While shepherds washed their socks by night

My musings surrounding some of the more ridiculous aspects of today’s financial services industry have attracted some attention over the last year.

But with Christmas almost upon us, and 2014 drawing to a close, I felt it worth waxing lyrical on the growing, disturbing patterns of social behaviour that upon closer examination would have parents of the baby boomer generation turning in their graves.

UKplc has developed an appetite for expressing offence on behalf of others, outrage, remorse and grief on behalf of others and now we hear that the mob of ‘mad’ has turned its wrath on to chickens.

My father, a WW2 8th Army survivor, and my mother, an interpreter at the Nuremberg trials after the war, would no doubt be asking the question- “was it all worth it” if they were still alive and reading news headlines of today?

Britain it would seem is in crisis, no longer being trusted to cook a chicken for fear of having to handle it.

As always, blame needs to be apportioned or the lawyers and councillors would have nothing to do. Responsibility is firmly placed on the supermarkets where, we are told, as many as 79% of chickens sold by one leading brand contain‘campylobacter’ on the dead bird’s skin. This is all according to the latest research from the Food Standards Agency (FSA). Yes I know, another FSA doing good things on behalf of the nation without accountability at your expense.

From a UK population of some 64.1m, this bug is responsible for an ‘estimated’ 280,000 cases of food poisoning (through poor food handling and hygiene on behalf of the end user consumer I suspect) each year and as is to be expected in 2014 UK society, the consumer groups have piled in stating that supermarkets should ‘hang their heads in shame’ for selling food they know is dangerous.

The problem here is that in 2014, we cannot cook a chicken safely, either because we have never learned to or expect it to cook itself. We have lost the use of that in-built gene of common sense. Its loss went along with map reading skills, crossing the road after looking both ways, not talking to strangers, proficient cycling, spelling ability, simple mental arithmetic skills and very many more.

But wait, could things get worse?

They could indeed.

It would seem that the great British tradition of drying your washed socks indoors on a radiator is putting the nations health at risk.

Professor David Denning of the National Aspergillosis Centre in Manchester has issued the warning after treating a growing number of patients who have inhaled Aspergillus fungal spores, residing it would appear, in their supposedly freshly washed and now drying socks. Clearly there is not too much else going on in his world today.

Close analysis of news like this simply shows the dreadful shallowness of life in UKplc today, being played out in a month when we heard that some 2m Brits are eligible for gastric band surgery rather than take a the less invasive option to lose weight or the continued fallout from Laurence Llewelyn Bowen’s winter ‘Blunderland’ or that prospective parents can now be given ante-natal relationship classes by their cash strapped, time poor NHS, via an appointed Midwife to try to reverse the ‘shocking’ collapse in traditional families brought about by having children.

The world has truly gone mad, or at least it has in UKplc’s section.

We have a society that is now readily and speedily offended on somebody else part for just about everything that simply should not matter as much as it does.

We have borders that are not fit for purpose, we have an NHS in meltdown because the service is now aspiration and expectation based, rather than focusing on the basics of it’s original 1948 founding principles (comprehensiveness, within available resources) and a country controlled not by UK based elected politicians but by unelected civil servants, quangos, eurocrats and regulators.

My parents’ world and indeed my childhood world of the 1950’s is no longer there. Sadly, I think this is for the worse.

Children cannot it seem safely walk the streets without fear of molestation or abduction. In fact muggings have forced St Pauls school in London to ban blazers: and wear hoodies to blend in with local youths thereby avoiding the risk of attack.

Police it seems cannot deal with muggers like this as all their time is spent on dealing with historical abuse allegations and hate crimes, all very serious but why let off those committing real time crime – easier targets to apprehend surely? Instead valuable resource is directed toward matters that often have little supporting evidence other than some ‘he said/ she said’ statements about events that took place in the ‘swinging’ 60’s and 70’s or the accused is long dead?

You cannot be admitted to hospital without a fear that you will die from something you did not have when you went in on a Friday afternoon. Respect, manners and common courtesy for others are at an all time low.

And as for regulation and financial services?

The man from the Pru has long gone along with that oh so trusted ‘Captain Mainwaring-esq’ bank manager, the City stockbroker and accountant only to be replaced with spiv bankers, greed, excess and more regulation at ever increasing cost with little effect.

Even financial services fines are not being used as intended, instead now going toward politically correct good causes rather that reducing the cost of regulation on firms with good records.

