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Guest Charlie The Tramp

Fsa Fears Consumers Can't Afford Debts

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Guest Charlie The Tramp
The City's top watchdog warned banks, building societies and finance houses yesterday they could suffer severe damage to their reputations if the current turn in the lending cycle reveals "they have given credit to large numbers of consumers who are unable to afford their debt repayments".In its Financial Risk Outlook 2006 the Financial Services Authority said: "Even in the current benign economic environment we are seeing signs of growing distress among consumers, including more insolvencies, more late payments on credit cards and a rise in mortgage repossession orders."

FSA Warning To Lenders

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Well it's a bit flippin late now, isn't it?

And isn't the FSA meant to regulate things to avoid this kind of thing?

:unsure:

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Well it's a bit flippin late now, isn't it?

And isn't the FSA meant to regulate things to avoid this kind of thing?

:unsure:

Surprisingly not. The FSA has only recently taken over the control of mortgages (not all personal lending) and has since said its overstretched.

If you worked in the Financial services industry (corporate side) you might agree that they do a decent job, but you would definately agree they ask for a lot of cr@p.

Compliance personnel and departments are in high demand, yet they actually add nothing to the economy.

Its a new sort of red tape. Most of it is to protect us against money laundering, funds being washed for terrorism etc. It is needed, but boy is it laborious and inefficient and stops or slows a lot of worthwhile projects.

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Compliance personnel and departments are in high demand, yet they actually add nothing to the economy.

I would disagree with that statement. Regulation is required for trust to be built in an economy. Without trust, people don't do business. If they don't do business, there is no economy.

Capitalism is based on the enforcement of defined property laws.

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Smell the fear, I think you are probably right, its just frustrating thats all.

You can't move in some areas of financial advice because of the FSA yet property ramping goes on unabated on prime time tv and no one bats an eyelid.

THat will all change after the crash of course, but until then I get slightly annoyed albeit perhaps wrongly.

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Smell the fear, I think you are probably right, its just frustrating thats all.

You can't move in some areas of financial advice because of the FSA yet property ramping goes on unabated on prime time tv and no one bats an eyelid.

THat will all change after the crash of course, but until then I get slightly annoyed albeit perhaps wrongly.

I wonder if it will change after the crash? we have had crashes before, but nothing changed.

I think the difference is that in financial markets it is the buyers and sellers of assets who are regulated. There is a clear connection between lies/deceit and profit.

In property it is VIs on the sidelines who take a cut of every transaction without actually owning the asset who require regulation. Being one step removed has allowed them to get away with murder, goading the market participants and plying them with loose credit.

Edited by Smell the Fear

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Well I'm no fan of red tape however the FSA are a neccessary evil.

The financial services industry have regularly and comprehensively proven that they don't give a damn about their customers and will screw them over at every opportunity.

For goodness sake this is the industry that invented the term "Independent Financial Adviser" to describe an individual who would sell their granny the worst pension in the world if it paid them the biggest commission.

I rest my case.

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I pursued the FSA about the massive mortgage fraud..

I did so since 2003.

They have ignored me at every step.

the FSA instructed the pension companies to sell shares at the bottom of the market.

The FSA have stood and watched whilst Rome has burned.

the governement have stood back and watched whilst rome has burned.

well done chaps.

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Yes there have been crashes before. But now we live in a nanny state where we get filmed to and from work and each pin transaction can be recorded.

After the economic fall out of this crash we could be looking for some serious scapegoats and I do think there will be changes.

The whole EA industry is unregulated and adds no value. The government's sellers pack is just the start me thinks.

I also think that BTLing (as a hobby), and leveraging with debt and releasing equity from property will become rude words again when more people default and other people start to actually lose money if its gets so bad that their bank cannot return their cherished deposits.

There's trouble at mill I tell thee.

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I think the difference is that in financial markets it is the buyers and sellers of assets who are regulated. There is a clear connection between lies/deceit and profit.

Indeed, we now have a class of investor that has no tolerance for loss and believe everything is a one way bet and when things turn sour it must be somebody elses fault, it simply must, anything else would bring into question their own brilliance. Monetary policy right from the top hasn't helped in this perception either, the evidence is clear, if things aren't so good the central banks will simply turn around and flood the markets will cheap capital and everything will be ok again, just give the patient another dose of the diseases to make them feel better... for now, you can't lose (can you?!?).

Look at split-caps, endowments, precipice bonds and pensions; compensation and claims of misselling is the order of the day, the same will happen with BTL'ers, this is a certainty. This crash will be wholly different from the last one, the number of naive investors and the extraordinary levels of gearing will leave many amateur landlords completely exposed, and the recriminations will be severe, instead of the banks taking clients to court for defaulting the opposite will be happening, BTL'ers will be blaming the evil banks!

Undoubtedly many professional landlords got burnt in the last crash, but many could sit it through provided they could handle the gearing, and the banks made sure of that at the start, and lots of lovely inflation took care of their debts regardless of the high interest rates.

This time it is so different, if you're a johny come lately BTL'er subsidising your tenant to the tune of £400 a month how long will you put up with that when the asset is relentlessly falling in value and when rents are static or falling due to the sheer desperation of countless other landlords happy just to have a tenant at all. Or possbily a new breed of brave landlords who are buying cheaper property and are able to cover their mortgage and provide cheaper rents. Then you have the situation where tenants may find it cheaper to simply buy and fund a mortgage cheaper than the rent required for to repay some silly BTL mortgage that was taken out at peak prices.

We're already seeing recriminations when those get rich quick seminars turn sour, this is just the start, just wait until lots of angry middleclass people are sitting on severely depreciating assets in an iliquid market.

The problem will be made ever more acute when their "considerably richer than yaou" friends turn up in their new Mercedes thanks to stock market returns or whatever bubble is going their way at that moment in time.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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