Banks, lending and your money
Those of you who are reading this article may well have watched or heard some of the replies that were given, I am sure that you too were just as surprised, confused or somewhat angered at the responses that they gave.
It appears to me that it is absolutely unbelievable that these two institutions were allowed to do what they did, in the way that they did it, without any proper risk assessment being done in the first place in order to prevent their institutions becoming vulnerable and exposed.
Indeed, one of those institutions being HBOS, has already this had an interesting turn of events in so much as their previous Chief Executive, who became the deputy at the Financial Services Authority has now had to step down from the FSA in light of what would appear to be political pressure. It would appear that this individual when he was the chief executive of HBOS ignored the advice that was given to him by one of his senior management team about the speed at which the bank was growing !
All they apologised for, these four gentleman, was that they ‘couldn’t see it coming!’
Well I think that is pretty weak considering the amount of money that has been lost and the fact that these two institutions have been bailed out by the tax payer, not the government, and this legacy will have to be supported by us, the taxpayer for many years to come !
And what was it all about ? Well , what it was all about was, a combination of things, but the whole purpose and aim of it was to produce a dividend for the shareholders and to make them appear to look healthy and strong in the eyes of the city as opposed to keeping a good solid business going for its employees, investors, savers, borrowers, etc
The people that supported these institutions as customers were nearly put in a very devastating position, and a lot of people have found that quite deplorable. In fact it is now coming home to roost with regard to the HBOS/ LLOYDS Banking Group merger as the whole of the C & G branch network will cease to be, all those branch closures and redundancies and for what ?
This merger was pushed through by the Government and our existing competition laws were relaxed to enable this to happen as it was expedient to do so at the time. The Prime Minister and Chancellor needed to be seen to be in control and acting in a way to demonstrate their competence ! The EU has taken an interest in this merger subsequently as they obviously feel it may contravene competition rules. In fact some commentators have suggested that the C & G has paid the price for this in order to reduce the size of the Group and therefore distract the attention of the EU.
What a mess ! Lloyds Banking Group was doing very well by itself and now it has paid the price for this expansion.
Where does that leave us?
Well, we are financial advisers who are directly authorised by the Financial Services Authority that in addition to providing the normal products and services that a financial services company provides to its individual clients, we also offer mortgages.
The truth of the matter is that for the past 18 months, or more, there have been products available in the market place which have been competitive and we have recommended these to our clients.
Each client is different and we run through a set criteria to establish what it is they need us to find for them. To do this we use a number of filters to identify exactly what type of product, etc they want. We have been able to find throughout this period of uncertainty suitable products and services for our clients.
The annoying thing is that if you were to believe the newspapers or listen to the political commentators or the media, then you would think that there are no mortgages to be had and that the world is nigh and we are all doomed.
Well the reality is that that is not the case, it might have been the case in some circumstances but not in everybody’s. We are quite happy to be able to say that throughout the last 18 months we have been able to offer competitively priced and far more competitive products than if you were to go direct to one particular lender.
The consumer has access to three types of Mortgage adviser. One being someone who can just advise on the products and services of one particular lender e.g. the bank or building society. There are also some advisers that just operate from a panel of lenders, up to a dozen, but often less.
Then, there are those that offer from Whole of Market and that means that all those products out there in the marketplace are now available and there is no bias to one particular lender.
What happens is, the most competitively priced product that the clients have expressed an interest in has to be recommended and if it isn’t then there has to be a very good reason why. The system that is used to search for these mortgage products produces an audit trail which is collected and the FSA has a right to access that information prior to a visit to a particular firm.
Any information that the FSA requires, prior to a visit, they have access to and that has to be provided by the relevant bodies concerned. A mortgage adviser that falls under the Whole of Market category / banner is actually responsible for the recommendation and the advise that they give.
This is unlike an adviser in a bank or building society, which you often find (as they are only offering products from one provider) the illustration will say that they are not responsible for the advice that they give and this therefore puts the responsibility for the selection of that product with the consumer and not the provider.
So purely from a protection basis, you are better of seeking the advice and professional services of a Mortgage broker. With regard to what you can do for the best in the current climate in which we find ourselves, there are two key areas that need to be protected at all times
One is a loss of income which can occur by way of death, sickness an accident or as a result of becoming unemployed. This issue can be addressed in a number of different ways and if this is of concern then do contact a qualified professional financial adviser to discuss this.
With regard to protecting your assets, often the single most important asset is your property but it can include other items aswell which you own outright.
This therefore means that you must ensure that any debts secured against that property, in addition to the mortgage, are protected against death so that a surviving spouse or family can continue to remain in the home. If they are not, then any creditors can go for the deceased persons estate in order for them to recover any outstanding monies.
There may well be other assets which also need to be taken into consideration which you have not considered to be relevant. For instance, if you own and run your own business which provides you with an income that maintains you, and your family’s lifestyle then that too is obviously an asset that, if lost needs to be protected against.
If you have any doubts then do seek professional financial advice to discuss these or any other matters which may be of concern to you.
Nic & Victoria,TD, Cert PFS, CeMap, Mortgage Solutions
Tel: 0844 844 0829