So, into the second week of 2009, a busy week for the government with reports of “money printing” from treasury sources, and interest rates and libor rates down to record lows. Personally, when we talk about expanding the money supply, the government are more likely to do this through adding liquidity with government backed iou’s to kick start the banking sector and get them lending to each other, not old fashion money printing, I hope!
I think this is the key, because if banks aren’t lending to each other or the public, it doesn’t matter what rates are set. Later we’ll have a look at a report of a possible state bank candidate.
John Charcol Directors have been in the Industry news this week, as Money Marketing revealed that in 2008, they were forced, through pure survival to place £2.1 million into their firm, along with having to underwrite £1.3 million rights issue, along with a juicy £1.2 million debenture to make sure they met FSA capital standards for last year. Three directors, Jon Moulton, Charles Wishart & John Garfield had put together £1.5million to pump into the organisation in 2007!
All these re-financing issues coupled with Charcol, re-tying themselves to L&G on the product side for Life & Protections, should place them in a strong position when the good times come roaring back, hopefully later this year. Maybe a chance for them to repay all the Investment in themselves. They obviously have faith in how they go about servicing their clients. I’ve been in F/S Recruitment for nearly a decade now, and I remember the glory years of John Charcol, where they held a big portion of the market, maybe those days will return! Good luck to them!
So what have the IFAs been up to in this 2nd week of 2009? Well, 2plan, National IFA Brokerage, have appointed Julie Darlington and Standard Life’s Paul Mcnamara onto its board of Directors. Their Management Chief Exec officer, Chris Smallwood stated that these appointments are part of their strategy to build for the future, and have a specialist in each area at the top of their organisation : Julie from a compliance, supervisory and paraplanning background, and Paul’s overall extensive industry knowledge and actuarial background are both bringing something to the board.
Personally, one of the positive things that medium sized and National IFAs are doing is to think long and hard about who the right calibre of people are going to be to get them through the bad times, but also be there to take advantage of the good times!
Still in IFA land, SimplyBiz advisers through its “New Model Business Academy” are, according to a survey of their members, are looking to sit over 2,400 CII exams in 2009. What about the rain forests, although, it’s all automated these days!
Joking aside, this is very impressive, as on top of this stat, nearly a quarter of Simplybiz members are at least Diploma level and /or above, of which 250 of these members are qualified to Chartered or Advanced Diploma level. I think IFAs, generally, should pat themselves on the back. Since writing this blog each week, I’ve found that on average, they’ve reacted to the recession, by becoming more pro-active, giving better quality of advice, offering a wider range of Investment and F/S products, and finally, they’ve educated themselves to higher levels, and many will hit and exceed FSA targets for 2010 and beyond. Well played to them!
Interesting article in Money Marketing, Treasury Committee MP, John McFall, has made calls on the Government to think about making the Post Office into a state bank to help kick-start the Economy and deliver lending targets! Furthermore, Mr McFall, stated that most Banks naturally are being too cautious with lending to different parts of the Economy, but that this will limit the revival, and cause a second depression! The Post Office, he believes could be a perfect vehicle to turn into a National Bank to offer a more aggressive lending policy!
It’s a “vicious circle” in these times, the Banks, were decimated in 2008, so have gone back to a more cautious lending and mortgage strategy, despite the government lowering interest rates to 1.5%, the lowest in recent History, and rumours of a expansion of the “liquidity” supply to the banking system. This cautious lending strategy filters back into the economy with individuals and businesses not being able to get access to credit to expand through the down turn, and hence a second “credit crunch” occurs. At least, with a state bank, they would have a different lending agenda, and hopefully, as people came out of the recession and the good times came back, they wouldn’t renege on their loans and the recovery is aided. Food for thought!