Monthly Archives: September 2014

SMEalliance v Parallel Universe.

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I was think this morning (actually I was dreaming it as well) about this bizarre situation we have of parallel universes. It’s a situation now so blatantly obvious between SMEs on the one hand and banks, regulators, authorities on the other, that we seem to talk an entirely different language and have an entirely different thought process. A very good example of this is the Lawrence Tomlinson report into RBS/GRG vs the Clifford Chance report. Clearly the two camps are not on the same planet and not writing about the same problem. Or, worse still, Clifford Chance looked at the problem and then interpreted their findings according to the laws of Klingon or the Disc World. Question – which camp is run by aliens?

I would say it’s not us, the SMEs (well I would say that) but I have good grounds for that assumption. We, the many SME owners and employees, have no option than to deal with very real, down to earth problems and situations. Given the many and varied ways banks have tricked, manipulated, defrauded, deceived (call it what you will) the SME sector, many of us, and I can say this as a fact, have problems making budgets stretch to the next day. The concept of what tie to wear to the next Mansion House dinner or what colour Merc to order next year, is totally immaterial to our lives.  We are very ‘grounded’ and we are determined to bring about change, so we don’t end up ‘under-grounded’ before our time.  And of course that is not a scenario that applies just to SMEs – the majority of people in this Country have been affected by the extreme austerity the so called ‘credit crunch’ caused.

So it’s been interesting to see some of the top people from the parallel universe, running around like headless chickens for the last few weeks because they were suddenly forced to face the fact that ordinary people count. I’m talking about the Scottish referendum of course. Even although the ‘No’ vote won in the end, it was a sharp wake up call to “all in it together” Dave and Ed & co, when the Scottish people made it blatantly clear they were sick of a Westminster dictatorship. And although I personally think it would have been a mistake to split the United Kingdom, I do think Alex Salmond and his team may have done everyone a big favour. They’ve made a point – if you want to stay in Government you’ve got to do what it says on the tin – or we’ll walk.

For a very long time now, what we’ve had between Government and people is “a failure to communicate.” And it’s become so out of hand most politicians fail to understand even the most basic problem i.e  we vote them into power based on promises made which will benefit the majority and then, when they’re in power,  they break almost every bloody promise in order to benefit the tiny minority living in the parallel universe which encompasses that tiny dot of Britain in central London to include Westminster and the City.

I don’t want to get involved in the pro’s and con’s of Scottish devolution – I’m not Scottish – but I was quite fascinated by the lengths our political parties went to to keep Scotland. Of course the proof of the pudding is in the eating and, in my humble opinion, what will follow now is a battle, the likes of which we haven’t seen for quite a few years, while Scotland insists Dave keeps his promises and the rest of the UK wonders on what grounds Scotland gets preferential treatment – when half of them didn’t want to be part of Britain in the first place? It is going to be very interesting.

Anyway my point is – Scotland has 5M+ voters and the thought of losing them caused many people from la La Land to become quite apoplectic. Suddenly they listened and suddenly they agreed to the need for change. I can’t help feeling this was more about economics than people but, whatever, it brought our aloof elite back to earth for a while. How long they will stay – who knows. But there’s a good chance they’ll be here en mass for the next 9 months.

It took the SNP years to build that momentum and some may feel it is entirely presumptuous to compare SMEalliace to the SNP. But you’d be wrong – every organisation looking for change via our democratic process is similar to the SNP. Our problem so far has been – only money has been having political influence – not people. SMEalliance may be at totally grass root level and we are absolutely a fledgling initiative – but we want change every bit as much as Scotland does – and we want to be listened to every bit as much as Scotland does. And I hope we will grow very quickly as an organisation – because we could potentially reflect the views of millions of people – and some of them Scottish. And no, we can’t vote to get out of Britain (well I suppose we could form a convoy and head for the Costa Del somewhere) but we could vote for the party that listens to us the most – which was always the basic idea behind SMEalliance – we want to raise our voices before more SMEs are brutally trashed.

