British IFAs could face a bleak year in 2009.

UK independent financial advisers are pretty much unloved by the regulatory body FSA.
Comments on the retail distribution review focus on the appearance that the banks have had a pretty easy ride. However, IFAs have got to consider the here and now. 2009 could be a bleak year but there has been so much change in the financial landscape that clients would need more advice rather than less.
For instance, the popular investment house New Star has seen the creditor banks take control while some of its high flying funds have closed for redemptions. You do recommend now? M and G or Fidelity.
Can you recommend structured products? The collapse of Lehman Brothers as a counter-party has made supposedly low-risk products into very high risk ones to put it mildly. Supporters of structured products point to their defined return and
low cost.
The collapse of the Icelandic banks have put the spotlight on the deposit guarantee schemes in offshore territories and have made a lot of British councils look stupid.
There is an area of advice in offering recommendations on where to
put deposits.
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Another area is pensions. The forthcoming introduction of a higher tax rate of 45 pct
will probably lead to an increase of pension contributions. SIPPs will continue to grow.
Finally, quite a few potential clients will be planning to leave the United Kingdom. They will need help in navigating the tax codes of countries such as Australia and the United States. The collapse of sterling against the euro might make moving to eurozone countries less attractive.

Merry Xmas to all my readers!!

I suppose it is a bit late to send a Christmas message to all my readers on Christmas Eve, when it is very quiet. I will go back to the theme of corporate bond funds but my experience is mixed all the same. I have been a long term modest investor in City Merchants and in capital terms the performance has been terrible. The best idea is to have a range of investments/deposits/properties!! I know that diversification in equity terms has not really worked but let's hope it should help in the future. Everybody seems to be down 30 pct and I suppose people will be averaging down their losses. The re-investment of dividends is crucial.
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One massive change in the UK investment landscape is the virtual disappearance of British banks from future portfolios. One of the staggering events of 2008 was
the death spiral of Royal Bank of Scotland (RBS) and Halifax. I could not understand why they did not hit the short sellers by buying their own shares. I suppose they wasted too much capital by buying back stock at previous sky-high prices. Is
RBS a buy at 44 pence?

ZIRP does not sound very good!!

I wonder what British independent financial advisers (IFAs) can recomend in terms of investments when we have got ZIRP or zero interest rates coming to us soon. The U.S
Federal Reserve Bank (FED) under Ben Bernanke seems to have pressed the panic button
by lowering its rate to a range of 0% and 0.25%. Here, the Bank of England might have a bit to go from its current base rate level of 2%. However, IFAs are having to survey the wreckage of the British financial scene and what do they recommend? Ten year gilts yield around just 3.4 pct. It is probably too late to get into them while long term they must be affected by the collapse of sterling and future inflation.
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Quite a few people are recommending corporate bond funds, which are offering significant yields and could sit quite nicely in SIPPs.

New Star has faded and John Duffield is leaving.

British investment manager New Star has fallen under the control of some major banks and its founder John Duffield is leaving. It operated a culture of star investment fund managers, some of whome found it difficult to outperform. Investment conditions have been tough for active stock pickers.
A columnist in MoneyMarketing jokes that he always wrote articles about New Star under the fear of receiving writs from the company's lawyers.
Another columnist says New Star's troubles have affected the fund management industry as a whole.
Meanwhile, the Bath-based firm Fidelius offers advice from simple mortgages to investment planning. It approaches the requirements of the client with a completely open mind.
Meanwhile, Nic Cicutti of Money Marketing, has written a perceptive article about the New Star implosion. For instance, he notes that New Star markets over 40 funds
compared with around twelve in 2002. Fashion funds reflected latest fads for investors. There was also no rigorous, disciplined approach when the stock market started to collapse. Also, good managers will have periods, when they are unable to outperform due to being in the wrong sector or having the wrong investment style.

Major banks could take control of New Star.

The major banks could take control of UK investment manager New Star. You would have thought that fund management was a straightforward and simple business with not much to go wrong. It seems that New Star was weighed down with debt, which was very negative when funds under management suddenly went south. When these funds go up, it can be a very profitable business if costs stay the same. It is sad that it has not worked out for New Star founder John Duffield, who is a real character amongst the grey denizens of the City.
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One worrying factor is that quoted businesses are going into administration nearly every week. It seems like it anyway (Woolies, MFI, London Scottish).
It will be interesting if the Bank of England lowers interest rates to 2 pct from 3pct. If the banks are not passing on the decrease to borrowers but are applying it to savers, then the Bank might consider a pause. It does not seem to be too worried about the exchange rate but sterling does need some support to prevent a major fall.

