Does the electorate get the politicians they deserve and if so, what mistakes have we made to be landed with such a woeful crop of petty crooks? There is not one statesman/woman in the whole of Parliament, which by any standards is a pretty poor show

We have finally reached the stage where Parliamentary Privilege and a review on codification of the law on privilege is now well overdue

The time has passed for MP expenses to be overseen by a Parliamentary watchdog (the Independent Standards Commissioner) and the whole process needs to be passed over to the police and courts under the criminal justice system to sort out these crooks

Maria Miller is just the latest in a long line of corrupt MP's who have got away with their actions because of self-regulation. These abuses must now stop! Furthermore, history has always demonstrated that self regulation rarely works successfully and because of its nature is always inherently open to abuse of one sort or another

Perhaps asking the Prime Minister to stand down over this matter would be rather severe, however, bearing in mind his total lack of judgement in this latest episode and the strong feelings about corruption in our elected representatives this option should not be discounted

Let us be clear about this matter, by all recognised standards Maria Miller has been found to be a thief and stolen from the taxpayer

Nevertheless, it is telling that the Commons Standards Committee regarded Maria Millers 'attitude' throughout as far more important than the actual deed of theft. This decision sends out the stunning message that theft by MP's is perfectly acceptable provided you have the right attitude when caught.

Unfortunately, this stance is totally devoid of any 'moral compass' and just shows how removed from reality MP's have become by this crass decision, which subsequently concluded that Maria Miller should repay far less than had been assessed by the Commons Watchdog. So not only can one steal from the taxpayer, it now turns out that one doesn't even need to repay what has been taken - let the good times roll!

Therefore the message is - crime does pay especially if you are an MP, ring fenced from the law of the land and judged by your potentially equally corrupt peers

Quite frankly the country is thoroughly fed up with having an elected 'den of thieves' trying to take as much out of the system as possible with their grubby little paws and getting away with it because of self-regulation. Jail sentences at the very least, should be the order of the day for these people

The real issue is that these practices are so endemic and ingrained in the political physic of entitlement (theft is just a 'perk' of the job) that those involved do not actually believe they are doing anything wrong

As for those supporting Maria Miller, make a note of them and ask yourselves whether they themselves have been doing just the same as Maria Miller because there is a strong probability that they have been at it as well. Furthermore, Mr Cameron really has dropped the ball with this one and those of his ilk need to seriously address their position in all this. Do they condone stealing from ‘The People’ because that is precisely what has occurred and one can be pretty sure this was not in any election manifesto.

Let’s just start off with a few simple rules for MP's

  • any MP who knows or suspects another of any action that in the 'real world' would be regarded as a criminal act, should be duty bound to report the matter; failure to do so should result in a automatic lifetime ban from Parliamentary Office with all accrued benefits to date being withdrawn (i.e. repayment of personal pension contributions and no Parliamentary Pension)
  • any colleagues 'automatically' supporting or seeking to influence and investigation or the outcome are instantly removed from office under the same terms as the previous rule above (i.e. no pension etc.). This includes the Prime Minister and any of his cohorts because although loyalty is to be admired - misplaced loyalty to cover up theft before the outcome of any investigation or directly contrary to the findings, demonstrates a fundamental lack of judgement which is detrimental to the country; as does trying to interfere or influence the outcome. So goodbye .....
  • there should be a transparent 'menu' system for fines if found guilty. Start off with repaying the amount in question and then having a 'de facto' fine of 10 (ten) times that amount as well
  • all/any gains made by an MP by using these schemes (i.e. second homes) belong to the taxpayer - or better still have the country utilise a system of 'digs' similar to Youth Hostels in days gone by and remove the concept of second homes because these are simply a licence to abuse the system

Nevertheless, ultimately MP's should be made subject to the law of the land, without fear or favour, like everyone else and it is about time someone did something about this matter as a matter of urgency

Tags: | Categories: UK Government

Via Ferrata Glencoe - risk free adventure, now there is an oxymoron

Why would anyone call a Via Ferrata ('iron road') climbing; or in todays environmentally aware climate think it remotely acceptable to damage natural rock faces which have taken thousands of years to evolve, by drilling steel steps into them? Lets riddle the rock face with iron steps fixed ropes and all manner of other garbage so that coach loads of punters can 'waddle' their way up the mountain and call themselves climbers.

