BEWARE! THE BANKS ARE OUT TO GET YOU!

[Tizer]

These pension access scams have featured in several Paul Lewis Money Box programmes. The problem will go from bad to worse next April when the latest rules come into force. At a time when we desperately need to make pensions as simple as possible the Government is making them hideously complicated and many people will make terrible choices about taking out pension cash early and others will fall victim to a tsunami of scams which people in the pension business are predicting. It's so bad that there is the possibility that pension companies are not going to sign up to the new scheme.

On your previous post about the markets and QE...Philip Aldrick, the economics editor at The Times, wrote a good article on Saturday spelling out the dangers ahead. He's very, very worried about the prospects and says Europe is back at 2007, about to hit the buffers again. He wants us to return to the old `moral hazard' standard where investors bore the risks that came with their investments. QE has swept away this risk and propped up the market and now we can't wean ourselves off it. We've got to bite the bullet and ease off QE, especially in the USA, but the corporates don't want to lose the easy money now they're accustomed to it.

[Stanley]

I agree about both pensions and QE. See this LINK for a Guardian article that reinforces what Philip Aldrick says. The financial system is on the gravy train but the government and the tax take isn't. Funny how they can't see that this is the inevitable result of allowing money to flow into the pockets of the investors instead of the consumers is to damage the overall economic prospects. The logical conclusion is that we get into 2008 again but the 'advisers' seconded to the government by the financiers and accounting companies aren't going to spell this one out!

[Tizer]

6 November 2014, BBC web page
`Bank of America adjusts results due to legal costs'
Bank of America has set aside $400m (£253m) due to rising litigation costs associated with a probe into foreign currency manipulation at the bank. That more than tripled the size of its previously-reported third-quarter loss to $232m from $70m. The bank has been engaged in "advanced discussions with certain US banking regulatory agencies to resolve matters", it said in a statement. Last week, Citigroup was also forced to restate its results. And both Deutsche Bank and JP Morgan have said in separate earnings releases that they have set aside over $1bn each to deal with the same investigation. On Monday, JP Morgan further specified that the investigation, being led by the US Department of Justice, could cost the bank as much as $5.9bn."

Is there any bank that we can trust, here or in the US?

[Stanley]

'The Bank of Mum and Dad'?

[Tizer]

We tried to open an account with Handeslbanken because they have a good reputation for customer service and ethics...but they didn't want us! Just told us they'd got enough customers, thank you.

[Stanley]

THIS REPORT in the Telegraph is worth reading and reflecting on. While Cameron and Osborne feed us with ersatz good news about the 'miracle' that is the UK economy, cold statements of fact like this focus on the underlying truths of the global economy which of course has an important bearing on us.

[Stanley]

THIS REPORT about the fines imposed by the regulators in the UK, US and Switzerland is further evidence of the fact that the banks were out of control, they were fixing the rates for their own benefit. Two things, one commentator said that he was disturbed by the fact that some of these activities happened after the first LIBOR cases were discovered and as far as we can see, nobody has been arrested for fraud. Oh and by the way, guess who will end up paying the fines.
How long do we let these cowboys get away with it? The clamp down on the pay day loans companies, while welcome. is too little and too late and is simply tinkering round the edges of the system. The sums involved in the major banks are enormous in comparison. Disgraceful....

[Tizer]

...and there's also this in N. Ireland:
`Ulster Bank fined £2.75m over IT meltdown'
Ulster Bank has been fined £2.75m (3.5m euros) by the Central Bank of Ireland over a 2012 IT meltdown which left around 600,000 customers unable to use their accounts for up to a month.
http://www.bbc.co.uk/news/uk-northern-ireland-30009431

[Stanley]

