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The Bank of England stress test results on the British banking system are being issued December 16, alongside its half-yearly financial stability report. The tests focus on the housing market and the Bank’s ‘adverse scenario’ which has a correction factored in.

Tenancy checks for private landlords in the West Midlands are liable for a ‘Civil Penalty’ of up to £3,000 if a residential tenancy is given to a person ‘without the right to rent’, from 1 December.  Landlords may still be liable if premises are sub-let, despite the tenancy agreement being applicable to a person with the right-to-rent, however,  responsibility for the checks can be given to an agent to remove the liability from the landlord to the agent, but a written agreement (between the landlord and the agent) stating the agent has the obligation to make the applicable checks, must be in place.  If successful as a scheme it will be rolled out nationally during 2015.

Started in the US with the support of American Express, the second of what is an annual event now for the UK, is happening on 6 December. Intended to encourage and highlight the support of shopping locally, keeping trade local and the importance of small businesses, Small Business Saturday has marketing materials available to make the most of the event.

The beginning of December (1st) sees Leeds Building Society changing its lending criteria  for borrowers subject to Section 106 (S106) Agreements. This is being applied across its whole range of mortgages including Shared Ownership.

The Small Business, Enterprise and Employment Bill having being approved by Commons, has its second reading during December. Contained within the Bill is the appointment of 50 Small Business Champions, to handle appeals against decisions by the regulators; including publicans pay disputes, or tied tenants’ right to request a rent review (if they haven’t had one for five years), additionally it contains an amendment to allow pub landlords the right to buy beer on the open market. Will pub companies and brewers work together with their landlords?

Currently seeking a new Chairman and recently fined £56m from the FCA and the Bank of England, RBS continues to make the headlines. Likely facing more fines in the New Year connected to Forex, the most recent fine was connected to its 2012 IT ‘glitch’ which saw millions of its customers unable to make payments for up to three weeks.  Apparently, since the incident, some £500m has been spent on the system, although whether that means the system has been fixed, ‘patched’ or replaced, isn’t clear (the system being IT and not a reference to service and products). IT and software can be labour intensive, yet RBS have laid-off staff so there seems to be quite a lot that’s not clear in that quarter.

The European Commission has approved Britain’s new Business Bank, saying that it would address small firms’ access to finance without distorting completion. Its aim is to put all current Government schemes under one umbrella and use a funding boost to stimulate lending.

Autumn Statement (December 3rd), has whisperings of an announcement regarding financial support to cover the cost of SME business rates, as a way of encouraging business back onto the High Street, but, as a final statement before an election the press is mainly guesswork… with a lot of Scrooge or Santa headlines thrown in.

Image and Article credit: Copyright SUF © 2014

Bank Rejects’ Offer

 

When does the one syllable, four-letter words into minute-long sentences, yelled out in single syllable breaths monster surface?

Think about the last time you were on the receiving end of rejection.Finger

Did the ‘it’s- not- fair!’ Monster surface when you were reminded that the world’s not fair, and this time, it’s not fair in your favour?

Deserved and fair or undeserved and unfair, it’s an uncomfortable place to be, with an uncomfortable word placed hanging in the air: Reject.  A powerful word with disrespectful connotations that’s used in high places and, the considered term for those whose bank loan application is turned away: the rejects.  However, any bank rejects may feel slightly more comfortable about their tag when they hear about the proposed forcing for some banks to close the Billy-No-Mates zone and offer their cast-offs to other lenders.

Can you go forcing something if it’s just not right?

Mothership
Apparently ‘tis so, the plans have been confirmed. The Treasury is drawing up their strategy in preparation for legislation and announcements during the Autumn (sometime when leaves are on the line, hay fever has turned to flu, blankets are being brought out because there’s a reluctance to put the heating on, and an Autumn Statement is due).

I can’t even begin to guess how many business groups and trade associations are linked with recent business statistics that show there are 4.9 million UK businesses, of which 4.7 million are categorised with micro status and  (though some are incorporated for deposits) there are somewhere in the region of 181 ‘banks’ (not including Building Societies) listed as active in the UK by the Bank of England. From amongst all those glorious numbers there were a magnificent ‘over 45 responses’ (I’m not certain whether ‘over’ means 46 or whether somebody decided 45 was enough before it was time to put the kettle on) rallying to the call from the consultation, to answer questions on  ‘help to match SMEs rejected for finance with alternative lenders’. WatchOut2

Sounding remarkably similar to the processing of victims in stocks (although it’s an image that might work for some, that would be the wooden pillory variety not the trading type) the proposed linking to ‘alternative lending opportunities’ suggests, for the mandatory process, ‘SME’s will be forwarded on to platforms’, whenceforth by their visibility, be sped to open market (I added that bit).  Similar to how some banks already operate (i.e. Santander and Funding Circle), ‘rejects’ will be asked if their details can be shared on Government designated private sector platforms for exposure to those who have an interest in staking their claim for a lending opportunity.