Where is the skill in that, on the other hand, in this egalitarian society where skill stands for nought and losing is a 'deferred opportunity', possibly this is a view of the future. What is the next step - escalators or lifts?

All climbing routes are graded to take account of a combination of difficulty and exposure etc. With this in mind perhaps these Via Ferrata routes should have their own unique grading system such as a '4 Big Mac' route or take a leaf out of the Stannah/Otis book and call them a '4 person/350 kg' route

In the past on a 2 person rope, one took the lead and the other followed, often taking turns at leading. Because the leader was exposed, runners (wedges etc.) were put in place so that if they fell the drop would not be too great. The trick was to ensure these runners were securely wedged in existing cracks of the rock so that most of them held if one came off, and they did not all 'pop out' leaving the second with the unenviable task of breaking ones entire fall themselves - say 10-12 stone dropping 30-40 feet resulting in huge wrench on the second and rope burned hands - and not a pleasant experience for the lead either

When it came to the seconds turn to climb, their task was to remove all the runners put in place by the leader leaving a clean rock face for others

Climbing is all about ability and not introducing a plethora of additional ironwork because you don't actually have the skill to reach the top without creating your own artificial stairway. 

Many years ago in the days of Joe Brown, Don Whillans etc. any aids such as simple pitons were generally frowned upon even in exceptional circumstances. Furthermore, good practice was to clean up after yourself and not to leave your debris scattered all over the rock face. Leaving permanant ironwork & scars on the rock face was not really acceptable - this in turn lead onto correct footwear so as not to damage the rock face (i.e. sandstone etc.) as well as using specialist boots simply for grip.

The thinking at the time was, if you cannot climb this route under your own steam then don't do it. Certainly do not nail yourself a staircase up the rock face to compensate for your own inability - after all there may be those coming after you who do have the skills to climb the route and by hammering metal into every fissure you have just destroyed the route for others and damaged nature

Yes in the past Via Ferratas had a defined purpose to ensure safe personnel (troop) movement in times of war over difficult terrain, but as for the recent opening of a recent new route in Glencoe - why? - money of course is the answer?

Clearly todays mindset is all about the selfishness of 'me' - I want to do something and never mind the fact that I do not have the requisite ability. I will just go ahead and damage whatever natural resources I choose for my own goals - nothing short of vandalism and certainly not 'at one' with the environment where a light footprint must surely be the aim?

Tags: | Categories: Sport

The costs to developers of providing Affordable Housing & also paying the Community Infrastructure Ley (CIL) will inevitably filter through to the final sale price of any new property on their development

Many Councils will not grant planning permission for a new development unless they are given 35% of the houses built in ‘consideration’ of being granted planning. Furthermore, on top of that, Councils then propose to charge a CIL of approximately £180 per square meter on the free market housing in the development

Naturally all this adds up to quite a significant value in 'freebies' for Local Councils and these additional costs will undoubtedly have to be borne by the eventual purchaser. This in turn results in any new ‘market’ house buyer actually paying a far higher house price than necessary to purchase a house on these new developments

So just how much is this additional buyer’s premium to underwrite Affordable Housing and CIL?

Here are some rough figures, relating to a one hectare development:

Figures per ha Total Market Affordable
Houses 35.00 22.75 12.25
Land cost - average 1,275,000.00 828,750.00 446,250.00
Build cost 2,882,250.00 1,873,462.50 1,008,787.50
Contingency 144,112.50 93,673.13 50,439.38
CIL charge 368,550.00 368,550.00 0.00
TOTAL COST PER HA 4,669,912.50 3,164,435.63 1,505,476.88

These figures have been taken from an actual assessment of one Councils situation and for the sake of simplicity ignore matters such as - the loss of 'builders profit' (20%) as well as a number of other things. However, they do provide an indication of the level of the significant windfall receipts by the Local Councils under the banner of Affordable Housing and Community Infrastructure Levy

Is this level of premium on a new house justified? Maybe it is, but just put yourself in the shoes of a young couple, just starting out, who have struggled to find the deposit necessary to purchase a house.

How would you feel having a premium levied on your purchase price because the Councils have sold their existing housing stock, spent the money and now wish to replenish it at your expense to house a future generation of potential benefit claimants? So not only are you paying your own way but are also expected to fund the life style of others as well

As for the new Government Help To buy initiatives - is the purpose of this scheme really to get the private sector (house purchasers) to fund Council House replacements by taking on more debt than absolutely necessary; or possibly more than they can afford?

