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Banking News & UK Comment 2008

 

12th December 2008 - HBOS shareholders vote today on Lloyds TSB merger. What else could they do now after yesterday's judgment stops legal challenge? More worrying is the news that HBOS trading position is deteriorating quickly with a further reported £3 billion loss since 30th September 2008. It seems that HBOS shareholders have only one option left and Lloyds TSB is it.

4th December 2008 - Bank of England drops rate by 1% to new low of 2% lowest level since 1951. The Bank of England is 'ahead of the game' and they need a pat on the back for attempting to prevent even worse problems from taking root.

1st December 2008 - London Scottish Bank forced into administration - London Scottish announced in February that it was ending its lending business to focus on its debt collection unit Robinson Way.

27th November 2008 - Today sees more than 32000 UK Jobs at serious risk as Woolworths, Entertainment UK and MFI go into administration and Speedy Hire cuts jobs by 10%. There is no 'let up' now to a full scale recession as the dominoes start to topple - but don't forget banks started all this with their greed. Woolworths now in administration The last hammer blow was when lottery operator Camelot stopped selling tickets through its shops. Woolworth stores will stay open until after Christmas but there is serious concern for Woolworths' 30,000-strong workforce. Entertainment UK part of Woolworths Group now in administration with  1050 jobs at risk. MFI now in administration and 1000 jobs at serious risk. Tool and equipment firm Speedy Hire cuts almost 500 jobs.

26th November 2008 - Bank of England Governor Mr King said this week that nationalising banks could not be ruled out and warned that the UK economy will go into "a steep recession" if the commercial banks don't resume normal lending levels. Chancellor Alistair Darling told the BBC that the situation was "urgent", saying more banks needed to "step up to the mark" and increase lending to small firms. "If they do not do it we will have to consider what further action is appropriate," he said. In the more immediate term, Mr King said UK banks may require additional government funds than they have already received.

At IBAS we know that many SME's have been told by their bank this week that their overdraft has been withdrawn or much more security is now required to just keep it. Obviously, banks have learnt the lesson of past reckless lending - but how many SME's will find their businesses destroyed with no bailout or rescue available to them?

Meanwhile, it seems banks will get some more direct funding from Government as the UK moves very quickly indeed towards full blown bank nationalization. It seems a lifetime away - but it was only in January (2008) that we said on this site: that 'banker's greed will penalize banking consumers yet again, by making funding much tougher for businesses to obtain and by driving even more individuals into bankruptcy'.

11th November 2008 - Today a big seller sent shares of Lloyds TSB tumbling by 14p as more than nine million shares changed hands. The sale of shares coincided with another report that Lloyds proposed £7bn takeover of HBOS may have run into further opposition from a counter bid. Fears are mounting that the rescue 'takeover' of Halifax Bank of Scotland by Lloyds TSB could be derailed by growing opposition to the deal north of the border. The feelings North of the border are very strong indeed and it has been reported that there will be massive redundancies due to the significant overlap between staff. Those fears were amplified by a stark pledge from Daniels to eradicate duplication among the enlarged group's 140,000 staff. Both Lloyds TSB and HBOS shareholders will vote on the deal. Lloyds' vote is on November 19 while HBOS's is on December 12. If the Lloyds deal is approved and the  bank is renamed as Lloyds Banking Group, ending some Scottish 'history', someone with 333 HBOS shares will end up with 201 Lloyds shares. As is the situation for borrowers, the worry is that the combined company will have a virtual monopoly on savers' money, controlling about a third of the market. 'Rumblings' of discontent continue and questions continue to be asked on why the Lloyds TSB 'takeover' is still necessary as implications for consumers, Scotland and HBOS 72,000 staff grow more worrying. There are 17,000 jobs at stake in Scotland alone and it has become a highly-charged political issue.