It wouldn’t surprise me if the mandate wants a `Guide for the Innocent’ creating which would be placed at various points of the youthful open spaces that have replaced privacy discussion areas in banks; no applicant will be left unturned and no applicant will be deemed capable of understanding why (notwithstanding unfavourable times) their business might be viewed by a particular lender as unfavourable. The leaflet’s headings likely something along the lines of How to improve your Chances for a Successful Application, Prepare your Business Plan, Know your Numbers, to a final If Your Application Fails. Then, more Disney than Dragon a simple statement ‘don’t worry, somebody will want you – ubiquitous smiley face’. 

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Finishing with:  If Your Application Fails:  OK, expect to see the taxi with no brakes waiting, not certain how much fuel will be in the tank. Destination? How should we know?  We want to close the door ASAP, you’re an unwanted guest. No guarantees but, if you’re lucky someone will pick you up, to cosy up over the spreadsheets, won’t (but maybe should) happen.

Despite HM Queen Elizabeth II stating (4 June 2014) ‘The Bill (Enterprise and Employment Bill 2014-2015) will support small businesses by cutting bureaucracy and enabling them to access finance” I humbly ask (not wishing to spend any time in those stocks), am I alone in an ever sceptical viewpoint?

Any bank, with new goals of bigger fish, being forced to share data with other parties about an applicant they deem a reject will definitely cut bureaucracy. But, (and this is the big but, possibly with a double T) to manage a referral system that treats all applicants equally, that is mindful of them falling down open gaps left over from perceptions of ‘non-quality’ custom, that ensures the Guide for the Innocent has all the lines in between read, that clears the applicant’s path of stumbling blocks to avoid a missed opportunity, means managing the difference of enabling them to access finance and enabling finance to access them.

Businesses (and not forgetting that lenders are businesses) are exposed to all manner of risk; market, operational, financial, consumer and pure liabilities; all contributing to continual and continued exposure.

Some businesses will manage to hide from some risks, some are on a hiding to nothing; the risk is, what do you expose and what do you reject?

 Image and Article credits: Copyright SUF © 2014

A Tale of Discrepancy and Discretionary Tarting

Ehghaahg uhmajeddth ohtkchgh mghigh emmmhgh’.

Nope, I wouldn’t get that either! But my dentist’s brain seems to have adapted to most of his customers, at some point, sounding as though they’re in a cardboard box full of cotton wool.  Open-wide mouths, some filled with metal probes, he knows the risk when he places his customers in `The Chair’ –  there’s little chance of gratifying conversation – instead he explains what’s happening as he goes along.

At the same time as guiding a new assistant for quality control whilst translating the procedure, he’d however underestimated the risk of his dental dictionary being stretched too far. Re-framing the language for me, there was no risk to it not making sense, however, what hadn’t been thought through was the potential for his patient to choke…. with laughing: ‘I’ll tart it up using a Tarting Tool’.  110128-N-7095C-043

In business, as in most situations: risk in proportion is reasoned by discretion.

Business and work environments are full of problems, many attributed to the grating that happens between rules and practice. For some, whose situations involve being their own managers, there are additional challenges to working autonomously without specific or clear rules available; conditions are defined using personal, sometimes unreliable or inflexible, values, which in turn makes the creation of a structure, to measure competency, ever more challenging. And, when a situation arises, when there isn’t a specific rule or working practice that offers conclusive direction, discretion, as part of a business practice, or system becomes stressed.

Holes, like rules, have a life cycle. For discrepancy the tarting tool needs discretionary usage.

HoleFollowing the financial crisis explosion, the FSA (now FCA) announced, that it would undertake a review, MMR (mortgage market review): to deliver ‘a sustainable market for all participants’ and to be ‘flexible for consumers’.  Its recent implementation has created headlines in respect of the assessment of borrowers’ income. In essence there were ‘holes’ which needed addressing and to prevent consumers being trapped, now places responsibility with the lender.

Figuratively, in the shoes of someone who fell through such a hole is Alice.  Contemplating her situation (‘…she was considering…. making a daisy-chain would be worth the trouble of getting up and picking the daisies), she weighs the benefits to her fiscal position (this might be for a property or her business) against the effort that’s required. A White Rabbit (financial product headline rate) intentionally runs close by. Alice’s time is consumed and because she hasn’t a discretionary ‘system’ available, the labyrinth of challenges for discrepancy she’s facing isn’t considered as she follows the white rabbit…. down the hole.