An individual house that would have had a build cost £123,000 without the impact of Affordable Housing and CIL

Now has to absorb the costs of Affordable Housing and also the CIL levy

Resulting in a revised build cost of £205,000

An additional £82,000 per house OR 66% premium

Tags: , | Categories: UK Local Councils

The Thatcher era championed the principles of selling council houses and property ownership by introducing the idea of the 'right to buy'. Whilst the underlying reasoning was sound and born of the best intentions, this was a deeply flawed policy that simply depleted a national asset by transferring it into the hands of the private sector with no mandatory replacement rules in place

All that happened was councils 'trousered' the proceeds and failed to build new council houses to replace those they had sold

One of the underlying reasons behind selling these houses was the run down state of the existing council house stock and the potentially huge costs of refurbishing all the properties.

However, what no-one could have foreseen at the time was the enormous subsequent housing price boom affecting just about every property in the UK; with houses becoming a very profitable tradable asset class in their own right (i.e. buy-to-let et al)

Unfortunately, even though the problems must have been obvious to successive Governments along the way, not one of them had the political courage to put a stop to selling the national housing stock. Furthermore, it was not unusual for 3rd parties or non-residents to offer residents funding to purchase council houses on their behalf. One of the prime areas for this was children purchasing their parents council houses, which is all well and good but, deprives others in need of a home in the future

Coming to the present time

Councils now realise that they have insufficient social (council) housing stock to meet their obligations because vast swathes have already been sold and they have long ago spent the proceeds without providing replacement houses

This is their present dilemma and they need some way of addressing the problem without funding it themselves - enter 'affordable housing' and note the name change. We no longer call these properties by their traditional name of 'council houses' because of a possible stigma; so in this world of spin doctors let’s call them 'social', 'affordable' or any other sanitised name we can come think of to change people’s perception

However, the concept of affordable housing gets even more interesting - with local councils thinking up ever more ingenious ways via their planning departments

  • If you are a land owner or developer then the local council will refuse to award planning permission unless a certain percentage of the development is allocated to affordable housing. This inevitably degenerates into a bartering process between the Council and the land owner or developer - pretty similar to a market bazaar
  • Who pays for these affordable houses - initially the developer, however, the costs are inevitably passed onto the subsequent purchasers of other houses on the development. Therefore, this becomes a tax on house purchasers to subsidise the welfare system
  • Any new mixed housing estate with affordable housing means that those purchasing 'market' priced houses are paying a premium to the developer to underwrite building affordable houses. Presumably this is simply another covert Council tax to make up for their mistakes of the past?
  • Is it right that youngsters who have saved for years to try to purchase their own (barely affordable) first home, have to effectively underwrite the costs of affordable housing for others who contribute nothing on the same development?

The planning system would seem to be holding landowners and developers to ransom (blackmailing them) because:

  • Planners have stated that they will not give planning permission unless they obtain a 'kick-back' to the tune of 25%-35% of affordable houses built for them at no cost to the local Council
  • It has been stated that local Councils are only prepared to pay agricultural prices for building land and not the going market rates. The reason for this is because they control the planning system and without their approval planning will not be granted - ergo they have capped the land price at agricultural levels unless they get what they want (i.e. cheap or free land). Therefore the planners artificially depress a free market for their own benefit
  • Furthermore, Local councils have the powers to approve their own affordable housing developments that would not otherwise be granted planning permission if a free market development was requested. So the same development can be refused to the private sector but still gain approval if put forward by the Local Council (with the accompanying 'back-handers' of course)

Could someone therefore please explain how these potentially corrupt planning practices of blackmail and artificially depressing land values in the UK is any different from similar corruption in 3rd world countries?

Surely it is very simple, authorities insisting on baksheesh in any form are actually employing either bribery or blackmail. Interestingly, the UK has recently introduced The Bribery Act 2012, so why does it not apply in these circumstance to Councils in the UK?


The Bribery Act 2010 creates a new offence under section 7 which can be committed by commercial organisations which fail to prevent persons associated with them from bribing another person on their behalf.


Finally we have the introduction of the Community Infrastructure Levy (CIL) - which is a sound idea, provided that the Local Councils do not become too greedy in their implementations of the levy. Also can we be assured of CIL fund 'ear-marking' - i.e. if funds are raised for infrastructure, then they can ONLY BE SPENT on infrastructure and not hijacked to cover some shortfall in another area

Does the CIL actually have to have some basis on fact or is it an arbitrary additional tax pitched at a level the prevailing Local Council thinks they can get away with? For instance is there a standard infrastructure cost calculation that applies to all Councils throughout the UK?