7th November 2008 - Dramatic increase in corporate insolvencies in Q3 2008 continues a trend which can only increase further despite rate cuts. The number of firms being liquidated is now up by 26.3% on a year ago and many more businesses will now fold as banks 'pull the plug' - despite the fact they've been rescued themselves. The insolvency figures trend show that next quarter will exceed 2002 peak levels for business failures and we have only just entered into recession.

6th November 2008 - A very bold move made by the Bank of England today cut interest rates by 1.5% in its most dramatic attempt yet to rescue an economy now in recession. Unexpected by many this cut brings official interest rates to 3% and is welcomed by us all. This is the largest since a 2% cut in March 1981 - the country was then gripped by recession and brings rates to the lowest level since 1955. This is good news for us all providing the rate cuts filter down to where they are most needed to businesses and mortgages. This cut also demonstrates just how dire the UK economic position has become.5th November 2008 - The Financial Services Authority (FSA) says it wants to regulate the way banks treat their High Street customers - Not before time either. We hope that the FSA don't just talk about it for the next three years. In our opinion banks have had it too easy for far too long already. Bank customers have paid a very high price and now have to contend with a recession, brought about by greedy banks profiteering. Banks must never be allowed the same control over consumers, ever again. Let's get rid of the Arthur Daley image. We need proper regulation not a bank funded BCSB with voluntary codes, which the banks ignore as and when they want.  Regulate properly, fine Banks hard, where and when necessary. That might just do it.

28th October 2008 - The Bank of England's Financial Stability Report is not good reading and the key points show the extent of the problem created by banks and poor regulation. Robert Peston BBC Business Editor provides a good outline on his blog but the numbers are staggering. A recession lasting at least 3 years is very much on the cards now. Businesses will inevitably suffer as borrowing gets tighter. Many will fail as bankers look after themselves first - yet again.

27th October 2008 - Today, as the recession of 2008 ‘bites’ following the property ‘downturn’ phase, what appears to be the ‘first of many’ failures in construction has resulted in a building company which employs 320 workers going into administration. The company, David McLean Holdings Ltd, of Flintshire has house building, property development and contracting subsidiaries, with offices in Cardiff and Shrewsbury. Administrators Deloitte said McLean's house building division was continuing to trade as a buyer is sought. The contracting division is to close. The group, founded in 1972, has operations in south Wales, the Midlands, north west and south west of England with a turnover of £160m.

23rd October 2008 - Having watched Lord Mandelson's statement to the BBC following his meeting with bank chief executives and after his statement (below) - we are completely unimpressed by the Government's rhetoric on supporting small businesses in the UK. Creating 'a forum for discussion' in 'the next two weeks' - may appear to many to be a step forward. However, we are acutely aware of political trickery and 'sound bite' politics. This interview 'smacks' of a complete 'fob off' as we hear about Government 'playing a role' and banks 'having problems of their own'. The Government made a deal with the banks to 'bail them out', the Government dictated those terms, the Government has the leverage to prevent further carnage amongst UK small businesses. Therefore, in our view it is  for the Government to make that deal work not a 'forum' or a 'talk shop' to dismiss the issues. Lord Mandelson had told MPs that banks will be urged to show greater "discretion and sensitivity " in their dealings with small firms. In a Business Select Committee hearing earlier this week, he said there was anecdotal evidence that smaller businesses were being hit with a "double whammy" by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges. It's what IBAS has been advising businesses on for the last year and also stating very strongly in public. Once again we state - this Government must take control of the banking small business funding issues and not be 'led by the nose' by bankers with self interest. Opportunities have been missed before in controlling banks and funding to small business and now we know the cost - it's huge and it affects us all. The Government urging banks to 'promise and pledge' is just words and hype for the media. No use at all, when we already know that many small businesses are already being 'trashed' as they speak. Action is required - the more visible the better. Let's see the stick - we've seen enough of the carrots.