But there is a welcome ray of light being shone by Ministers who are including plans to allow under 16’s to buy liqueur chocolates as part of the Deregulation Bill, a ‘much-trumpeted’ attempt to remove unnecessary red tape currently going through Parliament.

As a footnote, section 61 is worth a read. It refers to “Exercise of regulatory functions: economic growth” stating:

A person exercising a regulatory function to which this section applies must,
in the exercise of the function, have regard to the desirability of promoting 35 economic growth. In performing the duty under subsection (1), the person must, in particular, consider the importance for the promotion of economic growth of exercising the regulatory function in a way which ensures that—

  1.       regulatory action is taken only when it is needed, and 
  2.      any action taken is proportionate.

It will be interesting to see where that leads with red tape removal in financial services?

Many of today’s post war generation may have a different view, but I think I have answered my parents ‘rhetorical question’.

It was not worth it.

Be careful out there.

WW2 8th Army history

Nuremberg trials history

Life in the old dog yet

From a point where many thought the market might never recover, second-charge mortgages have (some might consider) produced a Lazarus-like resurrection particularly over the course of the last 12-18 months. This was a sector which, immediately post-Credit Crunch, was not just considered the black sheep of the mortgage family but was cast out and thought never to be able to return again.

How times have changed. The resurgence in second-charge lending has been self-evident for some time however if you were looking for some recent statistics I would point you in the direction of those from the Finance Leasing Association (FLA) which revealed that second charge mortgage business in September this year grew (year-on-year) 41% by value and 17% by volume.

It has been something of a remarkable turn-around and if competition is any sign of a sector’s health then you would have to conclude that the second-charge market is currently ruddy of cheek. Not only do we have an increasing number of lenders actively seeking business, but we also have a growing band of ultra-competitive master broker/packager firms all chasing introduced broker business. In not so many words, if you are an adviser looking to be more active in the second-charge market then you will not be short of firms seeking to partner with you.

So, why might this be? Well, quite clearly demand for second-charge mortgages has increased considerably and there are a number of underlying reasons for this, not least the fact that we have large numbers of borrowers either unwilling or unable to remortgage.

The former group might now find themselves on mortgage deals which one does simply not move away from – remember the raft of incredible lifetime tracker rates from many years ago. Savvy borrowers who picked these up – many of which will be paying 1% or less – are not going to be inclined to move anytime soon with rates remaining at record lows. However, this does not mean these borrowers are not in need of capital therefore a second-charge mortgage can be the right option in order to secure this funding. If you wanted another clear sign of the underlying strength of the second mortgage sector at present then you only need look at the remortgage market which continues to bump along the bottom, and probably will do so until those first few Base Rate increases are made.

Like any sector of course, the spectre of regulation does hang heavy over the second-charge market and practitioners and stakeholders would do well to be aware of what is coming over the horizon because it will change the nature of the sector. In September this year the FCA outlined how it will move second-charges from its consumer credit regime to be governed instead by its mortgage rules – this means a considerable (not necessarily unwarranted) upheaval for all those active in this market. Indeed, you get the impression that the regulator has been less than impressed by what’s been going on in the second-charge market up until this point. It wants tighter MMR-esque controls covering sales practices, affordability assessments, responsible lending, handling payment difficulties etc, and the easiest way to achieve this is via the mortgage rules themselves.

Which all means that from March 2016 second-charges will be regulated under the mortgage rules and therefore everyone involved is going to need to ensure they’re compliant with them. Greater regulation equals greater cost for all and therefore we shouldn’t be surprised to see a much changed second-charge market in just over 15 months than we have now. For a start, firms are going to need to get authorised to carry out second-charge mortgage business plus there will be the added necessity of data reporting, etc.

For those advisers considering their second-charge option, the first port of call should probably be the highly active master broker/packager operators. These are the businesses which will be able to provide plenty of background information and support in terms of placing business, not forgetting the fact they have access to all lenders and products at the tap of a button. Those not opting for this distribution method will find themselves having to trawl through many many lender offerings in order to secure the right deal.

The good news is that the second-charge market looks likely to maintain its upward trajectory for some time to come. All the news coming out of the economy and the MPC suggests it will be reluctant to increase rates anytime soon and therefore those borrowers on these incredibly competitive long-term lifetime tracker rates will not wish to move elsewhere. The second-charge market seems destined to benefit from this news for the foreseeable future.