Hi, the e-mail heading is a quotation from Henry Ford of two or so generations ago.
Things haven’t really changed since then because what drives people’s doesn’t change. Nor do the main systems underpinning our society change. The traits in people that contributed to the 1920s depression still remain with us to this day – turn on the TV any weekend evening to see just how keen people are to become rich and famous without first working hard. Perhaps it’s not surprising our kids expect too much too soon.
I’ve been been asked in to several schools recently to give some of their most challenging pupils a wake-up call about how the world works so they realise it’s vital they work hard, get the right results in their exams to give themselves the best chance in life. You see most kids don’t realise that the real world cares only about results, nothing else matters.
Right now some people and businesses are finding it’s really very easy making money, they’re getting the results without working too hard – for many of those lucky enough to be in this position, it won’t last long. For others, no matter how hard they work, they just can’t seem to make enough money. For a few, the cupboard is well and truly bare, there’s no hope, they may as well give up. For some, something big has to happen if they’re to turn around a slowly sinking ship. As you know I work with the latter 3 types of business…what’s clear to me is that while results aren’t always guaranteed by hard work, it’s still pretty important.
Regardless of what the Bank of England may say, things are not getting better for the majority of people in this country. Sure a few are doing fantastically – London and the financial sector are clearly operating in their own little bubble – while the majority of people elsewhere are just about managing to hold their own, nothing more. The point is there’s a growing number of people who are swimming against the tide, some are now so desperate that the self preservation instinct has kicked in, they’ll do anything, including lying and cheating, to survive – I’m seeing some truly awful things being done by some to others.
Who’s to blame? What’s to do? Surely, we’ve kicked the can down the road too far now, it’s time to take some real action to stop this madness?
Going back to who’s to blame, let’s talk about the banks. I know they’re a pet subject of mine, but please bear with me, I’ll keep it short. And I know they’re not the only people to blame.
In the good times even while the tide was in their favour, they broke the law, took us all for mugs. We now know that. Now in the bad times, they are playing a similar game, but not everyone has yet recognised that. I’ll give you one example that I’m working on at the moment… despite the base rate remaining at an all time low since 2009, paying little or no interest on customer deposits and the wholesale funding market working better, some banks have increased their standard variable rate or differential on their tracker mortgages. Those that have done this give their reasons for doing so as ‘their cost of funding has increased’ and that ‘they’re complying with regulator requirements to increase their reserves’. It’s a lie in some cases, they’re doing it just because they can, because the little man finds it difficult to fight a bank with all the resources they have. And there are a good many other banks waiting in the wings to do the same, once the legality of what the so far relatively few banks have done has been tested in court. The rights and wrongs of what they’re doing don’t really matter to them – the fact that they’re now getting innocent depositors and borrowers, the normal Joe on the street, to pay for their balance sheet to be rebuilt and funding arrangements to be restructured is not a topic talked about in homes, on TV, in pubs. The fact they’re doing this based on the questionable wording in their contracts – which is entirely biased in their favour – hasn’t ignited the regulator’s interest. It’s almost as if the regulator doesn’t want to rock the boat.
Just do a search on Google for ‘SVR increase’, ‘standard variable rate increase’ or ‘bank differential increase’, or visit Property118 and you’ll quickly assemble a list of the banks who have already done this. And you’ll get an idea of the hundreds of thousands of normal homeowners and buy to let investors who are being taken for a ride.
If you’ve got a client who’s effected by this, and they’re up for a real fight, get them to give me a call. You see, I think I’ve found a chink in some of the banks’ armoury. I’ll even carry out the lion’s share of my work on a contingency basis – because for me hard work does come before results.
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