Oh! ... and let's not forget that Local Councils are themselves exempt from CIL on affordable housing. This implies that this type of housing does not have any impact on the local infrastructure. Is it really feasible for affordable housing to have a zero infrastructure footprint?

Tags: , , | Categories: UK Government | UK Local Councils

What a very stupid statement made by Damian Draghici, an advisor to the Romanian Prime Minister

'.. Britain should be far more worried about bankers taking billions of pounds than Roma begging on the streets ..'

Clearly Mr Draghici has missed the whole point of the UK's concern (probably deliberately) - which is lack of control over our own affairs.

The UK can chose whatever measures it wants to take against bankers or anyone else; the fact that it has not done so is an entirely different matter - the choice is available. However, this is not the case with the UK borders where EU rules prevent countries managing their own immigration policies.

It doesn't really matter whether 1 migrant or 1 million gain entry, the principle is the same; countries want control of their own borders and not to be dictated to by the EU as part of their goal for a political power base. Migrants are generally regarded as bringing all manner of advantages to the receiving country, but only if they have the suitable qualifications and not because of an attractive welfare system (Romania £8 per week - UK £80+ per week)

Additionally, it is generally recognised that the UK has a growing element of generational dependency on welfare amongst some of the indigenous population. Bringing migrants in to work at low rates of pay thereby taking the jobs that could be used to wean generational dependents back into work is perhaps not the best approach. Obviously employers would prefer the work ethic of migrants in preference to some of the work-shy native population, but is that the best way to address encouraging existing welfare claimants back into work and off benefits?

Furthermore, these EU edicts fly directly in the face of the basic concept of Subsidiarity - which has been acclaimed as one of the fundamental cornerstones of all aspects of the EU, to prevent members being dictated to by unreasonable central policies

‘.. decisions should be taken as closely as possible to the citizens of the Union in accordance with Article 5 (ex Article 3b) of the EC Treaty ..’

Why is Subsidiarity not working in the EU - the EU seems intent on breaking their own rules & guidelines to get their own way (now there is a surprise)

The Romanian argument seems to have progressed from - 'large migration will not occur', through 'only qualified migrants will move' and now finally we get to the nub of of the matter where they are acknowledging the probable reality of the Roma population migration and trying to downplay the issue with distractions, such as bankers (who by the way are net contributors rather than recipients)

Yet another red herring from a new entrant attempting to justify free borders, and just as weak as all previous arguments on this subject. Although, it is as good as an admission that one is likely to get about massive free population migration across uncontrolled borders for the hope of a better life in another country.

There is absolutely nothing wrong with these aspirations provided the 'better life' includes contributing to their target country and not just taking (welfare in all its forms). Anyway surely the underlying question has to be why has their country of origin not been able to provide this life for them in the first place, because this raises a far more fundamental issue that the EU does not wish to address?

The UK has enacted laws in order to benefit the population and in this respect let us just begin with an easy one. Local Authorities in the UK have a duty to house the homeless, which raises the question of whether this is the case in Romania.

Do the authorities in Romania have a duty to house their homeless? If Romania (or any of the other countries) do not have the same basic enshrined obligations as the UK then there is no level playing field and consequently the UK is expected to provide better conditions than the migrants own country, which is an absurd situation with mass migration.

The UK's resources are finite, quite apart from that fact that the existing population density in the UK is one of the highest around and allowing a greater influx will only make matters worse.

Tags: | Categories: European Union

Substitute a Russian ice breaker / drilling rig for a oil tanker, the location of the Arctic for the Horn of Africa and the white faces of those crewing the RHIB's for black faces

Now one has all the ingredients of potential piracy on the West Coast of Africa

So what is the difference? Ah! the elusive motives of environmental protection instead of ransom, the absence of guns; but how would you know whether arms were present on a RHIB doing 40 mph towards you, in this situation?

Especially as all this culminated in an attempt to board a Russian oil-rig by a group of Greenpeace activists wearing balaclavas - in other words Piracy. However, laudable the motives were in attempting to prevent Russia despoiling the Arctic - "we're going to try and stop the drilling" (tweeted from Arctic Sunrise), it was still attempted piracy.