And here’s a thought running up to the election – if the 4.9M SMEs in this Country were able to function efficiently and grow as the entrepreneurs who started them intended, instead of being continually crippled – and not just by banks – the impact we would have on the economy would be phenomenal. We would be a huge asset to the Country and we would shift the balance of power back from the parallel universe to the real world.

Now I know a lot of people won’t like that idea. But it’s called democracy and if we could identify the political party who would give it a shot – we could be a handy vote.

 

 

 

 

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Venue Confirmed at the Law Society for 1st meeting of SMEalliance

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Very brief blog to confirm the 1st meeting of SME Alliance will take place 24th September at 1.00pm in the Old Council Chamber of the Law Society, 113 Chancery Lane, London.

This meeting has come about as a concerted effort. Many thanks to Jon Welsby who has got us the venue; to all the people who have got on board so  enthusiastically; to Nick Gould and to Gareth of Rustem Guardian who are supporting SME Alliance.

I’ll stop there before it becomes an Academy Awards speech where I throw in family members, my cats (dead and alive) and a tragic life story. But I would genuinely like to say (she’s off again), who would have thought something so important, and in a way so obvious, could have happened so quickly?

I look forward to seeing those attending on the 24th – and for those who couldn’t make it but want to support this initiative – the website will be up soon, it’s easy to join, it won’t cost anything and your support will mean everything.

We need a voice to make SMEs heard. If you join us, we’ll get that voice.

 

 

 

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SMEalliance up and running

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It’s been a busy week and I still can’t believe that two weeks ago SMEalliance didn’t exist. It certainly does now! Obviously it’s still early days but here’s a brief update of where we are:

We have a company .

We have a domain name smealliance.org.

We have a logo (to be unveiled next week)

The website is being built and should be up and running by the end of next week.

We have a meeting confirmed for 25 people on 24th September at 1.00pm (the venue will be confirmed early next week but if it’s not Chancery Lane it will be within walking distance of Chancery Lane)

We have supporters who can’t make the meeting but are on board.

We have media interest.

Not bad progress for 12 days work.  But I am fully aware we are at the very beginning of something and what we want to achieve will not be easy.

I’ve been repeatedly asked over the last few days, the very obvious question, what will make SMEalliance different from any other organisation that supports SMEs. And I want to say straight away, we haven’t formed this group as a criticism against other organisations.

However, there are serious issues for all SMEs that clearly are not being dealt with or resolved. As these are issues that affect SME owners, shareholders, employees, it makes sense for us to try and help deal with them ourselves and alongside existing organisations. After all, who knows the problems we face better than us? And please note – SMEalliance is absolutely not just about banks – so we are not going into competition with Bully Banks or anyone else – in fact we have a meeting scheduled with Bully Banks and I hope we’ll have meetings with the FSB in the future.

As I said on Day 1 of this initiative – there are 4.9M SMEs in Britain and it is absolutely ridiculous that we are ignored by all the major political parties. They may say they don’t ignore us but the proof of the pudding is; no one is doing anything about the way banks continue to trash SMEs and steal their assets; no one is enforcing the conditions banks agreed to as part of the bailouts (i.e funding for SMEs); no one is looking at the abuse we suffer at the hands of the insolvency sector; no one is looking at the inequitable position we are in with the justice system (i.e first we get abused and then our abusers use shareholders money to make sure we can be abused again in the Courts); we are crippled with red tape and regulation while the major corporations SMEs struggle to compete with, are often not even paying UK taxes because they’re registered off shore; the various Ombudsman schemes are not set up to deal with SME problems; the regulators are not set up to deal with SMEs (e.g the FCA does not deal with individual issues but the FOS can only give limited compensation which doesn’t cater for SME losses); and so on and so forth.