22nd October 2008 - Worsening economy - Gordon Brown 'comes clean'  - Britain's economic downturn is likely to cause a recession, Prime Minister Gordon Brown has warned. The global financial slowdown was likely to send the British economy into a recession as well, he told MPs during weekly questioning in Parliament. He echoed similar warnings from the Bank of England governor, Mervyn King, who on Tuesday evening warned that Britain was probably entering its first recession in 16 years. He also said the British banking system had been closer to collapse earlier this month than at any time since the start of World War I. Guidance will be issued to judges in an attempt to ease repossession rates, Prime Minister Gordon Brown has said. Mr Brown told the Commons that lenders would have to demonstrate to the courts that they had exhausted every avenue. But, lenders are supposed to do that already, under the existing banking and Mortgage codes and FSA rules, which we know are not working. If they did work, repossessions would not be running at 50% higher than a year ago. Lets hope Judges don't just get 'guidance' but are provided with the practical ability to implement practices and measures which can keep families in their homes for long periods of time to avoid another massive social problem.

21st October 2008 - Eric Daniels told employees that Lloyds TSB would continue with its bonus payments - despite the injection of up to £5.5 billion of government funds. We expect most of the country to be appalled but they will also expect the UK Government to take control of this situation quickly. It's blatantly wrong for bankers to profit from the country's demise whilst at the same time taking our money to do it. If there was an issue to fire up an anti Gordon Brown lobby, this is it. But if he can impose his will on bankers 'rescued by his bailout' and make sure our money isn't 'thrown away' - then he may go down in history books for the right reasons. We need a very strong PM now who won't take any nonsense from the sector which is most responsible for our present predicament.

20th October 2008 - Daily Mail article on small business today quotes Lord Mandelson 'There are things that we can and will do both directly as a Government but also indirectly using the banks as lenders to businesses as well.' 'Banks have 'suddenly and unilaterally' altered loan deals - then charged firms higher administrative costs for making those changes. In the past few months many small businesses have had their overdrafts either withdrawn or their interest rates raised above 15 per cent. 'Now I don't think that is good enough,' Lord Mandelson said. - So why didn't the  Business Banking Code work? Because it and Government strategy on small business is just not good enough? Lord Mandelson's comments are understated as we said on the 18th October: Social responsibility towards customers has never been a strong point or a priority in UK banking. Now we need to see that position change, and quickly. The success of small businesses and employment levels are closely linked - ending 'rip-off' banking must now be a priority. Does Government understand urgency where small business is concerned? - we shall see.

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18th October 2008 - We have now reached a position in UK banking where huge corporations which until very recently 'ripped off' their customers in a never ending profit seeking bonanza, have now become public interest companies by accepting huge taxpayer funding to survive. Social responsibility towards customers has never been a strong point or a priority in UK banking. Now we need to see that position change, and quickly. The success of small businesses and employment levels are closely linked - ending 'rip-off' banking must now be a priority.

17th October 2008 - The head of the Financial Services Authority has warned the City that the era of light-touch regulation is over  The FSA chairman Lord Turner said: his body would soon have "more people asking more questions" about the way the financial sector was being run. And he said the watchdog would have more room to do this because the current crisis had debunked the myth that hands-off regulation was key to competitiveness. Well it's taken a long time coming, but as we have been saying for a long time bankers cannot regulate themselves. They will inevitably be regulated in future with a somewhat 'heavier touch'- We cannot say anything but 'at last' and good, but look at what it's cost to make this happen?

15th October 2008 - Shares fall worldwide as the impact of issuing more debt to help the financial system cause worries of an even bigger possibility of economic slowdown and recession. Britain's more than 4.6m SMEs face a very bumpy ride in the year ahead. Banks have never been transparent and recent catastrophic events place the SME's even more at risk. SME's will need as much help as they can get - but it's clear that many face problems and are already 'dying on their feet'. Whilst banks have been helped by Government,  bankers assurances that they will pass on that 'goodwill' and help businesses is not yet evident. Talk is one thing - action another. We've seen how easily the Banking Codes and treating customers fairly can be circumvented - 'Watch this space' as we report on this issue later.