Is the UK mortgage market going to recover in 2009?

The British government wants the mortgage lending market to recover in 2009 but is this going to happen? In an article for Money Marketing the Charcol technical manager Ray Boulger proposes that Northern Rock, the mortgage bank nationalised by the government, could suspend or reduce the repayments made on the loan made by the Bank of England. This loan stood at £26.9bn at the end of 2007. The move would reduce
the pressure, which is contracting the mortgage market in Britain.
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It is funny that the British government wants to have lending levels set at 2007 levels but it seems that it does not want to influence Northern Rock and Bradford & Bingley, which are under its control. I suppose the comment by B & B boss Richard Pym
that the buy-to-let market is dead can be viewed as not helpful.

New Star shining bright?

It does not seem that long ago when the legendary British fund management entrepreneur John Duffield founded New Star with the aim of having the brightest and the best as his fund managers. Duffield had previously stuck it to some Germans and the new company was going places. Now according to a Money Marketing article it is thought that New Star will lose 50 to 60 of its 380 strong workforce.
However, Mr Duffield is positive for the future and sees long-term prospects are still intact with the benefits of increased savings and investment flows. He says property is the best option in terms of UK investment while the influence of India and China will continue to grow.
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Darius McDermott, of Chelsea Financial Services, told Money Marketing that he is confident that the infrastructure to support fund performance will be
there.
New Star International Property has just suspended dealings in the fund due to some institutional withdrawals. On his company web site, Mr McDermott notes that the fund has outperformed the MSCI index with a 9.2 pct decline since its launch.

British IFA firms will be reviewing independence in 2009.

MoneyMarketing has cited a study by the consultancy firm Plimsoll, which considers that some British independent financial advisers (IFAs) will be reviewing their independence in 2009. Some 161 IFAs are heavily in debt while there will be pressure from the retirement of directors. Around 470 of 2,900 IFA directors will be over retirement age during 2009.
Some 834 companies are operating without debt and many have cash surpluses. One strategy will be for the strong IFAs to take over the weak ones.
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Bolton-based Professionally Connected Financial Planning offers comprehensive service.

Professionally Connected Financial Planning (PCFP) was set up in February 1999 by Michael Norris and David Makinson. The firm is based in Bolton and offers the opportunity to pay with fees rather than with commission. PCFP offers advice in areas such as phased
retirement and funding for university fees.
www.searchifa.co.uk
I think I have been to Bolton once at night and I have seen the team a couple of times. The last time was when Bolton visited Tottenham and got shredded by Keane and Berbatov. However, Anelka looked pretty good and it was a shame that he went to Chelsea. Somehow Keane got himself sent off but it was still a convincing victory for the Spurs.

Bank stocks seem to be continuing their decline.

British bank stocks are again on the rack. Royal Bank of Scotland (RBS) is trading at 58 pence despite the fact that it is going to get quite a wodge from the British taxpayer. Halifax Bank of Scotland (HBOS) reached 90 pence, which is also receiving largesse from the taxpayer. These judgements by the stock market do not show any confidence for the future. This future seems to be one of hard grind sorting out the mess of toxic debt, derivatives and funding issues.
When Abbey National hit the buffers, it was helped by a benign environment to resolve its treasury book and it took several years and a sale to a stronger bank Banco Santander. The HBOS takeover could sink Lloyds TSB. If the combined bank does well I think at a later date the Competition authorities could order a reduction in its UK share of mortgages and savings.
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Are the UK banks going to need more state help?

Barclays is one of the banks, which has turned down the offer of help from the UK government. The British bank has raised money from Gulf investors for example. Independence means that it can exploit international ambitions. This compares with the Royal Bank of Scotland, which looks likely to dispose of quite a few foreign assets.
Barclays has attracted brickbats for ignoring pre-emption rights but has argued that conventional rights issues did not work well with HBOS and Bradford and Bingley. These latter banks were hit by the long delay between announcing the capital raising operation and actually getting the money. The new shares were also issued at a discount, which hit the existing stock price.
Let's hope Barclays is not hit by toxic debt or by increasing loan losses.
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I am reviewing my investments and it is not pretty!!

Sometimes I wish I went to an IFA. I am reviewing my investments and it is not pretty. My portfolio is extremely limited and is becoming more so.
New-build flats are coming down in price but will they recover? One government minister says they don't want a 70m population for the UK. However,if the working population declines, then more workers would have to be imported to cover the increasing number of dependents. It is probable that the population will rise and residential property would again be an interesting investment area.
In Bristol, the firm Edison Ford has significant expertise in the buy-to-let market.