The reason for SMEalliance is: we, the members (the few now and the many coming) are all very aware of how important SMEs are to society but also how individually vulnerable we are against the kind of unethical practise that blights the business community. Many of us started businesses with all the enthusiasm and dedication synonymous with entrepreneurship and with no idea how easy it would be for rogue elements of other sectors to see us as mere cannon fodder. We all employ (or employed) people and we know first hand the devastation caused when businesses fail because of immoral and sometimes fraudulent scenarios we have no control over. I think we’ve been collectively shocked that the protection we thought we had – regulators, law, Government – has, in many cases, proven to be totally ineffectual. Many of us have watched in horror as our businesses have been destroyed despite our every effort to save them. We’ve all tried individually to stop the kind of corruption and “wilful blindness” that makes SMEs such easy prey. Now we’re going to do it collectively. Who better than us to try and help remedy the problems facing our sector?

SMEalliance is a very simple concept. SME owners, shareholders, employees getting together to share idea’s and information that will help us all. And, most of all, having a collective voice that policy makers in Governments have to listen to. I’ll put that another way because a) “HAVE” to listen suggests we have a very aggressive agenda and b) as we all know, selective hearing or pretending to listen (nodding dog syndrome) is a speciality of some politicians. We want to get to the point where political parties genuinely WANT to listen to us and genuinely want to use our experiences to identify what needs to be changed or put in place for a more equitable platform for SMEs. It can only be a good thing for the economy to make the SME sector strong.

It’s a plan. It’s a very good plan. Now we just need to make it work! As I said, it’s early days but something about this does feel very logical.

That’s it for now. Anymore and someone will be buying me a soapbox! Will update again in the week. Please spread the word. #SMEalliance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WBUK at the Cambridge Symposium on Economic Crime.

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Last Saturday I had a very interesting time at the Cambridge Symposium on Economic Crime. I was there with other members of a whistle blowers organisation and several of us gave a ten minute speech on our personal whistle blowing experiences in relation to economic crime. I must admit I did feel slightly disadvantaged because the economic crime I know most about (HBOS Reading) is the one thing I couldn’t mention because it’s subject to sub judice until the end of the criminal trials.

I must also admit that while my colleagues were either very eloquent and experienced at giving speeches or had taken the time to write and rehearse their speeches, I kind of hoofed it because the last few weeks have been quite hectic and I could do with 28 hours in every day. So I was very nervous. But I also felt very privileged because the whistle blowers involved with WBUK  are a pretty impressive bunch and some of them are very well known for their extraordinarily brave actions exposing corruption across many sectors.  You can check out some of the members on this page: Members testimonials

Anyway I did manage to make a speech. God knows I don’t need much encouragement to start giving my views on malpractice in the financial system and once I got started I could probably have gone on for hours given half a chance (fortunately for the audience I didn’t have that chance).

What really struck me about yesterday was how shocked and how interested the audience was. They really seemed to appreciate the opportunity to hear ordinary people sharing their experiences.  The rooms for both of the WBUK sessions were pretty much packed and the feedback we got from the audience was incredible. In fact the organiser of the Symposium has invited us back next year to do a whole day in a bigger location because everyone was so keen to hear what we all had to say. And everyone was so complimentary!

I should explain why I found that so extraordinary. We, the whistle blowers, are not at all used to compliments. if anything, we’re used to being disliked for what we do – obviously we are disliked by the people we blow the whistle on but in general the authorities are non too keen on us either. For example, one of our members blew the whistle on very serious corruption in the police force – end result? She was kicked out of the police. Another even more tragic case was in the healthcare sector where the inability of the NHS to listen to a whistle blower who is a senior Paediatrician, later allowed the tragic death of baby P to occur (that 10 minute speech was heart breaking). She also lost her job although she fortunately has it back and is well respected for what she did. Or the  case our Chairman, Colonel Ian Foxley, who blew the whistle on irregular payments between EADS and the Saudi Royals. Not a very popular decision in certain circles: see GPT

I could go on as we have collectively blown the whistle on so many totally corrupt and unethical situations. And in general we have managed to highlight very, very serious issues to the public that in many cases have had positive results. But the result for the whistle blowers has generally been very negative. Many of us have had our lives devastated – people don’t want to employ people who might blow the whistle – most of us have lost either our jobs or our businesses – in the majority of cases whistle blowers have to fight for years before anyone will even listen to them and take the issue they are raising seriously – and while the issues whistle blowers raise are crucial to a just and ethical society,  we are often labelled as trouble makers.