14th October 2008 - At last shares rise again as FTSE reaches 4446.44 up 189.54 and a 4.45% gain by 10.30am. This appears to reflect confidence that the turmoil and global meltdown of world financial markets has perhaps just been averted. However, we are not yet 'out of the woods' and the huge amount of financial support provided to banks by governments all round the world will inevitably affect what can now be supported or encouraged in other directions. The next few years will be tough.

13th October 2008 - Taxpayers today now own around 60% of RBofS and around 40% of what will be LTSB plus HBOS as the Treasury announce a further £37bn state assistance of which £20bn goes to RBofS and Barclays at the present stand aside from this and will go it alone in raising further capital direct from shareholders and investors. History is certainly being made almost on a daily basis. The banks will have to change and perhaps now treat their customers with more fairness than has been the case but the detail we have yet to see. Now that the Government has seized the initiative, let's hope that the BCSB is quickly dumped in favour of an entity that will enforce the banking codes properly as part of new regulation and practices in line with the Government support & as warned in our posting on 8th October Lloyds TSB has renegotiated the terms of its takeover of fellow bank HBOS reducing the amount of Lloyds TSB stock it will give HBOS shareholders. HBOS shareholders will now get 0.605 Lloyds shares for every HBOS share, against the original offer of 0.833.

Sunday 12th October 2008 - last week the FTSE 100 in London fell by 21.1% the worst weekly fall since the crash of 1987. The Dow Jones in New York fell 18%  and the Dax in Frankfurt fell 21.6%. The FTSE fall wiped out £250billion. Bankers are going 'cap in hand' today for Government support to keep their business afloat. Time for 'heads to roll' at the top but bank directors who didn't do their job properly should also be despatched and 'pronto'. Consumers will want blood when they realize the true size of this mess and what it really means for each one of them. Is Gordon Brown up to that job?

10th October 2008 - today the FTSE 100 closed at 3932.06 down -381.74 (-8.85%) on the day but what a week! Assets deflating all round the world and some evaporating. Russia's lower house of parliament, the Duma, has approved a raft of measures worth $86bn (£51bn) to assist banks hit by the credit freeze and growing scepticism of banks amid the recent turmoil according to Mintel - while 33% of adults trusted the major high street banking brands in 2007, the figure now stands at 16% by September 2008. With the huge scale of the banker manufactured disaster becoming more evident each day for us all no doubt the figure of 16% will decrease further still. Would you trust a banker now?

9th October 2008 - today Most global shares moved higher as investors react to a co-ordinated interest rates cut and the UK bank rescue package but FTSE only at 4382.65 at 4pm. Iceland is in deep trouble and has suspended trading on its stock exchange in an attempt to prevent further panic spreading throughout the country's financial markets - Iceland's government has now seized control of all three of the nation's major banks - and the amount of UK local authority cash at risk after being deposited in Icelandic banks has now risen to more than £600m and despite the $700bn (£406bn) rescue package to shore up the financial system US treasury secretary has warned some banks will still fail

8th October 2008 - today we have reached a 'different place' as Six central banks - including the Bank of England - have cut their interest rates by half a percentage point  in a concerted 'defusing' operation. Also, at last the UK Government has acted to prevent further mayhem and announced details of a rescue package for the banking system worth up to £50bn thus hopefully ending the constant fear enveloping the UK business world. The Government has lent the banks the capital they need to start things moving again - but it's not 'without strings' - bank shareholders will understand that they are now paying for past banker's sins in profiteering and they cannot remain passive in the future. What isn't clear, is whether the HBOS deal with LTSB, which was urgent last month, is still necessary for UK consumers? Also, is Lloyds TSB renegotiating the terms of its takeover?

