operative’!

Realty Reality

Will everyone just slow down a second……the housing market needs a reality check. In fact, David Cameron you need the biggest slice of fact as you have gorged on fiction yet again.

 

If you were to believe the Council of Mortgage Lenders, Royal Institution of Chartered Surveyors, David Cameron, anyone mildly associated with David Cameron, any Estate Agent, my Aunty Eileen……you would be under the impression that the property market had been rescued overnight……all due to the great success of the Help to Buy Scheme self-congratulatory introduced by……(you guessed it) David Cameron.

 

Let’s cut to the chase here.

 

Mortgage approvals for house purchases over the past month were 67,000. This is the highest level since February 2008.

 

HOWEVER:

 

(A)  Of this figure, only 2,000 used the Help To Buy Scheme. That’s less than 3%.

 

(B) The combined borrowing figure of £365 million using the Help To Buy Scheme  
      represented less than 1% of the total amount borrowed.

 

Perspective is worth so much more than cheap headlines.

 

If only Westminster realised this.

 

2 x Olympic Freebie

The 40% tax payer owned Lloyds Banking Group has announced that they have set aside a further £700 million to cover additional compensation they must pay out for PPI claims.

 

This will take the total compensation payouts across the banking sector for PPI claims to a staggering £18 billion pounds. To put this into perspective, this is twice the cost of the Olympics. That's scary.

 

Now I could spend the next fortnight slamming the morality and ethics (lack of clearly) of the banking sector......but here's my controversially positive take on things......

 

The basic reality is that the UK economy has had an £18 billion injection of 'free' cash distributed to consumers. And here is the crucial thing......there is now sufficient confidence for the population to spend it.

 

We are a consumer driven economy and our economic prosperity is based on the population spending money......this readily available £18 billion has brought us cash to spend.

 

The evidence in some sectors is staggering. Car sales are up 16% in the last year. Mortgage approvals are at their highest levels for 3 years. House sales are at a 5 year high.

 

Now I appreciate we have a long way to go to get prosperity back to pre Northern Rock times (can't believe that is 5 years ago) but a corner is being turned.

 

Lots of winners on the back of the banks being the loser!

 

And one final key point......do not let the political parties spin you into believing that this was down to their policies......it is purely down to the banks paying for their morality failings.

 

Long way to go but it is definitely a start.