DON'T BANK ON THEM

When I retired, I had a bit of money to spend.  After putting aside some for holidays, moving house, grandkids, Sugar Puffs, etc, we invested the rest.

Here was my thinking - the economy was apparently facing a downturn.  Bank interest rates had already begun to drop.  A whole range of interest rates had just plummeted, but, although many had climbed a little, they had then leveled off.  Previously favourable options, such as building societies, local councils, etc were also not offering much return (there were I think at the time only a few, obscure councils still looking for investments).  And house prices had begun to show signs of peaking.  If I put my money in an interest-bearing bank account, or similar, I would receive a regular, but only very small return.  So the answer seemed to be to engage the bank's investment portfolio manager.

Of course, banks are in such bad odour at the moment that today my decision sounds like a stupid idea.  At that time, it seemed quite prudent.  What happened next was that the manager deducted his hefty fee from my investment up front and the value of my remaining investment then fell through the floor.  It has just recently looked as though it might be rising again, but, if I withdraw it now, we still don't have invested even the amount we first handed over.

We haven't just sat here miserably of course: we have constantly chased up the managers, discussed other mixes of investment, even complained to the Ombudsman.  My contention is that everyone knew the market wasn't continuing to do well, but engaging an expert manager would guarantee my money would do better than if I, an amateur, stuck it in a low interest bearing account.  As it happens, I was quite wrong - putting it in the building society, or even leaving it in the bank, would have been better than giving it to the investment manager.

The managers of my money have the following excuses - we are in a world recession, no one could have foreseen a world recession, the Euro is struggling, that makes the growth of European investments poor, shares indices have all fallen, property prices have foundered and not picked up.  My reply - yes, but, given all these problems, which I was paying you to overcome/avoid, why didn't you put my money into something that wasn't recessing/struggling/poorly/foundering, etc?  Naive, aren't I.  If they had just stuck it in the bank, it would have done better than it has.  And I would probably be praising their foresight and management skill now.

The Ombudsman, by the way, studied all the papers and concluded that the investment manager had done nothing wrong, since investments can go up and down.  Er . . . yes, so I should only expect success if the market is rising anyway?  What am I paying for then?  In a rising market, I could have cut out the expensive middleman and bought my own shares.  The manager actually did three things wrong - he called himself 'an expert'; he moved my money from an interest-bearing bank account to what has turned out to be a worthless bunch of shares, something I could have done quite well by myself and he charged me a fee for losing my money.

Why am I telling you this?  Well, I have just received a glossy booklet from the bank with masses of facts of and figures and graphs and pie charts, showing how my money has lost value.  It then has a Twitter-like tweet from each portfolio manager, a commentary on the present position of the market, designed presumably to boost your confidence in them as managers, or advisers, or insightful commentators, or just plain bright people.  I shan't bore you with them all; here's just one to give you a flavour of their expertise:
'Approaching a point where we can see a possible way through the economic crisis.'

In English, the sort you and I speak everyday, this appears to mean, 'we can't yet see what to do.'  And guess what?  I'm approaching a point where I can see a possible way to trust them.

A LOAD OF MERCHANT BANKERS

So now we have another banking scandal.  I'm not really surprised.  The activities of the banking community has been so uncontrolled, so egocentric, so full of selfish, careless bravura, that they have clearly thought themselves immune to the law, either that defined by Parliament or that moral one followed by most of the rest of us.  It was only a matter of time before the rot led to the collapse of the structure, like a flashy seaside pier beset by rust.  And too many people jumping on the roundabout.

Perhaps one more blatant crime is unimportant; no one has a good word to say about bankers at the moment anyway.  But once, in the not too distant past, if you wanted to get a reliable recommendation or a trustworthy signature, you asked your bank manager.  I don't suppose anyone would bother these days; it wouldn't give much of an impression anyway.  I even heard someone on the radio say that they were now on a par with estate agents!  Perhaps you can't trust anyone these days.  What a mess!

But I don't really care much if bankers get a bad reputation.  I haven't ever had much of a good experience in banks.  But what will be a much bigger problem for us is the impact on the reputation of the banking industry in general and London in particular.

There was a time when we let the bankers get away with near murder and allowed them to draw annual salaries approaching the GDP of a small country.  The reason we allowed this situation to go ahead was that we wanted the bankers to stay here.  'If we don't cowtow to bankers, they'll all move to Paris', was the mantra.  It's very difficult now to see why that would be a problem.  Keeping these people in Britain has made a major contribution to our economy.  But at what cost?

I don't really care about what sort of inquiry we now have into the banking industry.  The politicians will continue to argue about this for a while.  But what none of them seems really to be concerned about is that, whatever the inquiry discovers, the reputation of London will be damaged worldwide and will require more than the sticking plaster of an inquiry to heal.  We already know that Barclays have broken the law and that other banks are being investigated.  It'll take a major political and PR effort to overcome that.  Why don't we let Paris have them?

BANK SH*T

'Hello, Mr Hook.  This is FatCat Bank.  I'm Craig.  How are you today?'

Have you ever had one of these phone calls?  Now I have put money in FatCat Bank since they were just a Kitty, but they have never tried to do personal business on the telephone.

'Not today, thank you.'
'Mr Hook, we are just conducting a customer audit to check that everything is in order with your account and to ensure that you are happy with the management of your money.

Now, just to make sure that you really are our customer, Mr Hook, would you mind confirming some details of your account for me.'

They must think we're really dumb.  I'll hand over my account details to someone I don't know and say I'm happy and then mysteriously my account disappears and I'm not so happy.'

'I'm afraid I don't do this sort of thing on the telephone.'
'So probably you're not sure whether I'm really your bank, Mr Hook.  I can give you your sort code or the last 2 numbers of your credit card to confirm who I am.  Which would you prefer, Mr Hook?'

It's compelling, isn't it.  I like the friendly use of my name too.  So someone has got hold of one of my credit card purchase slips.  But they're not getting anything else!

'I'm afraid I don't do this on the phone, Craig.  But I will pop into the bank tomorrow and sort it all out.'
'No need to do that, Mr Hook.  I'm sure we can save you the trouble.  Now, before you answer a few questions, is there still anything that concerns you, Mr Hook?'
'No, I've been having a bit of a problem with nuisance calls recently, so the police are monitoring my telephone and will be recording this call now.  I expect they'll give you a ring in the morning and sort out my account.'
'OK, Mr Hook.  Goodbye now. . . . . . . . . .Sh*t!'

I wonder what that last sentence meant.