Russia then went on to take control of the 'mother ship' from which this attack had emanated. Contrast this with world navy's searching for Somali Pirate mother ships far out into the Indian Ocean.

Does the end justify the means? - and if one does believe this, then where are the boundaries. After all the Somali Pirates could claim that hijacking ships for ransom was in order to feed their people - a pretty compelling point of view, how does one argue with that!

The problem with these 'stunts' is that most of the time those involved are rather naive like children and don't seem to realise the impact (seriousness) of their actions.

When caught out we get the plaintiff bleating about not realising what could go wrong or the fact that they were attempting something illegal (piracy). Then the inevitable expectation for the rest of the world to excerpt pressure on Russia, who are depicted as the aggressor in all this, to free those involved

And now we are subject to a lot of posturing and bravado by those who have been released by Russia. Frankly, they should thank their lucky stars that Russia recognised their 'antics' for what they were, and decided that the whole process of arraigning them was more trouble than it was worth on the world stage, at a time when the Winter Olympics were deemed more important

The Sunday Times (29 December 2013) has just run a fairly nauseating story about about one of those released - Kieron Bryan - presumably because he is a journalist; nothing like pandering to ones own! Perhaps he has learn't his lesson and in his own words, will be less 'gung-ho' about future assignments, but as a journalist why was his judgement so awry and naive in the first place?

And as for Greenpeace - they seems to be veering ever more towards the 'boys own' adventure club style, when a rather more considered approach could probably have just as much effect, but 'unfortunately' not so dramatic; so fewer headlines

The following question needs to be asked - How far are Greenpeace prepared to go in 'hanging their own people out to dry' in order to get headlines?

Having taken a quick look at the Greenpeace organisation setup there would seem to a few other areas to be addressed:

  • Greenpeace UK is not a Charity
  • Greenpeace Environmental Trust is a Charity

Charities are permitted to claim Gift Aid on donations, although they are subject to Charity Commission rules such as an annual risk-management requirement and accompanying disaster recovery procedures.

The Greenpeace Environmental Trust accounts (y/e 31 December 2012) under Notes: 7 for grants handed out, shows an amount given to Greenpeace UK of £1,112,500 for the year.


  • Is Greenpeace Environmental Trust being used as a vehicle in order to obtain Gift Aid on donations, which are subsequently passed on as tax-refunded grants to Greenpeace UK?
  • Is Greenpeace UK used for high profile demonstrations, bypassing the Charity Commission requirements for risk-assessment and potentially conducting illegal operations (i.e. Piracy) outside the sphere of the Charity Commission - whilst at the same time having these operations funded by Gift Aided donations from Greenpeace Environmental Trust?

In other words is the relationship between Greenpeace Environmental Trust and Greenpeace UK being abused in order to utilise the 'best' vehicle under different circumstances?


The Charity Commission Publicatons

Tags: , | Categories: Charity

Is the current principle of gift aid simply robbing Peter to Pay Paul. In these straightened times when Government borrowing is spiralling out of control does this area need to be reviewed?

Bearing in mind that tax revenues in the system are finite, surely it should all be down to the best use of this resource without one party having a short-fall in order to subsidise the other

Unfortunately, taking any money whatsoever out of the tax system does not mean the underlying Government obligations for spending disappear in relation to the gift aid claims. The result is simply that the Government has to borrow more money to cover the resultant loss in tax revenues and the needs of Welfare, Social Security, NHS, Schools etc. do not evaporate. Unless their funding is covered by increased state borrowing they would inevitably suffer

There is however, a sound argument along the lines that charities are more effective at using the money and better at targeting deserving causes.

Nevertheless, whilst Charity CEO's continue to be paid eye watering salaries and individuals such as Sir Stephen Bubb persist in trying to justify excesses Charity boss defended salaries 60th birthday party funded by donations it really only highlights the issues. With this in mind should the Government consider re-addressing gift aid?

Using that same old canard that everyone trots out to justify their excessive salaries '.. the salaries are competitive to those paid in business and will ensure you get the best people to do the job ..' and then trying to compare Charities with Business in this context. Well in the past with nationalised industries we all saw the CEO's of Water Boards on modest acceptable salaries; once these organisations ceased to be nationalised their CEO salaries went up four-fold - for the same people in the same job?

But that it the whole point, Charities should not be in competition with business on the salaries scale. By all means pay a reasonable salary but not to the detriment of the needy who by definition have less money because the balance has been 'trousered' by those claiming to have the their best interests at heart

Also the incestuous practices of re-circulating funds back into other charities should be reviewed as should all the other little wheezes.