Bank of England governor can still move markets.

A speech in Leeds last night proved that Mervyn King can still move markets. Today,
sterling was down 4 per cent against the dollar. This was in response to the Bank of England governor saying that the UK economy was entering recession. If I was the governor I would try and talk things up since it might make things better. There is no point in trying to wish for a deep recession.
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Most IFAs be wondering if they have the client base to survive. Mortgage brokers have been badly hit as property transactions have come down. They have been in recession for quite a long time. Apparently, the recovery will come in 2010.
In Newmarket, Suffolk, Frank C Barker offers advice in areas such as lump sum investments and income protection. I wish I had a lump sum to invest, although the traditional arena of the stock market looks very risky. However, the world does not stop completely and people have sums on deposit where they are looking for a better return.

I expect IFAs are shell-shocked over recent events.

I read in moneymarketing.co.uk that levies on British IFAs could increase due to the nationalisation of Bradford and Bingley. The Spanish bank Banco Santander bought the savings and branch network while the UK government ended up with the mortgages.
Bradford and Bingley had a major business with the buy-to-let sector.
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Panic selling hits UK stock market.

The view was that equities were the good long-term bet in comparison with bonds and cash. However, this week's falls in the London stock market has shown how risky shares are. One view is that the stock market is pricing in a depression. I don't know how the Royal Bank of Scotland got marked down to 79 pence at one point today. This is a massive bank and one which would benefit from the UK government bailout if it wants to. It does not bear thinking about if RBS has to be rescued by the government, although some sections of the population in Scotland would be delighted to have a Scottish state bank.
I think pro-Independence supporters had counted on a vibrant financial services scene in Edinburgh, which has been badly affected by the recent market turbulence.
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Another bad day for the UK bank stocks.

Today (October 7th, 2008) has been another bad day for the UK bank stocks with some of the major banks denying that they asked the British Treasury for money. It looks like there is going to be some recapitalisation although opponents of nationalisation or partial nationalisation say the banks should look for merger/sale deals with stronger partners. Anyone for Abu Dhabi? I wonder what the government would think if the Qataris swallowed up Barclays.
Looking back at an old copy of moneymarketing.co.uk for July, there is an interesting article by Mark Dampier, head of research at Hargreaves Lansdown. He notes then that bank stocks were already down 44.9 pct for the year. Dampier also emphasises the importance of the housing market, since it employs directly and indirectly millions of people. However, the housing market will continue to fall.
Dampier says "In the future, people will look back on 2008/10 as the Great Deleverage."

I like Brian Tora article on financial crisis.

I like the moneymarketing.co.uk article by Brian Tora on the current financial crisis by looking at the past. For instance, in the early 1970s there was a three day week in the UK and hyperinflation. Tora says this crisis is all about overborrowing with too much money being lent to the wrong people. However, he is confident that we will get through the crisis, which may be once in a lifetime event but is not unique.
Meanwhile, in Brighton the financial firm Antrams has been offering advice for over twenty years. It can handle complex financial planning issues.
In his regular investment article for moneymarketing.co.uk Tora says he is convinced "central banks and governments will find a way out of the situation created out of easy money and greed". However, I think he might have to exclude the bankers Trichet and King, who seem intent on fighting imaginary inflationary battles. It may be that inflation is used to attack the debt mountain in various countries. However, Trichet and King must be more pragmatic and cut interest rates now. Oil and food prices have come down, although the Bank of England governor must be worried about the level of sterling.

It is interesting BOE widening range of collateral.

The UK central bank Bank of England is widening the range of collateral it takes from banks in the provision of their funding needs. The central bank is to take paper, which is not AAA rated such as U.S student loans. The Bank of England governor Mervyn King is probably pondering how to get the banks off this funding tap.
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Apparently, the Governor is being more pragmatic and is less concerned at making the banks pay for their mess.

I suppose everybody is waiting for U.S bailout.

Apparently, it is the Republican caucus, which is holding up the $700bn rescue package in the United States for the banks. I wonder what British independent financial advisers (IFAs) could recommend in these troubled times.
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Frances Kemp of Knowlden Titlow Financial Services Ltd gives an excellent review of the collapse of U.S investment bank Lehman Brothers.
It is sad that HSBC is cutting jobs, especially back-office ones. They were'nt the ones responsible for investment decisions in areas such as mortgage-backed securities.

Alistair Blair reviews the Lehman affair in the Investors Chronicle.