7th October 2008 - the headline today - IMF warn of a 'severe downturn' and they state that "The global economic downturn is likely to worsen as the financial crisis continues". Banks 'took a pasting' on the stock market today and by 4.50 pm the FTSE 100 stood at 4597 with RBofS down 39.2%, HBOS down 34.7%, Barclays down 20.7% and LTSB down 12.93% - so much for stability - nationalisation of banks either in part, or more, now looks more likely by the minute. Richard Branson calls for dramatic measures and blames lack of regulation, which has brought the country to it's knees and said that the current economic downturn is "effectively a recession".

6th October 2008 - the headline today is that Hypo Real Estate was 'saved by the bell' as Germany's finance ministry agreed a 50bn euro ($68bn; £38.7bn) plan to save it - also that New UK car registrations fell 21% in September, the Society of Motor Manufacturers and Traders (SMMT) announced - it's the fifth consecutive month that the SMMT has reported falls in new car registrations. The FTSE 100 fell to 4755.90 this was down -224.35 today and that represented a -4.50% fall at 1.10 pm - these are extra ordinary times indeed and will lead to increased pressure on the Bank of England for a rate drop this week.

5th October 2008 - the headline today is that another bank is 'teetering on the brink of collapse' - this time it's Germany's second-largest mortgage lender, Hypo Real Estate, who said a bail-out deal had fallen apart after after a banking consortium withdrew from rescue talks. It's inevitable that its failure will put further strain on financial institutions in other countries. In the same news item it is reported that Gordon Brown said the meeting yesterday had agreed to ask the European Investment Fund to release 15bn euros ($21bn; £12bn) in loans to help small businesses operate - we wait now for their response and then what and how any help might be given to UK Businesses. We hope they don't wait too long to decide - as businesses are already failing as we write.

4th October 2008 - the headline today that Gordon Brown is to call for a £12bn EU small businesses fund to help companies through the economic crisis - following on from yesterday's news (below) indicates just how big a mess bankers have left us with in the UK. We welcome the idea GB is promoting, as UK businesses need as much help as they can get to survive this mess. But, how can that financial help be given to companies? We have yet to find out. But there will be little confidence in any suggestion that those funds are administered by banks, as with the SFLGS. If that should be the suggestion and assuming that any funds will become available, we certainly would not support or indeed trust bankers with yet another opportunity to divert further funds for their own use. Watch this space for further developments.

3rd October 2008 - the headlines today of British Banks bailed out (by Bank of England) see Peston's Picks and also Service Sector shrinks and jobs go for 5th successive month - indicate an interest rates cut 'on the cards' next week as Bank of England monetary policy meeting is held and will decide whether to hold interest rates again, or not - a full blown recession by Christmas seems certain - one way or the other. Even if interest rates were cut by half a percent next week UK businesses will not see any benefit  - banks will just use the cut to 'prop up' their own finances as they have done before.

UK Businesses are now failing because many of their customers have stopped buying - we know that from what we see and hear that fear has taken over, as the almost daily questions are, Which bank is next to fall? How are we ever going to get out of this mess? Will my job be safe? Will we lose our home if our business fails?

As the Service sector represents about 75% of the UK economy and now appears to be in 'freefall', jobs are already lost and others are now being lost very quickly. Many businesses will inevitably fail due to the harsh economic conditions evident now and following banking excesses. Unfortunately, poor businesses will be exposed immediately, but the current conditions will expose good businesses too, as many are highly exposed by borrowings, which just cannot be met when cash flow is eroded. In this climate, Banks will not lend to allow such businesses to trade out.

Even if Government and the Bank of England bail out the banks, don't expect the banks to be as kind to businesses, as we enter an economic 'climate' which is far worse than the early 90's. In the early 90's business assets were stripped by banks, after they had forced the business failure. Cash is now King again and we have entered a new era, where credit and borrowing will not be easy to source. Banks will not lend money at 'any price' to prop up ailing businesses. Indications are the banks will move quicker to claim business assets this time around in order to benefit themselves.