But I realised on Saturday, when people have the opportunity to sit down and listen to our stories, they appreciate what we’ve done and are even astounded by what we’ve done. I could see a reaction by many people in our audience of complete bewilderment and incomprehension that it should be so hard to blow the whistle on situations that are blatantly wrong – not just for individuals but for society. I really felt an enormous amount of empathy for what whistle blowers do. And of course while we do meet each other and speak to whistle blowers on the WBUK help line, we rarely get the chance to collectively meet people who are totally unconnected to the world of whistle blowing.

Unfortunately the Government, with their various enquiries and reports don’t seem quite so keen on us and everyone at WBUK has been very disappointed at the Francis Report or the BIS review of existing legal frameworks for whistle blowers and I am already disappointed in advance of the PRA report of what caused HBOS to fail. But Saturday made me think that maybe, if we can keep raising the profile, it will be the public (even bankers, lawyers,  accountants and even senior officials in the healthcare sector) who will help us make whistle blowing a respected and much needed voice in society. Clearly we just need to spread the word about the good whistle blowers do.

To finish, I would just like to reply to a valid point raised by an accountant in the afternoon session who suggested we (society) needs to look at both sides of the coin – i.e. someone might use whistle blowing to make malicious and unfounded allegations against another person. I didn’t get a chance to reply but let me just say – I have been one of the people manning the phones for the helpline for the last couple of months. I have heard some totally appalling stories and I mean truly shocking, from people who feel they have no option but to join the whistle blowing community. I have also heard stories that weren’t really about whistle blowing but were about personal disputes. Still serious issues but not necessarily whistle blowing. It’s not hard to identify real whistle blowers. And when I’m speaking to people on the phone, my own criteria is – is this person telling me something that will be detrimental to lots of other people if it isn’t exposed?

I would say to anyone questioning the integrity of whistle blowers and here’s the crunch – no person in their right mind would chose to be a whistle blower. No one queue’s up for the job and no one really wants the job. It’s not easy and it’s not a nice job. Sometimes it changes the entire direction of your life. It is a fact many whistle blowers need support to deal with the mental stress and anxiety resultant from their decision to try and do the right thing – and that is a support WBUK tries to give. Nervous breakdowns or depression are common complaints with whistle blowers. But all the disadvantages still doesn’t stop some people blowing the whistle on gross injustice or corruption. Thank God.

Anyway, Saturday was a really positive day for all of us and I am really encouraged to believe that by this time next year we will have an even bigger voice and support for WBUK. And we will be closer to removing the stigma of blowing the whistle. Hopefully we’ll be closer to a situation whereby whistle blowers get the kind of protection that will encourage others to come forward and blow the whistle when they see situations that should and must be flagged up for the good of society. And while my personal experience involves the financial sector, hearing the speeches on Saturday, the thought that has remained with me all week is  – at all cost we must avoid a Baby P situation ever happening again. We need whistle blowers.

 

 

 

 

 

 

1st SME Alliance meeting fully subscribed.

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Brilliantly we have filled the spaces available for the first meeting of SME Alliance. Many thanks to those who have also pledged support – we will keep them fully updated on the agenda and, of course, the results of the meeting.

While we don’t have any more space for the meeting, please do keep contacting us on: smealliance2014@gmail.com if you want to support this initiative and get updates. It’s early days but who knows? After all it is logical – approx 25million people work for the  4,9 million + SMEs in this country. But in recent years we’ve been like lambs to the slaughter as far as the bamks have been concerned and successive Governments have done nothing to stop what’s happening. Bankers may well control the wealth of the country but they’re not (quite) brazen enough (yet) to pretend they have more power than politicians and Governments.