The excellent financial commentator Alistair Blair takes a look at the collapse of U.S investment bank Lehman Brothers in the Investors Chronicle. He notes that the $22bn balance sheet was overwhelmed by "so much toxic rubbish being generated in the mortgage financing".
The shareholder funds of $22bn had to support assets of $670bn.
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Blair also noted that the Lehman average pay per employee was $330,000 and totalled $9bn a year.

Ages ago I read a couple of books on American investor Warren Buffett, who emphasised the importance of investing in things you understand. I suppose the financial situation of U.S investment banks is not that clear. Buffett has for the past few years described derivatives as "financial weapons of mass destruction". The investor from Omaha (Nebraska) has made money by investing in stocks such as Coca-Cola and reinvesting the dividends over long periods and really benefitted from compound interest.

Is Bank of England governor holding up recovery of mortgage market?

I wonder if central banker Mervyn King is holding up the recovery of the mortgage market in Britain. In August moneymarketing.co.uk reported that King's
"heavy-handed rejection of proposals to help the mortgage market floated by Sir James Crosby shows there is little consensus on what needs to be done in the homeloan sector".

The Bank of England governor does not want any type of guarantee as far as lending is concerned and thinks the UK mortgage market will recover on its own accord. However, this approach has been criticsed by Wave Lending chief executive Colin Snowdon, who describes the governor as an economist first, a banker second.

Linda Will, of West Country building society Stroud and Swindon, says the problem is the financial authorities are undecided on what to do and there are major divisions between themselves.

Sir James Crosby is the former boss of HBOS (Halifax Bank of Scotland), which could be swallowed up by Lloyds TSB. HBOS has 20 pct of the UK mortgage market but in terms of new lending institutions such as Banco Santander unit Abbey National have been growing fast.

The UK mortgage market will probably recover naturally and the lenders will start lending if the spectre of negative equity falls away. I think the government might have to give a helping hand to the housebuilders, whose share prices have been shot to pieces.

Bank of England governor - No pain, no gain.

The Bank of England governor, Mervyn King, has not said the phrase "no pain, no gain" but he is pretty adamant in his opposition to any plans by the UK government to prop up the mortgage market. I read in moneymarketing.co.uk one description of Mr King, which said the Aston Villa fan
was a purist and was not a pragmatic economist.
Some parts of the mortgage market continues to operate. If you are creditworthy, then you will still receive credit. However, it looks like there are real problems at the first-time buyer level, which obviously hits chains.
In recent memory building societies ran a cartel while rationing housing loans. Such things were dismantled in the Thatcherite revolution but remarkably banks and building socities can still move together in the United Kingdom. They all seemed to raise their required deposits at the same time and at the same level. Or was that my mistaken impression?
If the Bank of England governor has his way, there will probably be a slow recovery.
UK Chancellor Alistair Darling wants any recovery to be quicker and it will be interesting to see how far he ignores Mr King.
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moneymarketing.co.uk profiles IFP ceo Nick Cann

moneymarketing.co.uk has profiled the chief executive of the Institute of Financial Planning (IFP), Mr Nick Cann. The executive is hoping to achieve a target of 2,500 certified financial planners within three years. Mr Cann was surprised to be approached by the IFP since he came from a sales/marketing/business development background. The Oxford Polytechnic graduate worked at Barclays Bank and Robert Fleming/Save and Prosper.
moneymarketing.co.uk notes that "Cann has introduced a number of initiatives to raise the profile and reach of financial planning". While the IFP ceo notes that more firms are looking at advanced qualifications.
The first Financial Planning Week was started and this ran from September 8th to
14th.

Will Alistair Darling rescue the mortgage market?

Will British Chancellor Alistair Darling rescue the mortgage market? The Bank of England governor Mervyn King wants the market to recover naturally and does not want any form of state guarantee or help for borrowers. Mr King is insisting that the lenders should still retain the risk of their mortgage loans.
Some observers consider that the Bank of England governor is being too much of a purist and should be more pragmatic.
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Postscript: with me writing in September 2009 Darling is still Chancellor, which seems a minor miracle, since he is more or less ignoring the instructions of Prime Minister Gordon Brown. Darling wants to be a bit more upfront on forthcoming spending cuts from 2010. However, he could help the mortgage market, which has shown signs of recovery, if he reduce stamp duty rates.

Mervyn King is still Governor of the Bank of England, which is another source of wonderment. He must be surprised that the UK banks seem to be making efforts not to
repossess at the first possible moment. I think the banks should be congratulated for these efforts to keep down residential repossessions.

