2069 Years of Relevance

I read an interesting quote from Marcus Tullius Cicero in relation to Ancient Rome from 55 BC.

 

He said that:

 

“The Budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed. People must again learn to work instead of living on public assistance."

 

In the 2 months that have passed since the Budget, the quote made me revisit the key aspects.

http://stevesmithlive.blogspot.co.uk/2014/03/election-budget.html

http://stevesmithlive.blogspot.co.uk/2014/03/advice-furor_25.html

http://stevesmithlive.blogspot.co.uk/2014/04/substance-to-stench.html

The Budget wasn’t balanced, the Treasury isn’t being refilled, public debt is rising not falling, officialdom has never been more arrogant, our money is not well managed when helping foreign lands and there is little business incentive to create jobs to reduce public assistance and reliance. 

 

The quote is as relevant today as it was 2069 years ago. Yet with each budget that passes, we move further and further away from the ideals.

 

I tip my hat Marcus Tullius Cicero

R B S - An Update

A mixed bag of news for ‘our’ favourite bank RBS for Q1 2014.

 

On the plus side, it is making profit……and good profit at that. The troubled bank has doubled its profits in comparison to the same period in 2013.

 

How has RBS done it? Pretty simple really……sales up (14%) and costs down (15%)……the pretty basic features of most business profits. Which begs the question……why has it taken 5 ½ years to get to this stage.

 

There is a ‘but’ though……isn’t there always with RBS! The bank still expects to make a loss for 2014 due to the enormity of the fines / compensation they expect to receive during 2014.

 

So where does that leave the small matter of ‘us’ looking for a return on ‘our’ £45 billion investment in bailing the bank out?

 

More patience I’m afraid. The best case scenario is a return to sharing profit via a dividend payment in from 2016 (‘ish).

 

I’m not sure that too many people would have agreed at outset to an investment with no return for 8 years!

 

The pain continues I’m afraid.

PPI Is Sooooo Last Year

The Financial Conduct Authority’s latest report has highlighted that consumers are making less complaints about PPI mis-selling and the flood of gripes is slowing. There were 1.39 million new complaints in the last 6 months about the sale of the loan insurance……a fall of 22% compared with the previous 6 months.

 

I blogged last September on the next banking issue that was around the corner……

 

 

http://stevesmithlive.blogspot.co.uk/2013/09/and-next-bank-misselling-scandal-is.html

 

And low and behold……the regulator has announced that complaints about current accounts have risen by 8%.

 

As one storm ends, another one draws closer.

 

You make your bed……

Wronga

I’ve got a bit of a bee in my bonnet regarding anything that prays on the vulnerable or desperate……and ‘payday loans’ very quickly fit into that box.

Over the past week there has been some concern over a TV advert by Wonga. The issue escalated to such an extent that the advertising watchdog ruled that it “confused the public about the interest rates that applied”.

The commercial featured a conversation between two puppets about the costs of a Wonga short-term loan. The Advertising Standards Authority stated that the advert was “misleading by implying a representative APR of 5853% was irrelevant”.

My issue here is not Wonga……They pray on the vulnerable or desperate and we should expect their adverts to do exactly that……which they do.

My issue is that it took an advertising regulator rather than a financial regulator to stop this……and that was only due to complaints. Why is this not being picked up before it even gets to TV airing? All promotional material from a business card to a TV advertisement has to meet strict regulator criteria in the financial world……surely an APR of 5853% that is being promoted as ‘irrelevant’ would cause some concern with somebody? Surely?

I can’t make a company conform to my moral compass but I should expect it to confirm to a regulatory one?

Silly me……I expected better.

Cautious Optimism Definitely Maybe

George Osborne was given a significant boost yesterday after the International Monetary Fund (independent and impartial – we can trust them) retreated from its previous criticism of the UK’s austerity policies and predicted the UK will grow faster than any other ‘rich’ economy this year.

 

To avoid confusion……‘rich’ is described as the Group of 7 (G7). This is a group consisting of the seven advanced economies……Canada, France, Germany, Italy, Japan, UK and USA. Now, to ensure that there is no confusion between G7 and G8……G8 is the G7 plus Russia. Get it?

 

Anyway, the big deal is that the G7 countries account for around 40% of all money / growth made in the world. And for dramatic effect……that’s 40% from just 7 countries.

 

The IMF’s bi-annual analysis is looking pretty good……an upbeat forecast for the world economy generally and for the UK in particular. Given that it previously predicted growth for the UK at 1.5%, the latest prediction of 2.9% for 2014 is another substantial upgrade to the IMF's assessment of the UK outlook.

 

Lots to be confident about looking forward……we just need the growth figures to be ‘actual’ rather than ‘predicted’ and we will have some substance to support the confidence.

 

I’ll leave the last word to the politicians given that the General Election is just 12 months away……

 

In the blue corner……Chancellor George ‘Gorgeous’ Osborne hailed it as "proof that the economic plan is working".

 

In the red corner…… Shadow Chancellor Ed ‘Grow Some’ Balls accused the government of "complacently trying to claim that everything is going well".

 

Regardless, the IMF says there is plenty to be confident about……so I’m feeling confident. So there!

 

Substance To The Stench

I apply quite a simple rule to all the announcements in any Budget…… ‘what’s in it for them’.

 

Take a decision made by the Chancellor, question what’s in it for that political party, dissect it from a number of angles and then publicise what it really means. Pretty simple……but it seems to work.

 

My initial reaction to the Budget was one of anger and disappointment. I felt it was a party political broadcast aimed at those aged 55 and over as 75% of this demographic will vote in the General Election next year. That was my initial ‘off the cuff’ reaction……unsubstantiated and lacking any merit to back it up.

 

And then I took to the internet in search of substance to support my reaction…….and an HMRC report into ISA investor demographics popped up. It’s a 24 page report but there were two key messages that came out of it (you’re very welcome)……

 

(1) Average ISA Subscription

 

The table below highlights that the average amount invested in an ISA is £3,945. If this is the average amount invested, why increase the limit from £11,880 to £15,000?

 

 

 

(2) Average ISA Savings By Age

 

The table below highlights the average ISA savings value increases dramatically for the over 55’s. Or to put that another way……the increase in the ISA limit is most likely to benefit an over 55 as they will want and use it.

 

 

My initial reaction was……what a complete farce of a Budget. And I stand by that even more. All we should ever want from any Government / Budget is to represent us well, do what is right and do what is needed for our long term prosperity.

 

A blatant attempt at vote winning doesn’t tick any of those boxes.

 

If you are not angry, you should be.

Advice Furor

I am (obviously) a great advocate of people seeking advice when it comes to all matters relating to pensions in the UK. We have one of the most complicated pension systems in the world due to decades of rule meddling and the intertwining of a complicated tax system.

 

One of the up shots of the Budget announcements on pensions was the proposed increase in the options available for those retiring and also amendments to the pre-existing options. All in all, it made the subject of pensions more complicated than ever before.

 

It is now almost impossible to make an informed decision on pensions without seeking advice and for many this is outside of their financial reach.

 

Or is it?

 

The Chancellor announced in the budget that everybody should have the right to access free advice at retirement and launched the 'Advice For All' Scheme, setting aside £20 million to fund the initiative for the next 2 years.

 

Great news, right?

 

Oh come on.....you know the rules by now with this lot......always check the small print!

 

According to the 2011 census, 1.2 million people will retire over the next 2 years......which leaves the new 'Advice For All' Scheme providing £16.67 per person.

 

In a word......pathetic.

 

We all deserve better than this.