On the one side we have reckless gamblers, known as bankers, again raking in cash and handsomely rewarding themselves, on the other there is a threat of extremely severe cuts in local services.

Add that to the high levels of unemployment and the collapsing infrastructure of the nation and I can only repeat again that we are in serious danger of becoming the new serfs to the new feudal lords.

This morning’s Financial Times carries a long report (Do-it-yourself warning as state cuts back) of forecasts by the most senior Local Authority professionals. So serious is the matter that we have a joint report from the Society of Local Authority Chief Executives, and the Chartered Institute for Public Finance and Accounting.

 They expect a cut in local services by one third over the three years 2011, 12 and 13. With Alistair Darling forecasting government cuts of over an eighth one might wonder how George Osborne is going to ensure ‘we are all in this together’! If he becomes Chancellor…

 The idea of bankers paying their fair share – any share – of the ‘fine mess they’ve gotten us into’ recedes more every day. They complain that they would not be able to hold onto the best staff otherwise. To which the question must be ‘Best for what?’.

 ”But there is undoubtedly going to be a need for individuals and families and communities to do more for themselves, along with the voluntary sector, rather than looking to the state as the provider of first resort,” comment our doughty professionals.

 Bankers, of course, faced no such restrictions to save their bonuses. And, to make that possible,  we are seeing the price we will have to pay for a very long time. Who says ‘the prices is worth it?’ Not those doing the paying.

 For me this raises a very important question. Who is all this for?

 We are dazzled with figures about how we must trade, we must find the cheapest labour, we must become efficient. But must we?

 It certainly makes company balance sheets look better. But who is that for? Not for you and me. Does it matter how cheaply goods are imported if we are out of work and unable to buy them? If just having our refuse collected costs an arm and a leg – or if it is not going to be collected at all?

 It raises many questions about how we organise our world; and many questions about what is important to us as people. Over the coming years those questions will be major discussion points.

 We are offered figures which show green shoots of hope. Today’s double whammy from national and local government leave me feeling distinctly in depression.

Joseph Harris – Debt Control Man
 http://controlyourdebtcrisis.co.uk
 Control Your Debt Crisis on Your Own Terms

But he is a very bright spark about how markets work – after all he makes a lot of money that way.

And I was fascinated to read in the FTWealth  ideas column that he has a view about bubbles as well. To him every bubble has two components.

The underlying trend in reality is one, and the other is a misconception relating to that trend. Boom and bust happen, he believes, when a trend and a misconception “positively re-inforce each other.”

Well, I’m, not going to try to explain that. You’re right, it’s because I am not quite sure myself what he is talking about. Essentially I think it is about the propensity we all have to see what we want, rather than what is there.

But what it did do is remind me of my discussions about truth. That truth itself is hard to find, or really define. And that we need certainty and so make truths of what makes us feel safe.

Well, anyway, that’s what I think. and I’m sure he is right.

Even if he does think of himself as a failed philosopher.

Joseph Harris – Debt Control Man

http://www.controlyourdebtcrisis.co.uk

Control Your Debt Crisis on Your Own Terms

This is a neat little survey of the field, but left me distinctly disturbed. Now I understood the origins of Microfinance to be affordable small loans to help the underprivileged in poor countries to start the process of lifting themselves, and so contributing to their nation.

Affordable to me describes the whole package. Small sums that are enough to purchase stock for the initial trading of a small business, or loans to households to supply needs. The repayments would be small and might not start for a while. And the interest rate would be very low.

In the UK this is not a new idea and was operated by the Midlands Tallymen, who loaned the money to buy clothing and domestic cottons and linens from sometime in the C19. They would lend about £10 at a time and seek repayments of about ten shillings (half a pound) a week for 21 weeks.

That is dear enough at 5% on a twenty week loan, an APR of about 12.5%, certainly not cheap for the time in question. But it dwarfs and pales beside the figure quoted by Harford from a study of a South African project with charges equivalent to 200%.

No wonder he says that the value of the system is questionable.

In Kenya a savings accunt paid no interest and charged ‘hefty’ fees for withdrawal. That just seems an activity run by sharks.

That is a killer charge; it makes no sense to me if its purpose is to help the less fortunate. But in my research over the banks across the world, and the profit seekers who treat no one with sympathy it is all too familar.

In analysing the new Lending Code I find that Microfinance has become a word for the banking community. But they define a micro-enterprise as a business employing fewer than 10 people and with a turnover or asset total approaching £2million.

That certainly seems small, but Micro?

Actually it is a European Union definition! This suggests some confusion of understanding about the idea, though the effect that the smallest businesses should be treated with more care and responsibility than the bigger ones is a positive approach to the learning curves faced by those developing them.

I wouldn’t want to discourage any of this, but I am sorry to see so much opportunism creeping in.

Perhaps it needs a while longer to settle down into a sound international system.

Joseph Harris – Debt Control Man

 http://www.controlyourdebtcrisis.co.uk

Control Your Debt Crisis on Your Own Terms

 Paper documents to enable the transfers of moneys have been around almost since the dawn of banking. Indeed there is evidence of written authorities in the first century BC.