It is always a drag to come back from hols!!

It is always a bit of a drag to come back from hols. Buying English newspapers abroad like the Daily Telegraph makes you realise how pessimistic the papers are. Or are things really bad? I was in Spain and apparently the country is sliding into recession but it seemed the place was open for business as usual.
One drawback has been the collapse of sterling against the euro. I don't think Spain really needs a hard currency but we found our euros flying out the window when we went to a few meals.
It has taken ages to get back into things but I am wondering if I apply for Gordon Brown's new energy package. Depending on which part of Spain you are in, you don't have to worry too much about being cold.
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Santander's Abbey chases HBOS in UK mortgage share.

The specialist publication moneymarketing.co.uk has published the list of top institutions according to UK mortgage loans. In top spot is HBOS, (which operates Halifax and Bank of Scotland) with £73.1bn or an estimated 20.1 per cent of the UK mortgage lending market. Chasing hard is Abbey, which is part of the Spanish banking group Santander with £35.6bn or 9.8 per cent. The list comes from the Council of Mortgage Lenders (CML) and covers 2007.
The Abbey's market share has improved in comparison with the 9.4 per cent level in 2006. The Spanish-owned affiliate admits that the exit of other companies from the UK market has helped.
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It would be interesting to get up-to-date figures since Northern Rock would probably have a very different position to last year. In 2007 the Newcastle-based bank had fallen from third to fourth with £29.1bn or estimated market share of 8.1 per cent.
Its new management wants to shrink the loan bank but it might just end up with a load of duff loans. The 2008 first-half results showing losses of half a billion plus were terrible.
The CML figures showed UK building society Nationwide had grown from 5th to 3rd in the ranking with £33.9bn or an estimated mortgage share of 9.3 per cent. My mortgage is with the Nationwide.

I am a bit worried about the missus' B and B shares!

I am a bit worried about what to do with the shares held in British mortgage bank Bradford and Bingley by my spouse.
I suppose we could give the rights issue (capital raising) a miss. I could take financial advice from an independent financial adviser . We could spend the £184 (I think it was the sum last time I looked) on the hols instead.
I suppose the UK stock market will be spooked by the gory figures from the nationalised Northern Rock. Alot of customers are probably throwing in the towel with the change in economic circumstances. Those 125 pct mortgages are coming to haunt the Geordie bank in a big way. Gawd knows why I invested (and then sold) a modest sum in Northern Rock. Not that I am a big expert on UK bank shares. In the weekend FT the Scottish investment expert Colin McLean noted that Northern Rock had posted upward earnings per share for five years. Sounds like some dodgy regulation by the British regulators and this is probably a problem at Bradford and Bingley. Would there be a mercy killing? The banks will probably have their own problems and would want to wait until conditions improved. Perhaps there could be a joint bid.

Is buying individual U.K equities too risky?

Is buying individual U.K equities too risky at the moment? There has been bid action at Detica and Acambis, which has been very helpful. However, for large sectors of the British stock market such as banks and housebuilders where volatility has been very high and the movement has been down. It would have been very difficult to time when to buy Alliance and Leicester and then not to hang around for the Banco Santander paper.
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I wish my few stocks would go up a bit. I look at their prices in the paper and wish that I bought a tracker fund and then could stop worrying about equity investment.

IFAs are going back to school

MoneyMarketing has reported that the UK companies Scottish Widows, part of the Lloyds TSB banking group and Norwich Union, part of the insurance group Aviva,
are heavily attracting independent financial advisers (IFAs) for their training
academies. For instance, Norwich Union has attracted over 1,300 registrations to
its Financial Adviser Academy since March.
www.searchifa.co.uk
MoneyMarekting cites George Andrew, market relations head at Scottish Widows, who noted the appetite for more professionalism in the industry.
I think IFAs have enviously looked on at the legal and accountancy professions, who
manage to charge substantial fees for their work.

UK direct property unit trusts prove a poor buy.

In the United Kingdom retail investors of direct property unit trusts have been hit by the double whammy of poor performance and of being unable to sell. Major players such as Norwich Union and Friends Provident have locked investors in with long notice periods.
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The idea of investing in direct property via unit trusts was that it represented a non-correlation with shares. However, these unit trusts have proved illiquid with a limited market for selling their assets when investors cash in their units.

Are we going to get any Spanish lolly?

Are we going to get any Spanish lolly from the Banco Santander paper bid for UK mortgage bank Alliance and Leicester? Santander might end up bigger in the UK than in its home market of Spain. OK, that might be unlikely but the car manufacturer Volkswagen
has a presence in Brazil similar to the size of its operations in Germany.

