Super Banks, Super IFAs, now…Super Mutuals!

The PFS-Personal Finance Society, are helping Advisers revise for the CII Diploma Exams, through a series of study sessions. Aegon Scottish Equitable are behind it all as the sponsor. Apparently the percentage of members that have completed the Diploma exams has increased by 30%. These study groups will be held in Leeds, Bristol & Birmingham in March so get yourselves booked in.

IFAs, in my opinion, are given a lot of support on the technical side, with these initiatives,& it could be a great time for Aegon Scott Eq to promote their Life, Investment & Protection products (I’m so sceptical). More importantly, it could be a great forum for IFAs to discuss their experiences during the recession, and share ideas of how different firms are dealing with issues! A problem halved etc….

A bit of a sad story really, the FSA has stated that by the end of Q3 2008, 340,000 Mortgages were in arrears. It was discovered that lending peaked in Q3, 2007, but declining dramatically since then.

This, for me, is the key to recovery, if the Mortgage sector was to come back, construction would follow. But, this is looking further away than expected, and despite billions of pounds from the Government, the banks aren’t even lending to each other, and hence, have been accused of taking legal action straight away, on people who briefly slip into arrears! I think, if efforts again, to get the banks lending, not just in the mortgage market, but to businesses and individuals alike, we will be at risk of a “second depression”.

The recent trend of, what I would term “uber companies” has continued this week, with the rumours of CFS-Co-operative Financial Services & Britannia Building Society, coming to fruition! The merger between the two is likely to create a “super mutual”. This new giant, will compete with government and shareholder owned banking organisations. Through, Economies of Scale, an overall calculated saving of this combined organisation of £60,000,000 will be passed onto customers, through “competitive rates and improved customer service”. They are likely to create a single brand, but this will take up to 3 years, and still has to be passed by the shareholders later this ye

This is a constant trend! I’m surprised, if I don’t read about some type of merger or acquisition in either, the IFA, Bank or Building Society sectors each week. I know that Britannia’s x-tie Axa have moved onto distributing its products through National Australia Group, NAG amongst others. I suppose it’s nice to have a chair to sit on when the music stops.

Onto the Macro picture, last week, the Office for National Statistics displayed that the Uk Economy shrunk by 1.5% in the final quarter of 2008, having an immediate impact on the FTSE, pushing it beneath 4,000 points, to 3,968 by mid-morning on Friday. RBS, Lloyds & Barclays lead the retreat, falling between 3-13% by 10.30am in the morning.

This follows on from what I saying earlier, it’s a vicious circle, the banks are being over-cautious about their lending, which adds to lack of confidence in the whole sector. All it needs is one big snippet of news, and the bank’s share price suffers exponentially. Someone, somewhere has got to start lending to someone, and try and break this cycle. The alternative is, the Government nationalising the whole banking sector, building on their stakes in Northern Rock, B&B, & 70% of RBS!

I tried to pick a positive note to end with, but I don’t think that the grey, rainy weather is the only grim picture in the UK this week. So, I’m afraid it’s negative again! The National Association of Pensions Funds stated that 52% of defined benefit Pension Schemes, (that are still taking on new members), could shut down due to the Recession and Banking crisis. Latest surveys by the NAPF, suggest that around 1,000 Pension Schemes are in trouble.

Basically, employers, in such a down turn will look at areas where they can make savings & 60th, 80th & 30th (if they still exist) are good place to start in their eyes. This has been happening for over a decade now, and the days of employers paying out 40/60th of people’s final salary at retirement are long gone. Oh to work in the Public Sector!