September 2008 has shown that the UK is no where near the end of the 'credit crunch' or the associated problems created by sub-prime lending. HBOS has been driven to it's knees by what appears to be a determined and concerted 'short selling' attack, which will inevitably drive HBOS into becoming a part of Lloyds TSB.

So, yet another bank disappears from the mortgage market place, resulting in less choice for all consumers as 20% of the UK mortgage market business is almost gifted to Lloyds TSB. Had proper regulation been in place prior to 2007 in the UK Financial Services industry instead of the 'light touch'  regulation, which allowed ever increasing greed as a major motivation in banking, much of what we are now seeing in the UK could have been avoided. Instead, we will now see greater losses than ever seen before and a 'shake out' of jobs and businesses  on an unprecedented scale. - 17th September 2008

The banking industry's incompetence, mismanagement, greed and recklessness, have finally burst the bubble of continuous profit making from ever increasing consumer debt. The full losses from sub-prime lending woes, whilst already huge, are still not yet fully revealed. What does this mean for banking consumers? UK Banking consumers will now inevitably own the Northern Rock because Nationalisation is the only option left which can repay the huge bank guarantee from the Bank of England. IBAS believe that Banking consumers will be left ‘shouldering the weight’ of multiple failures in the banking systems and the financial pain caused by bankers incompetence, mismanagement, greed and recklessness over the last decade, which will result in global financial pain which will cause  damage for a long time to come. - 17th February 2008

World markets have lost £2.7trillion off global stock markets in January 2008. Spiralling US financial problems and US house prices still falling is indeed grim reading, because we know that the 'fall-out' will affect us all. 27,000 repossessions last year - highest since 1999 and with many more predicted for this year. The UK is already feeling the 'heat' from the American kitchen - Northern Rock the first, but expensive casualty. Soon we will have the banking reporting season. We have seen massive and record profits by banks over the last few years. But, this year may be different. Analysts worry that new losses linked to sub-prime problems keep emerging and we may yet see some more then. UK Business confidence is already at a record low.  Most economists measure a recession as being two consecutive three-month periods of economic contraction and we seem to be teetering on the brink of recession. The next few months will show whether the UK has teetered over that brink. - 12th February 2008

Today's survey results that 80% of lenders predict a rise in mortgage repossessions of more than 10% is not too surprising to IBAS and Moore Blatch elaborate that "We have seen a significant increase in repossessions over the year, and with house prices falling, the vast majority of lenders expect this to continue over the foreseeable future," said Paul Walshe, head of lender services at Moore Blatch. The firm said that couples splitting up, redundancy or business failure are the primary causes of 69% of repossessions. Those facts are also well known to IBAS and we are already seeing the signs of such a 'build up' of increased pressures on small businesses in borrowing positions. The liquidity issues within the big banks will inevitably impact on small businesses. There are now some similarities to the last recession and small business will have to 'tighten it's belt' to survive the storm that is approaching. As with the last recession banks will close down businesses and sell the business assets to improve their own  financial position. The 'trick' is to not be over extended and in a position where the bank can make immediate demand for payment at any time, which is convenient to the bank. - 5th February 2008

The Financial Services Authority (FSA) today published its Financial Risk Outlook (FRO) - warning firms and consumers of the risks inherent in a significantly less benign economic environment. Its central scenario identifies the following five priority risks:

  1. Existing business models of some financial institutions are under strain as a result of adverse market conditions;

  2. Increased financial pressures may lead to financial firms shifting their efforts away from focusing on conduct of business requirements and from maintaining and strengthening business-as-usual processes;

  3. Market participants and consumers may lose confidence in financial institutions and in the authorities’ ability to safeguard the financial system;

  4. A significant minority of consumers could experience financial problems because of their high levels of borrowing;

  5. Tighter economic conditions could increase the incidence or discovery of some types of financial crime or lead to firms’ resources being diverted away from tackling financial crime.

The FRO focuses on the risks arising from the events of the second half of 2007 and the less benign economic outlook expected over the next 18 months.