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With the share bids for Abbey National and Alliance and Leicester, Briitsh shareholders are accepting a major player in the UK banking market. Does it matter
if a foreigner holds a certain percentage of this market? Would the authorities be
so welcoming if some foreign group took over HBOS (Halifax Bank of Scotland)? Or perhaps the British authorities will give
Sr Emilio Botin, Santander chief, a knighthood for rescuing two mortgage banks?

Clive Briault trousers £528,000 from the FSA.

One of the few scapegoats of the Northern Rock affair, Mr Clive Briault, has trousered £528,000 from the UK's financial regulator Financial Services Authority (FSA). Mr Briault left the organisation in April 2008 by mutual consent. The mortgage bank had to be rescued by the UK government after being unable to borrow from the wholesale lending market.

MoneyMarketing also reports that the FSA boss, Callum McCarthy, who saw his pay go up by 10 per cent to £480,553 but did refuse a bonus. Amazing, the British government under the Reverend Gordon Brown, has called for pay restraint to help keep inflation at around 2 pct-3 pct, when quangocrats are getting a lot more.

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The Daily Telegraph reports that Northern Rock has appointed Rick Hunkin to reinforce risk control at the Newcastle-based bank. Mr Hunkin had a similar role at the U.S owned institution GE Money UK Home Lending. I suppose better late than never.
I suppose everybody is wondering if Bradford and Bingley is going the same way as its
northern rival.

HBOS affiliate Clerical Medical stops trail commission.

MoneyMarketing reports that Clerical Medical has stopped trail commission to quite a few independent financial advisers (IFAs). The British financial company, which is part of banking group Halifax Bank of Scotland (HBOS), justifies its move by saying that many customers no longer deal with their IFA.

www.searchifa.co.uk


MoneyMarketing cites a Clerical Medical spokesperson, who says customers have been telling them they no longer have an IFA and the move is to keep in line with the requirements of the Financial Services Authority (FSA).

I think Clerical Medical has shot itself in the foot over trying to grab a small amount of money. This might mean it is under financial presure. Who knows? The
Halifax share price looks pretty miserable at the moment.

Mortgage broker John Charcol is restructuring.

Moneymarketing.co.uk reports John Charcol is restructuring. The UK broker is to reveal redundancies later and for instance, the Birmingham branch was closed recently. Redundancies are to be confirmed later and technical manager Katie Tucker
has already left.

I suppose this shows the painful adjustment being experienced by companies in the UK housing sector.

The British housing market still operates.

The British housing market still operates. Houses still have for-sale signs. There are also cash purchases, which do not need mortgage finance. It is unfortunate that two main lenders Northern Rock and Bradford & Bingley are limping along. However, the Nationwide points out that house prices are still 10 pct higher than they were three years ago.
Yet, Liberal Democrat Shadow Chancellor Vince Cable notes that the housing market has been seriously overvalued for some time thanks to massive consumer debt in a quote to
moneymarketing.co.uk.

The housing market is crucial to the UK economy and I am surprised that stamp duty has not been cut to help sentiment. British Chancellor Alistair Darling should have carried out a cut at the March budget since it would have been quite a powerful signal. He perhaps does not have the money at his disposal but a cut then would have been more helpful. The quoted UK housebuilders are going through a torrid time.
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British housing market bust?

Are we going to see a British housing market bust? The housing market has certainly frozen up with the lenders tightening their criteria. For instance, there are no more
100 pct plus loans and we have not really felt the knock-on effect of Northern Rock and Bradford & Bingley hitting trouble. The missus' share stake in B & B has such a forlorn value that I have to wonder when the shares will ever recover.
www.searchifa.co.ukFirst-time buyers should be helped by a reduction in stamp duty but a thoughtful article (sorry harrowing article) in the New Statesman says that nobody should be considering a property purchase at the moment. I suppose we just have to sit out the next two years but the Labour Government has always wanted a buoyant housing market for the feel-good factor during general elections, so 2010 anybody?
Northern Rock could hit a real financial mess if the housing market goes down and the Government now probably wished that it was not so picky about Lloyds TSB. Northern Rock is also undermining the stability of the housing market through its shrinking programme. It might make perfect sense to force customers to go elsewhere but not if there is not much of an elsewhere to go to.

John Wriglesworth predicts possible fall in housing market.