I saw that as well Tiz but thought I had been gloomy enough! What strikes me as the facts emerge about the chat rooms conversations and emails is how immature the members of the 'A Team' were. They were greedy kids playing a computer game with extremely large prizes.
Daughter Janet and her late husband Big Harry both worked for investment banks and from what they told me all those years ago the ethos was centred on one thing, making profit. Janet was on the compliance and security side and said that whenever she warned the management about the possible dangers of the new algorithms the whizz kids were coming up with she was always asked 'will it make money'.
The rigging of the rates wasn't algorithm based it was pure greed and affected many trillions worth of transactions each day. In some ways the algorithms are worse. J told me that once they are in the system, because of the way the programmes are structured, they act almost like a virus and in her opinion the only way to clear them out was to write clean programmes, scrap the old hard disks and memories, put new ones in and re-install clean programmes. But that costs and interferes with the business of making money. The only place she was allowed to do this was when she was rebuilding major government databases connected with security.
One funny story about this. When she applied for a job that needed security clearance she was told it could take three or four weeks to get confirmation through that she was kosher. She got a call from the government agency the following day and was asked if there was something she hadn't told them! Her clearance was automatic because she was already on one of the highest levels.

[Tizer]

It's not only the banks that didn't listen to warnings, the oil company Shell is now in trouble for not heeding warnings from their own staff about structures needing replacing and therefore allowing severe oil spills in Nigeria in 2008. The BBC has gained access to company email message and the like.

[Stanley]

I heard that report as well. I always remember reading the biography of a man called Harold Geneen who, as CEO of ITT dragged it from being a rag tag amalgamation of smaller companies to be one of the most powerful corporations in the world. I disagree with much of his philosophy and how he did this but one thing stands out in my mind still. He said he didn't want to be bothered by staff telling him how well things were going. What he wanted to hear was word from his staff at whatever level that something was going wrong. He made it easy for the whistle-blowers to get access directly to his office and summarily sacked anyone who interfered with this process. I think we need a bot more of that.....

[Tizer]

...and we were getting more of it in the 1980s: remember Tom Peters' `In Search of excellence' and the like? But it all went belly up in the 1990s and I think the arrival in the business world of personal computers and the internet had much to do with it. Bosses suddenly discovered they could `manage' at a distance, get a few cheap techie kids in to do the web design etc and you could sack all those office workers. Marketing came to be seen as more important than the quality of products and services. Accountants began to run the companies instead of those with the knowledge of the business area. Company performance on the stock market governed the salary and bonus of bosses who then focused solely on those indices at the expense of customers and employees.

[Stanley]

Dead right and one of the major driving forces behind much of the 'improvements' was McKinsey consultants. Still enormously influential and it's surprising how many people in politics and industry worked for them. Their mantra was 'if it can be measured it can be managed'. They were the first consultants to advise that whole tiers of middle management, the people with one foot on the shop floor and one in administration, could be cut out as they weren't 'value for money'. When we get a perspective on these measures we will find that they were incredibly damaging.

[Tizer]

...middle management, the people with one foot on the shop floor and one in administration...

I like that phrase, it sums up the significance of those people and the implications of losing them.

[Stanley]

The foremen and shop superintendents were the first people to see exactly what was happening in the works. They worked with the men and drank with them in their locals. McKinsey never factored that in to their equations. Exactly the same thing can be seen in politics at the moment, the leaders are completely out of touch with what's actually happening on the ground. Another important factor was that in the old system, the leaders and CEOs came up through the business and knew how it functioned. Compare and contrast to today's bank executives who don't understand what algorithms are or the damage they can do. Add in a remuneration system based exclusively on profit performance and you change the culture. Guess what you end up with.....

[Stanley]

Not sure whether this is banking or politics.... News that Japan has gone into recession again. Of course Japan has been a basket case for years but what struck me was the possible explanation given by economists. In order to boost government tax take to fill the hole in the budget they increased the sales tax sharply and the consumer seems to have reacted by stopping buying which has dropped the GDP and sent them into recession over two quarters. This echoes my constant contention that the domestic spend is the key factor in raising GDP. Austerity is doing the same thing in the UK economy. Go figure!

[Stanley]

The RBS fine for the computer blackout was bad enough but THIS article draws attention to even bigger fines to come for the group. We are told that the customer doesn't pay but this of course is nonsense, And then of course there is the fact that as taxpayers we have a large stake in the bank. Is there no end to this meltdown? Are the same idiots still in charge?

