Sinking Ship or Ships

Further to the crises still unfolding, may I add a couple of observations.

The hands at the wheel of the sinking ship "S.S. UK Banks" are none other than the FSA- who have been strangely silent these last few weeks. Let me briefly revisit several other icebergs they hit whilst asleep; The Endowment mess, Equitable Life, B&B, Northern Rock and the rest of the flotilla. As we all know, only one eighth of an iceberg is visible and there are still more hidden dangers of which we aren't fully aware waiting to rip the ship apart.

However, would it not be only fair at this time for the FSA to come clean on a major disaster whose blame was laid solely at financial advisers? The endowment debacle was caused by 13 major insurance companies using a generic industry average charge on the illustrations they provided. These charges bore no shred of truth to the real charges on the contracts which outstripped any projection of growth. This practice was allowed to continue for years and despite the Freedom of Information Act, the FSA continue to refuse to release these companies' names. The reason given is that there would be a mass exodus from the companies, people would stop doing business with them and they may go bust. Isn't that what's been happening with the wrongdoing banks?

The FSCS (compensation scheme) itself is an untamed animal. When the interest on the loans to the banks becomes too much for the banking sector to support under the FSCS ( they pay an annual fee to finance the scheme), and when that figure rises above £2billion per annum, then the rest of the financial community who pay fees to the FSA,must pick up the bill! As an IFA who has not fallen foul of the endowment saga, I have already paid compensation to the FSCS on behalf of the advisers who shouldered the blame, and now it seems I personally will pay for the bankers who walk off with a sack of cash, having trashed our banking system.

Meanwhile back at the most expensive office spaces in the UK, Canary Wharf, the FSA party on by adorning the walls with expensive art, hold lavish leaving bashes for their dearly retiring servants (on a final salary scheme continued from previous employers the Personal Investment Authority) and recruit the disgraced bankers to positions of power. If you think this is not true then watch this space.

Dave King