A journalist asked me today why we are putting together this initiative – and then answered his own questions. The organisations that are in place don’t seem to have been at all vocal about the many problems SMEs face. Most of them have been silent and stood on the sidelines.

As my mother used to say – “if you want a job well done, do it yourself.” That’s what SMEalliance intends to do. This isn’t just about fighting banks. It’s about asking how 25 million people, who are the life blood of British business, can be totally ignored?

We have no more space for the first meeting (which is amazing given we only came into being a week ago) but we do need the support of as many SME owners and employees as possible. A few thousand supporters between now and the general election next year, may just remind people what an election is about?

 

 

 

 

 

 

 

 

Update re: meeting of SMEalliance 24th September 2014

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09/09/14

Many thanks for the replies. As I’ve been in Oxford all day (but I live in Cambridge) I haven’t had time to respond – but I will. What is going on in this Country – we have major road works on our busiest roads in rush hour traffic? And then they open the roads at night when there’s hardly any traffic? So just over 2 hours to get back from Oxford but 3&1/2 to get there! Bonkers.

Rant over – As we still have to book the venue, it would be really good if anyone else wanting to come on 24th September could reply by 11.00am tomorrow so I can pass the definitive numbers on to Jon Welsby who is finding the best place.

Thanks also to those who can’t attend but want to support SMEalliance. Crazy to think all this started just a week ago! I wonder where we’ll be in a month? I’m really looking forward to meeting you all. And I would just add – after the meeting I had today with a really lovely farmer and his family, who have been totally abused by banks, the quicker we get a voice and some muscle, the better!!

Best

Nikki

From the replies received it seems that Wednesday 24th September is the best date for the 1st meeting of SMEalliance. So that’s it – we have a date. It’s been suggested the meeting should take place at 1.00pm because some people have a considerable distance to travel – and no one wants to by peak time rail tickets if they can avoid it.

What we can’t confirm as yet, is the venue – because we don’t know how many people want to attend? We have a list of 8 people who will definitely be coming but because last week was so hectic, I haven’t had a chance to confirm the names of many others who have expressed an interest to be involved. Until we know the numbers, we can’t confirm the venue. Jon Welsby has suggested a couple of venues he can get but they can only accommodate 10 – 12 people at max. I am sure we can find a bigger venue if more people want to come and our priority now is to confirm the numbers.

I have set up a specific e-mail address for people to confirm their attendance:

smealliance2014@gmail.com

Alternatively you can confirm by commenting on this blog.

Please let me know (if possible by Wednesday morning) if you would like to come. I am in Oxford all day tomorrow but would really like to be able to work on this Wednesday. Once we have that info I can e-mail all participants with a venue and an agenda (of sorts). Please bear in mind – this is a fledgling initiative at the moment and the purpose of the meeting is to make a plan for the future and create a strong group that will have a voice. I am not necessarily leading the group as the meeting may produce someone better suited to the job. But I am more than happy to help get us to that stage.

It would also be very helpful to receive an e-mail from anyone who isn’t in a position to come on the 24th but still wants to support #smealliance and receive regular update. Please make it very clear on e-mails on in comments – I WANT TO ATTEND ON THE 24th SEPTEMBER or I WANT TO SUPPORT SMEalliance AND RECEIVE UPDATES. At this stage the only info we need is the confirmation, a name, e-mail address (which we’ll obviously have), a twitter name (if you tweet) and a phone number if you want to give it – not obligatory.

Next blog on Wednesday or Thursday – hopefully with a venue and an agenda for the 1st meeting. Obviously the agenda will only go to those who are attending the meeting or want to support. Oh – and any bankers signing up to get inside information – we would be very happy for you to attend and speak to us!

Look forward to hearing from everyone.