Money Marketing cites economist John Wrigglesworth, who predicts that the UK housing market could fall by 50 per cent. He says that if lenders return to lending at
a multiple of three times income, then housing prices could drop by 50 per cent,
returning to their level of early 2000. This was when lending criteria began to
be loosened.
Wrigglesworth, who is managing director of Wrigglesworth Consultancy, says the British government has to inject £350bn into the mortgage market through the Bank of England special liquidity scheme. He considers the initial £50bn pretty paltry.
I suppose this is the time to batten down the hatches. The number of transactions has dropped sharply and I wonder what the government will do since it will want to go into the 2010 general election with a strong housing market to get that
"feelgood" factor.

When will the credit crunch be over?

In the United Kingdom there have been a range of forecasts on
when the credit crunch will be over. We seem to be a bit behind
of the United States, which apparently is in recession according
to some pundits.

However, Money Marketing has cited Ray Boulger, technical manager
at John Charcol, who says the housing market figures are not that bad
in reality. For March, Boulger noted that the real fall in house
prices was 0.1 per cent according to the Nationwide. However, this
fall was seasonally adjusted to 0.6 per cent.

Perhaps the UK economy will escape a recession but the performance of the
housing market will be key. The government has not helped by increasing
taxes. Housing minister Caroline Flint was photographed with a briefing
document forecasting a 2008 decline of 5 per cent to 10 per cent
at best.

The Bank of England governor Mervyn King has more or less stated
that he will not reduce interest rates in the short term.

Will banking problems hit wider UK economy?

Will banking problems hit the wider UK economy? The mortgage market has shrunk following the travails of Northern Rock. With the number of loan products being reduced and with hefty deposits required, the British housing market is going
to be travelling at a reduced speed. Some homeowners will be trapped and will be
unable to move despite the job offer, downsizing, divorce, death of a partner
etc.
www.searchifa.co.uk
The Bank of England has cut interest rates but these have been used by the banks to reinforce their profitability. It has been heartening that some banks such as
Royal Bank of Scotland, HBOS and the Bradford & Bingley are reinforcing their balance sheets with rights issues. (The missus has 250 shares in Bradford & Bingley).
HSBC looks big enough and ugly enough to get by so we just have to wait for
Barclays' decision on whether to go ahead with a capital increase.

Profitable and strong banks are vital for an economy even though they can come across as robbing institutions. The British banks have been guilty of pushing cheap credit and it is becoming a shock to the UK consumer for the reverse to happen.
Maybe we are looking at just a further six months of pain.

Are you bearish or bullish?

Are you bearish or bullish? I was thinking about increasing my pension provision again and just felt a wave of defeated boredom. I have not got enough spare money.
Are UK equities going to be top-class performers or should I just try and pay off
as much of the mortgage as possible?

I was amazed that there have not been more British banks following the path of
Royal Bank of Scotland and Halifax (HBOS) in launching rights issues to raise more money from their shareholders. I could buy them and hope then
the shares of the two banks go up enough over the next 15 years so that I could retire. (I have been rereading this last sentence and I think it is a load of rubbish!!)

Mortgage fraud case opens in Glasgow.

A mortgage fraud case has opened in Glasgow and the amount could reach as much as £3.2m. Institutions believed to be affected inlcude HBOS, which operates the Halifax and Bank of Scotland brands, and Lloyds TSB. A total of nine people have been arrested.
www.searchifa.co.uk
A recent BBC report put UK mortgage fraud at around £700m and the attraction was that it was a low risk activity. One surprising issue is how some solicitors and accountants are prepared to risk their professional status by indulging in mortgage fraud.

Later note: the problems of Bradford & Bingley apparently have included fraud amounting to £15m.

Is Bank of England governor defending UK financial markets?

Is the Bank of England governor Mervyn King defending UK financial markets? Obviously, he would not like to be lectured by overpaid bankers over the need to hose
the markets with cheap cash. However, this might be necessary to get things going
again. I assume the governor is very aware of the dangers of importing inflation
with the depreciation of sterling. This should help exporters but this has never
been the priority of the Bank of England.
www.searchifa.co.uk
Mr King must be as mystified as the rest of us that the banks have not cut dividends
and raised capital. This would be allied with management changes. How many
Barclays SIVs can go bust before the management does the decent thing.
www.searchifa.co.uk

The credit crunch in the United Kingdom - how long?

I don't want to be negative but previous credit crunches in the United Kingdom have coincided with recessions. They seem to go together like ham and eggs and I can't
see British Prime Minister Gordon Brown and UK Chancellor Alistair Darling managing to persuade the banks to resume lending. I would assume the credit crunch to last
for the whole of 2008 while the housing market is already suffering from a lack of buyers. Some areas such as London are going up but others such as the West Midlands
are going down.
I think Brown and Darling should cut stamp duty rates to help pep up the housing market, a market, which is being dampened by the slimming down of Northern Rock.
www.searchifa.co.uk. In some respects the
housing market could just freeze up if vendors do not decide to lower prices. There would be just a Mexican stand-off.

