FTAdviser.com

We now arrive at an exciting juncture of Investor’s Alphabet. J is not just the first letter of a finer point of finance – it is the very profile of an investment process.

J is not the only letter to have inspired financial theories. William De Vijlder, global chief investment officer at Fortis Investments, asked journalists at a recent market outlook conference “which recovery” they predicted. Four scenarios loomed large on the overhead projector:

W         J           L          U

Most journalists – ever prone to sitting on fences – opted for U, the middle ground between jolly-hockey-sticks J and lugubrious L. Mr De Vijlder then went on to demonstrate why the economy was in fact due for W.

But the J-curve is better known than the W-wiggle. Private equity partners like to apply it to projects when they are on the phone to their lenders. They buy an ailing company, laden it further with restructuring costs and hefty management fees, then – if all goes well – rejoice as margins inexorably rise. Most investments are based on the assumption U will turn into J within five years.

Economists, meanwhile, use the J-curve to describe the impact of a currency depreciation on a country’s balance of trade (exports minus imports). As the pound falls in value against the euro, the value of imports soars relative to exports. This leads to an immediate deterioration in the balance of trade.

In the long run, however, the lower price of UK goods in Europe should lead to increased demand and, eventually, a gradual improvement in the balance of trade above and beyond the pre-depreciation level.

Political science has yet another application of the J-curve. Letters are always useful because they add the weight of familiarity to an argument. J is the most useful of the lot not because it is the most accurate but because it is the most up-beat. Philosophers may prefer the O hamster-wheel and hacks the S tail-spin, but – to misquote TS Eliot – policymakers and bankers cannot bear much reality.

Finally some good news! And we have a pretty chuffed pensions sector to prove it after the Department for Work and Pensions revealed that Sipps will be able to hold protected rights money from State Second Pensions from October.

Yes, you read that right – Minister for Pensions Reform Mike O’Brien made the announcement this morning, stating: “These changes will give more flexibility and investment choice to people taking an active interest in the management of their pension fund. It will also be easier for individuals to transfer funds between different types of pension schemes, and to consolidate pension rights in one place.”

It didn’t take long for the pensions sector to embrace the change.

Aegon head of pensions development Rachel Vahey was one of the first out of the blocks, saying: “This is a big step forward in making pensions clearer for everyone and will make it easier for people to consolidate funds, if this is the best option for them.”

Of course, it was always pretty obvious that the announcement would – on the whole – receive a positive reaction. Especially after the avalanche of people we saw visit FTAsdviser.com after my colleague Joy Dunbar revealed the DWP’s plans in an article yesterday.

After all, who’s going to whinge about the government correcting such an anomaly and opening up access to the estimated £90-100bn of protected rights is in the market which insurance companies currently have a monopoly on?

But it wouldn’t be news without the inevitable selection of grumblings, this time mainly about the potential harm to providers. For example, Tom McPhail, head of pensions research at Hargreaves Lansdown, yesterday warned that the change could be a “potentially catastrophic” development for some product providers that do not provide Sipps.

Other grumbles included that from Standard Life head of pensions policy John Lawson, who warned that it “could be another nail in the coffin for SSAS”.

Aegon’s Vahey similarly balanced out her initially positive reaction, saying she was disappointed that “the DWP isn’t prepared to go a little bit further and remove all the differences between protected rights and non-protected rights now rather than wait until 2012″.

But come on, do you really want to taint about the only good piece of news that we have seen in recent weeks?

Please, can’t we just enjoy it before the next bad news bombshell hits?

Now that the adjective ‘beleaguered’ which was used ad infinitum during the Northern Rock circus has now been inherited by Bradford & Bingley, and Ron Sandler is talking about giving up his executive status in his role as chairman of the Rock, I thought it a good time to muse over Mr Sandler – the man and the mission.After the Rock was nationalised and everyone had their fair chance to dish out their views on what went wrong and why, the only thing the industry had left to whinge about was Mr Sandler’s £90,000 a month payslip.

Mortgage advisers may not have to recommend products available direct to their clients, according to the FSA.