 The praescriptiones was believed to be the Roman name in the first century BC. In the 3rd century AD Persian Empire (Sassanid) banks issued Sakks, while Muslims were known to be using sakks from the ninth century.

 The Knights Templar ran a nice little earner, using drafts, for pilgrims to the Holy Land for a couple of centuries via their chapter houses. And by the fifteenth century the use of paper by merchants to carry money between major cities was well established across Europe and areas of Asia and the Middle East. Fragments found show the 12th century cheques were remarkably similar to our own

 Now our unromantic money men wish to end the paper trail some two millennia, or more, after it started.

 The suitable dryly named Money Council, in a consultation paper with a similarly dead-from-the-neck-up title National Payments Plan – Consulting on change in UK payments talks of the changes that might be made in the future.

 Now I am pretty critical, but the Council is not blind to the whole picture: “…special account must be taken of the needs of minority and disadvantaged groups…” it declares, with suitable gravitas.

 It then spoils the declaration with the fait a compli smug comment “…so that they can share in the benefits of innovation. We are asking what can be done to ensure that all sectors of our society can benefit from the move to more efficient means of payment.”

 Well, as it happens, the cheque remains the only paper trail of payment for the ordinary person. Anyone who uses digital technology, on which all other systems are based – and we all use computers, is fully aware how easily mistakes can occur, and how big (though fortunately rare) a catastrophe is.

It also ties us more closely to the banks than ever before. We can have little confidence in them after their comments following the strange judgement form the law lords sitting in their nice new supreme court. Indeed that case was about the distinctly fishy behaviour of the banks; how nimble their fingers are in our pockets!

Read this consultation document. If, like me you prefer to use cheques often, or appreciate the difficulties for the elderly and the lonely and the isolated. please send a comment to these worthy ladies and gentlemen to help them in their deliberations.

And, in the gadarene rush to the card, think also of the person who has hit troubles that mean they are denied the use of those cards. Are they to become the excluded of the new society?

SAQ – SAve the cheQue – give the bankers the SAQ!

Joseph Harris – Debt Control Man

http://www.controlyourdebtcrisis.co.uk

Before outlining the code section by section I will show the new numbering that is going to be important to all those using or needing to refer to it. This is more or less the content listing, but important as a a guide – a sort of drop-down menu. For ease (lc) will refer to the new Lending Code and (bc) to the defunct Banking Code.

Introduction: This has been changed to reflect the legal and regulatory changes that affect the code.

Section 1: Key commitments (lc) mainly contains the Fairness Commitments of section 2 (bc).

Section 2: Communications and financial promotions appears to be a gathering together of these matters, but mainly section 3 (bc).

Section 3: Credit reference agencies At first glance this appears again to be a consolidation of matters more scattered in the (bc), but mainly in section 13.

Section 4: Credit assessment looks new, and certainly is a move to more openness and transparency in bank operation. It may also be a response to criticism of the ‘largesse scattering’ by lenders in the past decade in particular.

Section 5: Current accounts overdrafts This section looks as though it may be new. Again a matter of transparency and clear information about bank methods.

Section 6: Credit cards These have become a gigantic part of the loans market, and so now justify a longer and more detailed section; previously section 10 (bc).

Section 7: Loans appears to be part of the old section 13 (bc).

Section 8: Terms and conditions looks like a new – and short – clarification of how signatories should ensure customers understand the terms and condition surrounding a loan.

Section 9: Financial difficulties Replaces section 14 (bc). There are important additions and changes. I have already given some detail on this in the blog.

Section 10: Complaints replaces section 15 (bc). It is updated of course, in line with the regulatory changes.

Section: 11: Monitoring is more or less the old brief section 16.

Annex A: Summary box for unsecured loans is like a template or guide to code subscribers.

Annex B: Statement of Principles for micro-enterprises I have dealt with at some length already. It also appears to cove the getting help information from section 17 (bc).

I think the Glossary has not been carried over to the new code, but perhaps that can be corrected soon.

Joseph Harris – Debt Control Man

Author: Control Your Debt Crisis on Your Own Terms
http:www.controlyourdebtcrisis.co.uk

What they have NOT said is whether the charges were, or were not, value for money. Nor whether the charges were fair or unfair.

Indeed, their decision is correctly being described as a technicality. In other words, no matter what the case itself is about, the manner of conducting either the case, or the matters contributing to the case, were incorrect on procedural grounds. At least their opinion is that it is incorrect in that way.

I am not a law lord; evident as it may already be to you, I want it to be clear!

But I have great difficulty in seeing how the Office of Fair Trading is not empowered to investigate value for money. This has been at the heart of trading rules and laws for as long as recorded history.

From the standards for weights and money itself, to the arcane details of contract, value for money has been at the heart of legislative process. How can fairness be expressed without reference to value for money?

I am not even sure this is in keeping with the new Lending Code!

My advice is to move your accounts away from the big banks. Many of the building societies have much more reasonable approaches. And the Co-op Bank may be another good repository for your current account. Certainly you are going to have to spend time and though reading the terms and conditions.