Best

Nikki

 

re: SME Alliance

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Quick update for all those who supported the idea of an SME Alliance to get some political support (in exchange for a potentially massive vote). I was quite amazed at how many people wanted to get involved – a very positive start.

Today I have spoken to Jon Welsby who is happy to organise a meeting place. So far the suggested dates are either 17th or 24th September. Please let me or Jon know which of the two dates (if either) are good. The meeting will be in London at a barristers chambers (start how we mean to continue)!

I just wanted to make one thing very clear. My intention, when suggesting this, was never to compete with other organisations like Bully Banks who help SMEs fight banks – and I hope Bully Banks and others will want to get involved. Also, although we do have the support of the excellent Nick Gould who is a lawyer, this initiative was never about legal advice or solutions and no lawyer could advise 4M SMEs! Neither is is about our individual cases – although I envisage we may want to collate our collective experiences in the future in order to fully exhibit how Government and the regulators have allowed SMEs to be mugged (I tried to think of a more politically correct description – but the word mugged seemed most appropriate).

The overriding objective of an SME Alliance is to point out what is, quite frankly, the beedin’ obvious: There are 4.9M SMEs in Britain (at least); Approx 25M people work for SMEs; we are crucial to the British economy and British society; we have been ignored. We are fed up being ignored and while, individually, Governments appear to have no interest in us, collectively we will have a very loud voice – and we will represent a very large vote.

Many of us have been totally abused by banks and, sadly, we have all had to come to the conclusion we can’t rely on any authority to protect our interests or the interests of our employees or shareholders – which is madness because we are the life blood of British business. And while we obviously can’t lobby or compete with the multi-billion pound banks or corporations in a financial sense, we have something they don’t have – numbers and voters. And running up to an election, I think it’s entirely possible that the votes in the ballot boxes will be every bit as important as the ballots in the board rooms.

I should know by the beginning of next week, which date is best for our first meeting and who will be attending. And BTW – I am organising this at the moment (I always knew my bossy side would have its day) but that is only until we decide how best to go forward and who best to take this forward.

I am incredibly enthused by the idea we could collectively bring about change for SMEs – not sure our political leaders feel the same. I tweeted the letter to Ed, Dave and Nick today. No replies – but then again, we haven’t even reached the end of Day1.

Watch this post – will do an update every time we have news.  All ideas and contacts gratefully received. Spread the word. #SMEalliance

 

 

 

 

 

 

 

 

 

 

To SME friends on twitter

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Dear David Cameron, Ed Milliband, Nick Clegg and other party leaders,

In the run up to the next election the owners and shareholders of 10s of 1000’s of SMEs who have been systemically abused by banks are wondering who to vote for and if there is any point? Over the last few years it seems there has been little difference in how the major parties have pandered to the banks and Corporates at the expense of the millions of small businesses in Britain. And while the present Government insists the economy is growing, the situation of banks refusing to fund SMEs while continuing to close them down, steal their assets and knowingly defraud them, continues unabated.

Not only do the banks continue with their unethical conduct to SMEs, we can assure you the majority of business owners find the regulators to be at best ineffectual and at worst biased towards the big banks. In all honesty we have no idea which party, if any, would be prepared to change that unethical status quo and support British businesses.

The following statistics come from BIS (beginning of 2013)

  • There were an estimated 4.9 million businesses in the UK which employed 24.3 million people, and had a combined turnover of £3,300 billion

  • SMEs* accounted for 99.9 per cent of all private sector businesses in the UK, 59.3 per cent of private sector employment and 48.1 per cent of private sector turnover

  • SMEs employed 14.4 million people and had a combined turnover of £1,600 billion

  • Small businesses** alone accounted for 47 per cent of private sector employment and 33.1 per cent of turnover

  • Of all businesses, 62.6 per cent (3.7 million) were sole proprietorships, 28.5 per cent (1.4 million) were companies and 8.9 per cent (434,000) partnerships

  • There were 891,000 businesses operating in the construction sector – nearly a fifth of all businesses