But if intermediaries want to argue they offer the best deals available it is hard to see how they cannot look at the whole of the market.

Following discussions with the Association of Mortgage Intermediaries, the FSA confirmed it did not expect firms to recommend lenders or particular products they do not have access to. This clarification by the FSA of expectations of mortgage IFAs has been heralded as a victory by Ami.

At the start of this month, Ami promised to ensure it spoke more about the benefits its members offered consumers.

This was the right move – the FSA and the government wants to improve the lot of consumers not necessarily the industry. By heralding mortgage advisers as the consumer’s advocate this could only assist Ami’s calls for assistance for their members.

By not talking about the whole of the market, mortgage advisers will weaken their argument that they should be the first stop for consumers seeking the best home loans on the market.

Ami should also recognise if it cannot claim to represent intermediaries who are able to explore the whole of the market for their clients, then their calls for less regulation by the FSA may end up falling on deaf ears.

I can’t help but think the Retail Distribution Review (RDR) is just hitting the financial services industry at the wrong time.

Right now advisers’ top priority is getting business though the door.

Of course there are some advisers who are doing fine, but then there are others who have relied heavily on mortgage business who are not so well.

Aside from the pull-back in the mortgage market and the continued arrival of news that property prices are dropping, there is something else playing on people’s minds.

And that brings me to the other ‘R’.

The other ‘R’ (dare I say its name) recession, isn’t far from the forefront of peoples minds, what with it bouncing around headlines everyday.

So we have the RDR – something that involves advisers’ time and money – alongside the possibility of a UK recession.

That doesn’t really add up to me and I wonder whether intermediaries are not more concerned about ensuring they actually have a business this time next year, rather than living up to the demands of the RDR.

The proposals it puts forward in relation to increasing the level of professional qualifications are a bit of a worry for some advisers, in terms of meeting the costs involved.

And this is just made harder by the current troublesome economic environment.

But, on the bright side, won’t higher levels of qualifications lead to a better skilled adviser community and, in turn, improve consumer perception of the industry? It will all be worth it in the end, right?

Even if this desired outcome is achieved, there’s no getting away from the fact that the timing of the RDR could have been better.

The final feedback statement from the Financial Services Authority is due in October this year, only then will be know its true cost and implications.

But do you think we will look back and say that in light of the uncertain economic conditions that dogged the rear-end of 2007 and 2008, the RDR should have been postponed?

My twin brother is a gambler. Not in the dingy “bet-your-child’s-college-fund” kind of way, but that’s only because he doesn’t have a child yet. 

He’ll bet on any sport, be it tennis, cricket or rugby, but his real passion is football. With this in mind he obviously has a vested interest in the Euro 2008 championships. 

To cover his extraordinary losses for this year he decided to go against form and bet on two unusual teams, Austria and Russia. Both teams were outside favourites, especially Austria, who have since crashed out of the tournament. 

If my twin brother was an investment manager, he’d be considering his information ratio. This measures the active return of an investment manager divided by the amount of risk they take relative to a benchmark. It is a close cousin of the Sharpe ratio, which measures the excess return over a risk-free investment divided by the standard deviation of the portfolio. 

To judge by his risks and successes with Austria, my brother’s information ratio is looking more like a disinformation ratio at the moment. 

But his other bold call is proving a winner. Russia staged an amazing comeback last Saturday and is on course to cause an upset like Greece in 2004. By avoiding the big teams my twin’s risk has been huge, but with his £30 bet and odds at 150-1 he could be in line for a huge windfall. 

How will his information ratio fare? I guess we’ll see this Thursday.

The big overhaul of the pensions system should mean that me, and thousands of others like me, will not be sat on a chair wearing layers of clothing in our retirement because we can’t afford to put the heating on.

The image isn’t exactly appealing and is, I suppose, a situation the government is trying to save us from through the introduction of personal accounts.

The scheme, due to be rolled out in 2012, will see the more financially lazy and cash strapped amongst us automatically enrolled in a pension scheme, forcing us to save for our golden years.