How much additional funding would be available for their causes if CEO's had modest salaries (say £60,000 maximum across the board). Alternatively, have a commensurate reduction in gift aid claims (claw-back) in line with CEO salary levels above this level - on a £1 for £1 reduction basis. This would concentrate the mind wonderfully and it would a choice between CEO salary increases or a increased level of gift aid with more going to their causes!

Perhaps one additional measure of performance should be applied to charities - that of declaring on a £1 basis how much money ends up in the hands of the good causes. 

Let us not forget for one moment the underlying mandate of charities, which is not to feather the lifestyles of their staff, but rather to help those in need!


72 per cent increase in executives paid over 100k a year at best known charities

New crackdown on spiralling charity executive pay

analysis beneath the charity CEO salary scandal - what the figures show

Tags: | Categories: Charity

The Government has a problem reconciling the need for people to save for their retirement, whilst at the same time not being seen to sanction any accrued benefits which can be passed onto their heirs after death.

This stance has pretty much paralysed any rational thinking on the way forward with pensions, which have now potentially become a liability rather than an asset. Given a choice between an ISA and a pension most people today would opt for the former, whereas with proper policies in place pensions should actually be the route of choice.

Governments must also learn not to regard pension savings as a 'cash cow' to be milked at will to top up their spending shortfall. Furthermore, they are a long term contract between the Individual and the State and the rules should only be changed with sufficient notice in order not to disadvantage savers.

And for goodness sake treat pension savers as adults. After all they have built up a pension in the first place, so bullying them over drawdown & capped GAD rates is really rather insulting. Especially, as the 'reason given' is normally that the Government is looking after them for their own good to prevent them running out of money in their retirement. Well hang on! - these are people who have saved in the first place and not welfare recipients who rely on others and have made no provision for later life.

The facts are really very simple - if you wish people to save then make life easy for them to do so. Governments must stop constantly looking over their shoulder to appease those who believe that passing things onto ones children is a bad thing. They become so obsessed with this hang-up that it has a harmful undue influence in all resulting pension polices, which seems to over-ride common sense.

The acknowledged wisdom is that most of us need to save more into our pensions to have a comfortable retirement and the older one becomes before starting the process the greater the monthly amount needed.

However, the ridiculous thing is that is not necessarily the case and it is perfectly possible to accrue a substantial retirement fund, if only Governments would take their head out of the sand and start thinking constructively.

Personal pensions (SIPP's) are already permitted to invest in commercial property. A simple example of enlightened thinking would be to revise the SIPP borrowing rules and allow them to borrow 60%-70% to purchase commercial property, provided the pension had a deposit of 30%-40%; furthermore, this should apply on a property by property basis.

The figures are simple and the loan on the commercial property would be paid off within around 15 years - entirely from rents receivable. Once paid off the property would then yield between 5%-7.5% per annum in rent, as eithe retirement income or to help fund another purchase

Example: Taking a commercial property worth £100,000, a deposit of £30,000 and a mortgage of £70,000 (70%)

  • Current situation - In order to borrow £70,000 the SIPP must hold assets of £150,000
  • Proposed situation - In order to borrow £70,000 the SIPP would only have to put down a deposit of £30,000

However, it is all about fostering the right climate and encouraging people to save into pensions.

Saying that someone must save £500-£1,000 in order to have a decent pension will simply put people off and the net result will be no saving whatsoever, because they believe that the figures being bandied about are beyond their reach and therefore it is not worth even trying to start saving

The benefits of getting it right are immense - now it only requires political will!

Tags: | Categories: UK Government

Were the banks guilty of insider trading with interest rate swaps?

The banks are once again in the news over the long running issue of interest rate swaps and channelling commercial mortgage requests down the swap route. The alternative option in many instances was that if customers refused to take the banks advice their mortgage application was turned down - ergo. no loan.

Now events are catching up with the banks and to all accounts it looks as though they will have to pay the inevitable costs of these schemes in compensation.

For many on the receiving end, it has not only destroyed their businesses but also their lives and left a wake of destruction in the form of divorce, family break up and so on. Inevitably some may never recover and this is especially relevant bearing in mind how long these cases take to resolve. Often 5 years plus and in the meantime they live in limbo.

The cornerstone of these schemes was geared around a future rise or fall in interest rates and depending upon which way they went the borrower was either a winner or loser.

