Banks collapsing. How long do you have between warning signs and it happening?

earlgrey_3

dunstonh wrote: »

Do CM have to run the risk of losing new business because funding from the parent company is unlikely to come in future and need to secure more funding for themselves?

Perhaps they thought that IFAs consider only their client's best interests and would still recommend products even if they didn't pay top commission.

Hmm, basic misunderstanding of how it works perhaps.

wizard5353

Okay this is slightly off topic but as good old Martin goes on about it so much. What happens if the Bank you are claiming back bank charges goes under or gets bought out?

Also why should I be happy about the £35k safety net? I lose that money for up to a year before I can get it back and I lose the interest on it. What happens if I become terminal ill and need that money to pay for treatment the NHS will not give me? What if my business goes bust? That is money I need now, not in 4-12 months time. So if I want to take my money and I repeat here; "MY MONEY" out of a bank and use it or invest it as I see fit that's for me to decide. No one is going to make me feel daft or stupid for doing what I deem fit to protect my investment. If a bank falls over because of a run it's their fault, NOT the customers fault.

dunstonh

Perhaps they thought that IFAs consider only their client's best interests and would still recommend products even if they didn't pay top commission.

Which has nothing to do with the post. Keep the IFA bashing to yourself and keep the thread on topic.

If CM had rebated the commission to clients then that could be a moral stance. However, keeping it for themselves is just capital raising with no benefit to the client. They also dont know what fee agreements were in place. It could cost clients more if commission offset was used.

nash0819

wizard5353 wrote: »

Okay this is slightly off topic but as good old Martin goes on about it so much. What happens if the Bank you are claiming back bank charges goes under or gets bought out?

Also why should I be happy about the £35k safety net? I lose that money for up to a year before I can get it back and I lose the interest on it. What happens if I become terminal ill and need that money to pay for treatment the NHS will not give me? What if my business goes bust? That is money I need now, not in 4-12 months time. So if I want to take my money and I repeat here; "MY MONEY" out of a bank and use it or invest it as I see fit that's for me to decide. No one is going to make me feel daft or stupid for doing what I deem fit to protect my investment. If a bank falls over because of a run it's their fault, NOT the customers fault.

You are lending your money to a business and that entails risk. If you put all your money into privately owned businesses, there is a chance that one or more of them will go bust at any time. It is a personal choice how much risk you expose your money to in this way.

The safety net ensures you get your lump sum back eventually. You may well think that the safety net is not good enough for your needs and, if you want to minimise your risks, you should go for safer options like NS&I. You may not get as good interest rates but your risk is reduced.

I, for example, have a few K in premium bonds with NS&I; the rest of my cash is in higher earning accounts with private banks and BS's covered by the FCBS scheme. I am hoping that I get lucky with PB's and land a £5K prize or more but I am more likely to lose out, compared to a proper savings account. However I also know I could call on my money at any time if I needed it urgently, as per the scenario you quoted.

Similarly, on a micro scale, I tend to keep £100 knocking about the house. I know it's losing value but it's useful to have it there if my wallet and cards get stolen or I forget to go to the cashpoint and the window cleaner comes round.

I don't think anyone is truly happy with the safety net in its current form but it is a start.

wizard5353

Thanks Nash, the details you state are valid but the point I'm making is that there are a lot of people on this board complaining that customers are taking their savings out of banks that are in trouble and that these customers are the cause for all the problems in the market at this point in time and the fall of the bank in question.

This is not the case, your money is your money and regardless of if there is a £35k safety net in place it's still the customers choice to take their money out or not (unless in the small print). The banks that are in trouble got themselves in to the mess in the first place by being greedy and building their businesses on a bad business model. Evey one here seems too quick to jump on those of us who switch providers saying that they are stupid and that we don't have a clue about money matters because of this so called £35k safety net and that the media should not be allowed to report on if a provider is having problems because people are sheep.

The only justification I can see for those sort of comments are from greedy shareholders or investors who are worried that there shares are going to become worthless. They have no one to blame but themselves like the banks. Just because there is a queue outside a bank in the morning does not mean it's a warning sign that they are going to sink.

True we are investing in a private company and there are risks and how people manage those risks is by removing their savings and depositing them elsewhere. It's the same as those who deal in shares who sell their shares when a company is in trouble. It is far more likely that shareholders selling up en mass are likely to cause the downfall of a bank than a few customers removing their savings.

The other point I would say is that many people don't have the sort of savings to spread about that you have. Up until last year finding money for food for the week was the extent of my financial goals. I now have an income where I can afford to invest and save but not much. A bank going under or massive drop in share values would clear me out which is why I and many like me take the option to move funds when we smell smoke. I'm not paranoid enough to start hiding money under the mattress but losing up to £35k for a year might mean life or death in the scenario I stated above. NS&I bonds are less of a risk but why use them when you can move funds to safety in the higher risk/higher interest environment of private banks before they get in to too much trouble? So long as you can move those savings there is little to no risk.

JimBlizz

Aghh... I've just moved to A&L, you're all scaring me now!