Callum McCarthy, the Chairman of the FSA, said: "To be clear, these are not firm predictions about what we think will actually happen but are a prudent attempt to highlight the risks that could impact consumers and firms in a less benign economy. "Firms and consumers need to recognise there are both short and long term risks and should think about the implications.

"Firms are clearly more aware of these risks now and should continue to consider how they would respond to a crystallisation of these risks particularly those relating to capital and liquidity."  - Source FSA - 29 January 2008

Sub-Prime losses from Bank reckless lending reach a staggering $98bn

The loss is directly attributable to US Sub-Prime lending and the ‘packaging’ of sub-prime lending into SIV’s (structured investment vehicles). The total figure is not known and may not be, for some time yet.  These losses make the Baring Bank total loss of £860million appear tiny in comparison. Regulators said it could not happen again, but in only a few months during 2007 we have all seen what a new breed of clever bankers can create.

Most banking consumers had not heard of Sub-prime lending and SIV’s before mid 2007. Within a six month period the staggering losses from sub-prime exposure has created turmoil in world financial markets. Who is to blame? Who started packaging these bad loans into buyable lots for wider sale? Who cleverly labelled the buyable lots as being top rated investment potential? Who checked all this out and made sure they weren’t buying into ‘rubbish’? The list of buyers of the repackaged sub-prime mortgages appears to be large and one would hope Bank and institutions were clever enough to avoid being conned, but this fiasco ‘smells’ of one huge ‘con’. - 17th January 2008

Northern Rock - The Northern Rock bank issue has not been settled one way, or the other and the true cost to the UK is completely unknown, although apparently considerable. The UK bank penalty fees debate is still to be settled one way or the other. 2007 was extraordinary in many ways and will inevitably make history. Massive UK bank profits, massive bank consumer unrest, plus a run on a UK bank which originates from banker's greed - all in one year. Which means that UK regulators are now in a very 'hot kitchen' indeed and they will need to be certain that the UK Government will back them, not attack them, for properly regulating banks and banking in the future.

For banking consumers the Voluntary Banking Codes, un-policed, without penalties for their abuse, are useless. Banking consumers are now able to see through that particular charade, although it's taken a long time. Banks have run a good PR campaign over decades using the BBA, the banking industry organization, to spread bank propaganda, not only to retain profits but to enable continued bank profiteering whilst avoiding proper regulation by legislation, or at least the threat of it being introduced by Government.

Banks inevitably 'channel' Banking Consumers towards the The Financial Ombudsman Service, which was formerly the Banking Ombudsman, established by the banks themselves in 1986 to cater for the individual complaints against specific banks.

The history of The Banking Ombudsman is that originally it was set up by UK banks in 1986 to avoid government legislation, which was then being suggested by John Major MP, then at the Treasury. John Major MP presented a white paper for discussion, because of the growing numbers of banking complaints from all banking consumers. Business organizations were apparently reluctant to represent their members as UK businesses were noticeably unrepresented which allowed UK banks a further opportunity to self regulate their own industry - legislation was therefore prevented at that time.

The result is that UK banks have enjoyed a further 22 years of very 'light touch regulation' with banks appearing to regulate themselves, whilst offering the illusion of providing better voluntary regulation at sometime in the years ahead, keeping customers and consumer organizations quiet  - a bit like offering carrots for the donkey. Unfortunately, the carrots have been very small and also very rare, but bank profits have escalated year on year as this industry has been protected by successive governments.

It is only now because of the sub-prime problems that we perceive profits diminishing - but banker's greed will penalize banking consumers yet again, by making funding much tougher for businesses to obtain and by driving even more individuals into bankruptcy. - January 2008

Independent Banking Advisory Service (IBAS) National, independent, unique, experienced, specialist, non-profit, banking customer membership organization which investigates and resolves business banking disputes & has since 1992 campaigned on UK Banking issues - providing business banking editorial for BBC TV News, ITV News, Sky News, Radio and all national newspapers.