  • In the financial and insurance sector, only 27.5 per cent of employment was in SMEs. However, in the agriculture, forestry and fishing sector virtually all employment (95.4 per cent) was in SMEs

  • Only 22.5 per cent of private sector turnover was in the arts, entertainment and recreation activities, while 92.7 per cent was in the agriculture, forestry and fishing sector

  • With 841,000 private sector business, London had more firms than any other region in the UK. The south east had the second largest number of businesses with 791,000. Together these regions account for almost a third of all firm

24.3 million people equals a lot of votes and that’s without taking into account the millions of individuals damaged by the so called ‘credit crunch’ when banks were given billions of pounds from the public coffers with no reference to the public. That is a statement of fact – not a political point and many of us see little difference in the conduct of the last Labour Government to the present coalition Government. The banks and bankers get richer while the society and the small businesses that are such an essential part of the economy are continually ignored or deliberately impoverished.

We would like to know if any of the political parties are genuinely intending to support SMEs in the next term of Government? We’d like to know if that support is included, or proposed to be included, in any manifesto? And we would like to know what guarantees will be given that any promises made in the run up to the election, will be upheld? In the previous election we were all led to believe miscreant bankers would be individually held to account and bankers would not be handsomely rewarded for causing the austerity most of us live with. It has not happened and, if anything, our banks feel empowered to act immorally and even criminally in the knowledge any penalty will be levied against the shareholders by fines from the regulators. It started with new Labour and this situation has been proliferated by the coalition.

We would be grateful if anyone can clarify what we should expect from the next Government and whether any party is intending to support SMEs. The situation for many SMEs in this Country is catastrophic. We want change – we want to know who is prepared to instigate that change – we want to know where our millions of votes should go.

Yours sincerely

SME Alliance.

Following on from yesterday’s Indy article about the HBOS Rights Issue, can we at least stop subsidising fraudulent conduct in banks?

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Tom Harper’s excellent article questioning whether or not investors were given key financial facts regarding the HBOS Rights Issue in 2008, provoked some serious outrage on the ‘Twittersphere’ yesterday – and quite rightly so. http://www.independent.co.uk/news/business/news/hbos-accused-of-misleading-the-public-over-4bn-rescue-9701791.html

I don’t suppose the Government, Lloyds, the Regulator or the BoE will be happy with that line of investigation. Not least because it opens the door to a whole torrent of questions about how many other transactions, involving state subsidised banks, have been less than transparent?

And perhaps the biggest question will be – was the information in the Lloyds/HBOS Merger proposal, as accurate and transparent as it should have been?

I am sure Lloyds bank will say the HBOS Rights Issue was nothing to do with them as it pre-dated the merger. But in order for the Merger Proposal to be correct, it should have contained watertight data about the financial state of HBOS – which, reading Tom’s article, I’m not sure it could have? I’ve looked at the Proposal and it relies on financial accounts for HBOS and Lloyds TSB dating back to 2005 – although conveniently, it only relies on unaudited accounts for HBOS in 2008. Not that it makes much difference because, sadly and to add weight to yesterdays article, the Big 4 auditors appear to have been equally confused as to the solvency of the banks despite the audited accounts, as shown in another excellent article by Ian Fraser, November 2010: http://www.ianfraser.org/connolly-i-do-believe-that-auditors-performed-well/

What I find really upsetting about all this was brought home this morning by an article from the Positive Money site (following up on an article by Jill Treanor in the Guardian). The article dates back to December 2013 and explains, in very clear and simple terms, how banks continue to be subsidised and why. https://www.positivemoney.org/2013/12/uk-banks-benefited-38bn-big-fail-state-subsidy/ And of course, if we are still subsidising the part state owned banks – we are also subsidising bankers’ bonuses – which, considering neither Lloyds nor HBOS have managed to comply with the terms and conditions of the 2008 bailouts, seems entirely unjust not to mention bonkers. In a letter I received from the Treasury dated 15/05/09, Lloyds and HBOS agreed to meet the following terms:

A range of conditions are attached to the recapitalisation package. Lloyds TSB and HBOS have agreed that over the next three years they will maintain the availability and active marketing of competitively priced lending to homeowners and to small businesses at 2007 levels. They will also provide support for schemes to help people struggling with mortgage payments to stay in their homes and the expansion of financial capability initiatives. The remuneration of senior executives will follow strict guidelines – both for 2008 (when the Government expects no cash bonuses to be paid to board members) and for remuneration policy going forward (where incentives schemes will be reviewed and linked to long-term value creation, taking account of risk, and restricting the potential for “rewards for failure”). The Government will also be consulted on the appointment of new independent non-executive directors…”

Joining up all the dots, I begin to get a very clear picture of La La Land and it’s not pretty. As I am definitely a layman in these matters (albeit a fairly well informed one), I thought I’d take this opportunity to share my view of what’s happened over the last few years.

Round up of events in La La Land.

In 2008 and after exceptional spending sprees by both the banks and the public, the proverbial finally hit the fan and many banks ran out of money. The Government, terrified they’d have a repeat of the Northern Rock débâcle, gave the banks billions from the taxpayers’ coffers. As this resulted in mass austerity, the Government were loath to let anyone know exactly how bad a shape some of the banks were in (some were insolvent) and they certainly didn’t want the public to know the exact details of the billions being handed over, so they did their best to keep it all quiet. They (and the banks) even kept it quiet from the people being asked to invest in the banks via rights issues and/or sanction the HBOS-Lloyds merger, although they didn’t have to keep it quiet from institutional investors, because they were ‘in the know’ and had no intention of investing in insolvent banks.

The banks took the money but totally ignored the social responsibility that went with it (terms and conditions) in the same way they ignore little things like money laundering laws or Principle 1 of the FSA Principles of Business: A Firm must conduct its business with integrity. Actually I struggle to see how most banks comply with any of the FCA Principles: http://www.fca.org.uk/static/documents/handbook-releases/high-level-standards136.pdf Section 2.1

However, after the credit crunch the banks could no longer be seen to lend with reckless abandon (which was a bit annoying, as they rather liked basing bonuses on inflated loan books), so they invented other reckless and ingenious ways of making money – e.g crippling the SME sector and stealing assets. Best of all, having totally screwed up and taken everyone’s money, they came up with their most ingenious plan to date – they sold us all the simple concept that – if we didn’t allow bankers to keep taking bonuses, they’d walk away – and then we’d all be screwed. To make sure that dreadful day never comes, we continue to subsidise banks so they all live happily ever after.

That sounds like a pretty dark fairy story and the darkest bit is – it’s not a fairy story. So I hope somewhere, someone in authority (not mentioning any names Mr Tyrie) will have read Tom Harper’s articles, Ian Fraser’s articles and I’m hoping Max Keiser will invite Paul Moore back on the Keiser show to talk about the appalling behaviour of HBOS, Lloyds and other banks. Because, crazy as is it and despite all the rules, laws and regulators we have, I think our best chance of getting banking reform is to report bank misconduct to the media and then spread the word via Twitter? Of course, that could ultimately do enormous damage to some banks but I can see little alternative to this course of action. It’s a huge problem that while we definitely do have regulators, it seems La La land is out of their jurisdiction – which is the obvious reason they cannot do anything to penalise errant bankers.

*Here’s a thought – if we’re going to rely on journalists to clean up the banking world – maybe we should be paying our financial journalists (and their research teams) more and getting rid of regulators? We’d save a fortune and get some results.

Anyway, what upsets me most about all this is how we continue to let ourselves be mugged and my point is: If banks are intent on continuing to cheat their customers, destroy SMEs and refusing to compensate the people they defraud while insisting they still get huge bonuses – fine. It seems there’s little we can do about it. But can we please, please stop subsidising this conduct?