Employees will be automatically enrolled into the scheme and it is hoped that inertia will prevent people from taking it upon themselves to opt out, and hence people will begin saving for their retirement

When you look at the most recent figures published by the Department of Work and Pensions it is alarming to see that the number of pensioners living in relative poverty rose by 300,000 to 2.5 million in the UK in 2006-07.

Personally, I don’t fancy adding to that statistic and being poor when I’m older. So any nudge that encourages people to save has got to be a good thing hasn’t it?

Particularly if employers are going to have to match the contributions their employees pay into personal accounts.

So, why is it then that there is so much doom and gloom around this revolutionary idea from the government?

In our recent FTAdviser.com poll, advisers were asked whether personal accounts would just be another industry failure and (at the time of going to press) 82 per cent of the advisers who voted said that the scheme would fail because people would just opt out.

So why is it that hardly anyone seems to be supporting it?

Will it be another industry failure? Or will the government be savvy enough to educate the masses so they understand the consequences if they opt out of the scheme?

Tell us the issues you have with personal accounts here.

As the week draws to a close, it comes to that time again when advisers seem to be harder to track down.

Is it right that a with profits fund should bear the costs of misselling?

Yes, say the life companies citing a statement made in 1998 by Patricia Hewitt, the then Economic Secretary to the Treasury.  She made clear that it was acceptable to meet the pensions misselling costs from the inherited estate, because it is  “a sensible way to protect policyholders from immediate and severe cuts in their bonuses”.

But the FSA has had an attack of conscience. It has published a Consultation Paper for an amendment to the Conduct of Business Rules (COBs) governing  the treatment of funds that may be used for payment of compensation to victims of misselling. The document proposes that insurance companies will no longer be permitted to charge compensation for misselling to the inherited estates of proprietary offices’ with profits funds.

The FSA has re-examined COBs and concluded that “there is a case to consult again on whether shareholders alone should meet the cost of compensation and redress as the current rules may not lead to the fair treatment of policyholders.”

The timing of this CP coincides with statements made in evidence by Prudential and Norwich Union to the Treasury Select Committee enquiry into the inherited estates of life companies on 30 April 2008.

Nikki Maynard, director of strategic services at Prudential, told the hearing  that “the policyholders of the [with profits] fund share 90:10 in the profits and losses of that business.

Therefore it seems appropriate, where you have losses, that those would be shared 90:10 in the same way as profits are shared 90:10…for shareholders to bear 100% of the cost on a business, where they only get 10% of the profits would probably seem equally unfair to them”.

This completely misses the point that  shareholders generally have entirely different attitudes to, and acceptance of, risk compared to with profits policyholders. The latter will be largely small savers who want low risk savings plans.

Shareholders, on the other hand, will usually be far more savvy, and accept that one of the aspects of stock market investment is volatility. In buying shares they are investing directly in the company’s management and its ability,  hopefully, to make a profit in the shape of rising share prices and dividend payouts. If that management makes a mistake, it is the shareholders (and of course the managers) that should bear the costs.

Norwich Union has paid out about £500m in total for misselling endowment policies and pensions, from its inherited estate. Nick Prettejohn, chief executive of Prudential, told the TSC that it had used “about £1.6bn in total” to pay compensation for misselling victims and the cost of admin of those payments, all of which came out of the inherited estate.

Nick Ainger MP responded to this by saying that this meant there was £1.6bn less money to be distributed from the inherited estate and that it was the shareholders’ responsibility to ensure that the FSA guidance was abided by and therefore the shareholders who should bear a significant proportion of that responsibility.

This seems eminently fair to me: if the shareholders have to bear the cost of misselling, management will be under much greater pressure to ensure it doesn’t happen again.

The proposals for misselling compensation to be paid by shareholders only affect payments made after November 2008 (although it is regardless of when the misselling took place). But, the bulk of misselling payouts have probably now been paid, and the bill for misselling in the future is unlikely to be nearly as large.

That noise I can hear in the background sounds very much to me like the stable door being slammed shut after all the horses have bolted.

There is never a good time at the moment to remortgage your house.

And trying to work out a suitable fixed rate deal while backpacking through Cambodia is probably not one of them.