[Tizer]

A big mis-selling scam by the insurance companies....
`Pension mis-selling: scandal hits 100,000 retired savers a year'
"A Telegraph investigation uncovers first evidence of annuity mis-selling, with experts predicting a flood of compensation claims. Retired savers could be owed a boost to their pension incomes following a mis-selling scandal which means people in poor health are being short changed. An investigation by The Telegraph has established that approximately one in four pensioners who retired with a private pension in the past seven years is entitled to a larger annual pension income."..." Ros Altmann, an adviser to the Government on older people, said: `This is possibly the worst mis-selling scandal ever seen in Britain, including PPI, because it concerns people’s life savings and the sales are irreversible. "We will never uncover the true extent because some victims have died, but older people were failed on any test of fairness and should write to their insurer, to their MP and to The Telegraph to seek redress.'"
http://www.telegraph.co.uk/finance/pers ... -year.html

[Stanley]

I've heard those reports as well. I'll bet that, like me, you are glad you have got this particular financial trap behind you. I thought I was hard done to in 2000 but measured against what is happening now it was a great deal.... Bit like swimming in a swamp full of leeches..... This wonderful modern world.....

[Tizer]

RBS in trouble yet again...
BBC, 24 November 2014
`RBS apologises for 'incorrect' evidence to MPs' committee'
Royal Bank of Scotland has apologised for giving incorrect evidence to a parliamentary hearing, it has emerged. Bank directors appeared before the Treasury Committee in June to answer claims that RBS's Global Restructuring Group (GRG) had deliberately killed off viable firms. Newly released letters show that RBS chairman Sir Philip Hampton later said some of the evidence "lacked clarity". Committee chairman Andrew Tyrie branded the evidence as "unacceptable".
http://www.bbc.co.uk/news/business-30172326

[Stanley]

Panorama last night covered exactly the same subject and PE has been banging on about it for two years now. I had to laugh when one of the complainants pointed out that the black broad felt pen used to redact incriminating passages had been running out of ink and you could read the original by holding it up to the light. Question, when providing evidence like this why should any redaction be allowed?
See THIS for a report on banks refusing mortgages to applicants who could be retired before the loan comes to term. They say they have to because if they don't they could be accused of mis-selling. Surely after that length of time the capital value of the asset would be far greater than the amount of money owed on the loan? Or am I missing something here. I thought that was how banks made money, lending money at interest against adequate capital assets?

[Tizer]

It's because they've swung to the opposite end of the risk spectrum. Don't take any risk. Also, they've been given so much free money they don't need customers as much as they did in the past.
Me: "Can I have a loan please?"
Them: "Give you a loan, what would I want to do that for?"
Me: "Well, you can earn interest on it, make money".
Them: "Money! I've got a multi-million pound salary, annual bonuses, shares in the bank, big house, several sports cars in the garage. Don't waste my time!"

[Stanley]

How the hell did we get to this situation? If a service breaks down as comprehensively as this it should be scrapped. The 'banks too big to fail' are now even bigger. It must be the biggest con trick of all time....

[Tizer]

BBC, 26 November 2014
`Bank culture 'will take generation to change', says report'
"A "toxic" and "aggressive" culture inside British banks that led to scandals such as mis-selling will take a generation to change, a report says. A culture that was decades in the making will take years to unwind, the joint study by Cass Business School and think tank New City Agenda concludes. It estimates that poor standards have cost the UK industry £38.5bn in fines and customer redress over 15 years. The banking industry said it was "striving hard" to rebuild trust. The report found that at least £27bn of the £38.5bn in fines was due to mis-selling of personal protection insurance (PPI). In the six years between 2008 and 2014, banks received 21 million complaints, it said. Over two decades "an aggressive sales culture took hold in retail banking," with staff in some branches receiving cash bonuses, iPods, or tickets to Wimbledon for hitting sales targets, it said. Those that failed to hit targets "were humiliated by having cabbages and other vegetables placed on their desks," it added. "A toxic culture which was decades in the making will take a generation to turn around," said Conservative MP and New City Agenda co-founder David Davis."
http://www.bbc.co.uk/news/business-30190753

[Stanley]

And it all started over ten years ago when the nice lady behind the counter (gone now) asked me if I was interested in life insurance..... I had become a potential cash cow instead of a client.