Perhaps we should look to a funny little comment by a correspondent on TV tonight. This was to the effect that the cost to the banks would be billions of pounds, and that was concerning the highest ranks of government.

Perhaps once again we are seeing the unreasoned triumph of the banks over the people. Welcome to the new feudalism.

A very saddened  Joseph Harris – Debt Control Man

Author: Control Your Debt Crisis on Your Own Terms

http:www.controlyourdebtcrisis.co.uk

However the code has the BBA Statement of Principles as Annex B. It is a pity, that the British BBA, quotes figures in Euros and not good British pounds in this.

First the principles make clear that the bank has an obligation to ensure clarity for the borrower, and that it should advise the customer to seek advice on the bank’s proposal. Certainly a desirable approach.

The obvious exchanges of information through the finance period are set out, and this makes for clarity. There may also be independent reviews of the micro-business – though without clarity about how the reviewer will be chosen.

While it can be painful where it happens the principles wisely state that any harsh realities need to be faced and acted upon. this can, of course, include closing the business. Facing it when the signs are clear will be better for the micro-finance borrower, I agree.

As a sort of mixed ‘we are on your side’ message there is also the statement promising no legal action if… essentially closing the business when advised. Again it looks quite harsh, but it does make better sense to ‘live to fight another day’.

The banks clearly reserve the right to confirm that appointing a receiver would be the right action, and I can’t see them arguing against it; I’m not sure what that provision is for, since it would be in the contracts anyway, I would have thought.

The complaints procedures are similar to the individual borrower’s and I will deal with that in a later blog here.

But there is particularly a requirement on the lender to enable moving an account to another bank.

Joseph Harris – Debt Control Man

Author: Control Your Debt Crisis on Your Own Terms

http:www.controlyourdebtcrisis.co.uk

Because I had read many of the documents some time ago, and not got round to all of them, combined with a period when my attention had to be elsewhere, I had confused the guidelines with the submission to the 2007 review of the Banking Code, and both with some parts of the Consumer Protection Regulations.

Albeit, I have this clear now and apologise should I have attributed rule and regulation to a document which it is not in. But the effect of my comments is unaltered.

While the guidelines are given a somewhat detached status, since they are to be neither monitored nor enforced by the standards board, they remain specified good practice. As such they will figure in considerations of the actions of creditors and debt collectors in other places, and cannot be ignored.

The guidelines were of great value when they were published in 2007. While they are not directly included in the Lending Code they are, by this paragraph, made best practice in carrying out the previous 10 paragraphs. This is an invaluable advance for those affected.

While there is no mention of the other vulnerable debtors – elderly and poor – in the new code or in the guidelines, their link in the CPRs should leave no creditor in any doubt that similar care is required for them.

There are 15 main heads in this document and invaluable additions, such as a listing of relevant mental conditions.

In my judgement they leave creditors for no excuse to behave inappropriately in relation to those suffering, once the creditor has been advised of the condition involved. Nor, indeed, against those who fall into the other two vulnerable groups. I would add more to the vulnerable areas.

This is because of the extreme unbalance in the ‘playing field’ between the enormous companies and the defaulting individuals who have no experience or knowledge of the area. For that group of scurrilous companies – some of the biggest of banks – who follow an aggressive  path, I feel these regulations still lack the teeth that are needed to protect.

Well, I suppose these gripes are part of my shopping list for the next reviews in all areas!

That said I believe thanks and congratulations are due to all those who have worked extremely hard over many years to make these new paragraphs and  their guidelines part of the body of rules.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk
The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

The only time I can see that court action is justified is where it can be clearly shown there is BOTH ability to pay AND wilful avoidance of resolving the matter on the part of the debtor.

Whatever the history of the creation of the debt – and there can be more than one side to this – the issue at the collection stage is about both the position of the debtor, and the reasonable actions to determine resolution.

Now bear in mind that resolution may be achieved in many ways. The debt may be completely written off, without any call on the debtor in the future. It may be frozen on any basis from not chasing it at all, to regular contact; here the intervals of contact should relate the fact that freezing is going to be a response to small likelihood of payment. Annual contact should be sufficient.

There may be token payments, of say £1 a month. But here the use of this should be sparing, as this can cause problems for poor and disabled debtors. It is likely that the debtor has more than one creditor. Not only may the total pounds be noticeable, but the costs of paying can add 50 percent or even more.

The Debt Management Plan is not available where monthly repayments total less than £100 a month. At lower figures there is no way of using an intermediary, including charities, to distribute the total repayment.

Where there are a number of creditors it would be a good move for creditors to organise a clearing house for these payments. And that would permit something even more in keeping with fairness.

A debtor is generally required to treat all their creditors equally. But if only a pound or two a month can be afforded it is hard to divide; unless there is a clearing house that gathers many such payments, doing the computer-easy calculating and accounting, and passing sums on in bulk to the appropriate creditors.

It isn’t brain surgery. And not even rocket science!

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18