However, this simplistic explanation belies many underlying issues such as:

  • Normal business customers are not in the financial markets or the 'risk' game, which is completely alien to them and outside their field of expertise
  • Their customers had little or no concept of gearing and were way out of their depth with intricate financial arrangements
  • They were not in the business of 'gambling' on the financial markets - unlike the banks which use customer’s money to fund their risk taking
  • The requirement of those applying for mortgages was for a simple loan on known terms and repayment schedules. Whilst they accepted basic interest rate fluctuations could influence monthly repayments, most of them really did not understand the pivotal role of interest rates (swaps) or the ramifications of these schemes being recommended by the banks
  • Finally they believed the banks offered them a duty of care when offering advice or providing financial products

The banks knew full well that a 'normal' loan would in all probability not give them sufficient up-side - especially at a time when rates were in a downward trajectory and would in all probability continue to fall

There is a sound argument that because the banks were cosy with the BOE (Bank of England) they may have been a party to their thinking (overtly or covertly) over interest rates. In any event the banks were certainly aware of global policies in this area; whereas their customers were not so well informed.

Therefore, in the light of these facts, surely the banks had an inside track and have profited from information not available to their customers. However, to compound this issue, they went further than simply having this information, they tried to coerce prospective borrowers into disadvantaged loan contracts using this inside information.

All this must surely indicate that the banks actions were tantamount to insider trading. why else would the banks have introduced these schemes - after all no-one in their right mind is going to introduce a scheme where they lose out!


Clearly the banks themselves are inanimate corporate umbrella institutions and simply entities for those cooking up these schemes to hide behind.

RBS, Barclays, Lloyds etc. do not come up with these ideas - it is the employees & people behind the banks that do, in the knowledge that they will never be held personally accountable for the damage they inflict.

With this in mind it is about time that the rules were changed

  • Somebody must have come up with the idea
  • A group must have discussed the idea
  • Someone must have approved the idea in order for it to be implemented

Bearing in mind that every telephone call made to the banks is prefaced with a warning that the conversation is being recorded (for training purposes!), it should not be too challenging to arrange to a complete audit trail to be associated with every new idea (wheeze) the banks introduce for their customers

Once this process is in place it is then a simple matter to determine those responsible for introducing things such as 'interest rate swaps' and make them personally liable for any losses incurred as a result of their actions. No hiding behind the corporate entity and spreading the liability - you took the decision, so the liability is yours alone, although the bank will pick up any deficit one the individual employee(s) have been 'cleaned out'

After all this is what accountability is all about - being responsible for ones decisions and actions and having to pay the price if one gets it wrong!

Tags: | Categories: Banking

Shareholders & bondholder have a right to expect 'due care' when any organisation selects board members or a CEO. Especially if they are subsequently (bondholders) expected to suffer a 'hair-cut' in order to bail out the bank for any ensuing problems.

Banks should be run by proper proven bankers with an acknowledged track record and they should not adopt some woolly thinking egalitarian idea of including 'all comers' including those who have no experience or knowledge about banking

This is especially relevant to the approach used in this instance by the Co-operative bank and in any event a simple background check would have revealed that Paul Flowers had been:

Paul Flowers resigned from Bradford Council after pornographic material was found on his laptop

Flowers quit charity over '£150,000 false claims'

Interestingly this only initially came to light because someone felt they should blow the whistle on Mr Flowers, who then trotted out all the predicable excuses (we have heard them all before) which simply don't wash

And as for Mr Milliband - just take it on the chin and stop trying to muddy the waters by blaming the conservative party for other totally unrelated funding issues. The conservatives will have to answer for their funding sources in due course, but for now just deal with the matter in hand.

The message is pull together on this one and stop trying to score gratuitous points

The questions are therefore:

  • When can we expect to see a 'class action' by the Co-operative bond holders?
  • Should those involved in selecting Mr Flowers be liable for all their assets (house, pension, investments etc.) to help cover the banks losses? If so, when can we expect to see his house on the market and a cheque to the Co-operative for the balance of his assets?

Both of these approaches would send a very clear message for the future - hit those responsible where it hurts, in the pocket; because that is the only thing people nowadays understand Whereas, yet another costly parliamentary investigation (whitewash) with no teeth or satisfactory outcome is hardly the way forward.

The rhetoric from Mr Cameron may sound good but in reality it is a complete waste of time and money funded by the taxpayer

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