There are some super-massive black holes in finance provision; similarly there are massive holes in business and for business, with property purchase and property sale, and, when they come about from discrepancies merging together, it isn’t all black …. its liquorice.

Tarting a cavity with a tarting tool has no effect when the discrepancy has come about because risk wasn’t measured with discretion.

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Image Credits: Official US Navy PageMark EngelbrechtAndrew Yee.   Article credit: Copyright SUF © 2014

BOOM! The Only Acid Test

“As I hurtled through space, one thought kept crossing my mind – Every part of this rocket was supplied by the lowest bidder” ~ John Glenn.

There are some small numbers that can make a big difference to a business and there are some metrics that are readily available and ripe for easy improvement: the efficiency in using breeze blocks proportionate to bricks for a refurbishment, the types of stock allowed on the shelves longer than other types, the specific machine able to put out a new product, or even how the length of time taken to make a repair for a part that a customer doesn’t even realises exists.

And, glancing backwards over experience garnered in the daily running of a business, it’s probably the small tweaks and adaptations (how the day is organised, the sales cycle, staff issues… etc.) as being the most noticeable in having made or are still making a bigger difference for that business.

Putting aside the actual business type and market sector to isolate the financial aspect, too often financial decisions are also taken after, when the biggest numbers’ (gross profit, cost of goods, inventory and so on) history on the logs and spreadsheets have been looked over… and an accountant will likely guide through further changes to net better results (tax, VAT, company formation, bookkeeping….). Dollar2

The small numbers that can make a difference get the attention they need. The mechanics are regularly overseen. The metrics are monitored. The financial statements have a regular MOT (Monitor or Terminate).

But what about, as we call it, the mysterious metric?

This is the measurement I use as a starting point for calculating lender’s interest for mortgages, loans and business finance.  It isn’t a secret, obscure or hidden metric. It’s a usually overlooked business buffering opportunity made up of those small numbers – the little ones that make the difference amongst the numbers, spreadsheets and statements.

The financial statements might (maybe a year down the line) show where there is a problem (which six months ago was the future but is now the past).  BOOM!  While these numbers have been building up (or down), lenders have been building their key metrics using their own ratios and, a year ago, when there might have been wriggle-room in a business, so might a lender have had some wiggle room.

BanknoteChanger

A business’s metrics (from its ratios) change, lenders’ metrics (from their ratios) change. The correct business metric directed at the correct lender metric, at the correct time is the acid test of fiscal health. BOOM!

Images and Article credit: Copyright SUF © 2014

 

Pollex’s Up! Time Thief

Where is the human Pollex situated?

First day away from the office and, blessed crackers, I was exposed as a lazy thinker… I’d have to Google that one… I had no idea

Thinking takes practice  –  When it comes to cramming certain facts, I’ve never managed to hold the map of routes that circumnavigate burning midnight oil. Although even if I’d realised that higher intelligence (and by that I’m not referring to myself) isn’t insurance against the necessity of putting in practice, I’d still have skipped school in favour of seeing Bowie live. By the time I was a parent I hadn’t even given a thought to parenting needing practice so, as a naive parent, ‘kinaesthetic learner’  was welcomed as enthusiastically as child given a puppy for Christmas  and now, thanks to the Great God that is Google  we’re  all one click away from information overload …. and exposure to more lazy thinking.

Why bother problem solving by exploring ideas when there’s so much ‘knowledge’ readily available?  –  In business I’m sometimes as guilty as the next in giving out (accompanied by involuntarily inside mouth biting) ‘well… it depends’. The reason is (usually) simple: something is beyond my control; I have to surrender to an, in effect, legion of androgynous troopers, who waiting on the doorstep – ‘outside forces’.  For as frustrating as it can be (for all parties), I can’t always give a definitive black and white determination. But, just as I’ve experienced sufficient to realise that time is of the essence in business, I’ve also come to recognise, you’re going to have a hard time if a job isn’t done properly. Hence, I have a more frustrating time when a person emits (often with side of the mouth chew to infer they’re giving thought), ‘well… it depends’ as their camouflage for sitting on the fence – time wasting.

Ground control to Major Tom…   Can you hear me Major Tom?

Sometimes it does depend.