Non-doms are hit by confusion in the UK.

In the United Kingdom, non-domiciled residents may be feeling a bit aggrieved with the sudden change in their tax position. The HMRC has finally got its way on an issue, which was always batted away by former premier Tony Blair.
It looks like a one-off opportunity for tax advisers to deal with their non-dom clients before they leave the country.

Briault walks the plank at Financial Services Authority.

Managing director Clive Briault has walked the plank at the UK regulatory body
Financial Services Authority (FSA) following the Northern Rock debacle according
to Money Marketing. However, Mr Briault was the prime mover of the retail distribution review, which has yet to be finished. He leaves with a contractual
£380,000.

Elsewhere, I read that the actual FSA staff supervising the UK mortgage bank were insurance rather than banking experts. The organisation's internal report has pointed to failings in the supervision of Northern Rock but I think the main structural flaw was the tripartite responsibility of the FSA, the Bank of England and the Treasury.

Bank of England governor Mervyn King still seems to want to punish banks for their mistakes but he lost the opportunity to do that some time ago. In a perfect world
the banks' shareholders would lose their shirts for their poor lending decisions
but this would be too damaging for all concerned.

It is official FSA can't regulate banks.

The Financial Services Authority (FSA) has admitted regulatory failings over the UK
mortgage bank Northern Rock. Apparently, the FSA thought that the Bank of England would do more to support banks, when interbank lending froze up during the summer of
2007.

The small fry have been toasted with five of the seven member team directly supervising Northern Rock leaving. However, other main factors were the dithering of the UK Treasury and the Bank of England governor worrying about moral hazard.

Life companies will struggle with platforms - Skandia.

Money Marketing cites Skandia UK chief executive Brett Williams, who says that life companies will struggle with platforms. For instance, Williams believes that companies such as Standard Life will find it hard to achieve the right scale.
The Skandia UK chief executive comments there is fierce competition in the
market as shown by Friend's Provident backing down from its launch and by problems faced by Norwich Union's Lifetime.

Towry Law acquires employee benefits firm

Money Marketing reports that Towry Law has paid an undisclosed sum for Hazlems Financial. The employee benefits firm is based in London. Hazlems managing director Nick Jones said it was the right time and in the best interests of their clients.

Friends Provident is keeping Sesame after review.

Money Marketing reports that British insurance group Friends Provident, originally founded by Quakers, has decided to keep financial adviser network Sesame after a wide-ranging review. In May 2007 Friends acquired the firm for £75m. However, the group has decided to sell fellow financial adviser Pantheon, which concentrates on the high net worth market. Pantheon was bought for £33m.

Deutche Bank seems to be winding down UK mortgage operation.

Moneymarketing reports that the future DB Mortgages, a British unit of the German banking group Deutsche Bank, seems to have an unclear future. The bank has made redundant the managing director of DB Mortgages, Bill Dudgeon and would not confirm how many people were still employed at the affiliate.

Telegraph highlights "new model" financial advisers.

There was an interesting article in last Saturday's Daily Telegraph, which ighlights "new model" financial advisers. These are financial advisers, who
no longer charge commission but levy fees on the client directly. For instance,
Citywire publishes "The New Model Adviser" magazine. The Telegraph notes that
an increasing number of IFAs have moved away from commission-driven selling.

The firm SewellBrydenGunn has amassed clients nationwide from its Bagshot, Surrey base. The firm emphasises the high qualifications of its staff.

IFAS predict consolidation in their sector.

In articles published by UK magazine Money Marketing both Bruce Wilson, of Helm Godfrey, and Garry Heath of Life change, predict consolidation in the IFA industry. Wilson says he has received more calls from IFAs to sell their businesses in the last few months.
Garry Heath says developements in backoffice IT are allowing consolidators to benefit from cost cutting. Increase size allows advisers to market more to their
clients.

People who are interested could look on www.searchifa.co.uk for a financial adviser near them.

Money Marketing publishes Sesame survey

Money Marketing publishes an interesting survey of Sesame advisers. Some 64% are concerned about the possible effect that falls in the housing market could have on their companies.

However sales and marketing director Stephen Young notes that 20% of Sesame advisers are actively looking to recruit. He says that advisers are also willing to change to market conditions.