Without balanced thinking, pros and cons are useless  –  Take marketing  for example.  As each trend, strategy, plan, and measurement, expands, increases, decreases, the general shift  becomes, as with each element of a business’s evolution, more complex; especially when (like you and me) the customer factored in to the ROI is increasingly savvier in using online search for information, solutions and comparison. Then take what is now an elemental marketing platform, the website. Every business owner will have their own opinion about the notion that a business without a website is said to be non-existent. A website for some is easy entry into marketing, for others it can be too difficult to even consider, different perspectives, both derived from a ‘thinking’ process relevant to itself. However, the value judgement of ‘thinking’ resides in the overview, which is measured by considering the positive points of having a website and the negative points, or lesser positive. When something hasn’t been tried before, or experience tells of mistakes, messy experience, or similar, the ‘thinking’ balanced viewpoint might go along the lines of ‘it might be worthy of more information for further consideration’.Thumb

When thinking isn’t practiced surely it goes the way of any unpractised skill, meaning it can’t be put into operation from experience. Using the analogy of the well-practiced acrobat with an ability to rotate many hula hoops, all at once, quickly enough to make the hoops look as one – that’s what a Venn diagram of the scope of my service business’s crossovers would look like (elements overlapping one another, plus elements overlapping with other service businesses) –  just as other business owners’ Venns will have overlaps for how and what they operate. I don’t know about you, but for me it’s difficult to want to only direct my attention to the interesting bits of my business. The way I try to manage this tendency (and maintain direction) is to think about the decisions I have to make …. and make those decisions. And, as I don’t like to limit my thinking, the information I need mustn’t be limited or biased….

Thumb2 The point is, it’s not only the information that’s important. We all want a derivative black and white determination AND at the same time choice, alternatives to consider. The route of least resistance means that we don’t get distracted, decisions can be made quickly, time won’t run away further than it already has. Searching amongst constraints to find hidden, unobvious, possibility and informed decision making takes thinking about (time) which (as the inside of my cheek will attest), on the occasions of forces being beyond my control, can be frustrating – But as, in my experience, confident responses aren’t guarantee of certainty. Saying ‘well…. it depends’ can, depending on where you sit, be fence-sitting or thinking beyond the most likely.

 “You ask yourself not if this or that is expedient, but if it is right”  – Alan Paton

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Image credits: Celestine ChuaKevin KMarc DalmulderJin.

Article credit: Copyright SUF  2014©

The Banking Reform Act, ring fencing retail and investment banking, and implementing recommendations of the Parliamentary Commission on Banking standard (including criminal offences for senior bankers misconduct), has become law.

As is said, this is just the beginning.

Although, ring-fenced banks will not be able to hold or own the capital of other non ring-fenced banks etc., it won’t be fully in force for another four years during which a new authorisation process for staff will be introduced and effectiveness reviewed.

And, a banking union plan has been agreed for managing Eurozone banks (UK plus 10 other countries are not part of the plan). The ECB (European Central Bank) has been put in charge of European Union regulation rules for banks in the Eurozone

Image credit: WetWebWork  Article credit: Copyright SUF © 2013

Standing small things side by side, a singular value often has the ability to magnify itself; the singular value is increased as a collective.

Individually three words can each hold their own important relevancy; stand those words next to one another, as World Book Night does (the smallest word propped-up by the two longest at either side) and their combined strength works together.

Words come together to create a sort of letter-land community, in this case the common cause is promoting the world of books (and literacy in general). The three little words standing in a row could have placed the littlest first ‘We’ll go in letter order, B-Book, then N-Night, W-World’ : Book Night World.  ‘Nah! We’ll have little Book first, then you go World and I’ll follow’ : Book World Night. ‘No, you go first World because we’re all encompassing, then I’ll stand in the middle (the main act) followed by you Night’.

World Book Night. Enjoy Yours.

Image credit: mrsdkrebs  Article credit: Copyright SUF 2013

 

To avoid future bailouts at taxpayers’ expense, the splitting-up of major European banks debate continues  considering the separation of  high-risk investment banking and other bank operations: similar to  the Vickers Commission (London) aim, in separating capital market transactions from banking activity (lending and deposits).

Since 2008, the familiar phrase ‘too big to fail’ banks, has ensured that four years down the line countries are running out of resources and the public are enlightened enough to want to know where their public contributions are being placed. Creating splits between the banking types seems to have two arguements;  should there be any future problems being split, they’re easier to be dealt with, whilst the counter argument is, it was the specialised banks which instigated the problems in 2008 and the universal banks were stable.

Complex problems require comprehensive explanation.

Business Week  –  Der Speigal –  Economic Times  –  And opinion

Image and Article credit: Copyright SUF 2012

 


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