Case in point, I received a phone call from my brother and his wife recently, who are coming off a rather nice tracker rate on their £220k London home.

“We do realise we might have to pay a little bit more,” he said. “Is there anything cheap?”

I had to take this opportunity to deliver the two most doom-and-gloom messages of the week – not because I took delight in it (although I am sitting in an office while they are travelling the world), but because it dawned on me that it was time for a serious reality check.

The first message was that the mortgage industry is sounding the death knell for fixed rate mortgages under 6 per cent.

I was suitably informed by online company Mform.co.uk yesterday that if you wanted a mortgage under 6 per cent you need to seal the deal within the next six weeks, or cough up for a rather hefty arrangement fee.

The other harrowing blow came soon after, when I told my brother that Moneyfacts had announced that the cost of two-year fixed rate mortgages had hit a 10-year high.

Enough to have the average remortgagee-to-be spluttering into their morning cup of tea.

Moneyfacts also said that for those looking to sure up some longer term security will now have to pay, on average, 6.72 per cent for a five-year fixed rate, or 6.66 per cent for a variable rate.

My message extracted the desired response – with my brother likening the idea of paying an extra percentage point on their mortgage to having a rather ‘delicate’ area waxed.

So, are these high rates what mortgage advisers and homeowners have to get used to now?

Just four months ago experts were predicting the Bank of England base rate would fall below 4 per cent, an event that would have provided a much-needed reprieve for those either trying to get on to the property ladder or those struggling to make their repayments.

Now, thanks to a rather gloomy inflation outlook, the base rate could creep up again. Swap rates have also been on the rise, with lenders responding by raising their fixed rates.

You can understand why homeowners and potential buyers continue to have little faith in the housing market.

Sounds like a good time to go backpacking in the jungles of Asia to me.

Inflation has won the battle – and, by Mervyn King’s own admission, it looks like it might also win the war.

This morning’s announcement that the Consumer Price Index (CPI) rate of inflation hit 3.3 per cent in May – its highest level since the index began 11 years ago – was bad enough.

There’s no way that even the best government spin doctor could argue that the figure isn’t a long way off the Bank of England’s target of 2 per cent – or that it’s not heading in the wrong direction from April’s already concerning rate of 3 per cent.

But then Bank of England (BoE) Governor Mervyn King came out today and predicted that the CPI will exceed 4 per cent later this year. That’s some significant fuel for already roaring speculation that the UK economy is on the precipice of a recession.

In his letter to the Chancellor Alistair Darling to explain what action the BoE is taking to control consumer prices, King unsurprisingly blamed sharp rises in food and energy prices for the increase in the rate of inflation.

“As things stand, inflation is likely to rise sharply in the second half of the year, to above 4 per cent,” King wrote, adding, “I must stress, however, that there are considerable uncertainties, in both directions, around this, and any such projection is particularly sensitive to changes in domestic gas and electricity prices.”

Well that’s a relief – given that the price of crude oil hit a new high of close to $140 a barrel yesterday. And that’s despite Saudi Arabia agreeing to increase output in July. Some analysts are now even predicting that oil could jump to as much as $200 a barrel during the next 18 months.

At the risk of being branded a doom monger – it’s only Tuesday and it’s already sizing up to be a very bad ‘news’ week.

The CBI yesterday announced that it has lowered its economic forecast, predicting that we could see the slowest rate of growth in 17 years next year. And its bets are on CPI peaking at 3.8 per cent in the third quarter of 2008.

Inflation in the Eurozone has, meanwhile, hit 3.7 per cent, its highest level since current records began 1996. And consumer confidence has spiralled, with the UK general public showing increasing concern (and knowledge) about rising inflation.

The one glimmer of hope is that the King has agreed with the CBI that inflation could peak by the end of the year, as long as there were no “unexpected increases in oil and commodity prices”. That being the case, the rate of inflation should begin to fall back towards the 2 per cent target next year.

Keep your fingers crossed.

While ‘helicopter cash’ may conjure for some the stirring image of Mervyn King, commando-like, flinging bags of cash from the open mouth of a Huey chopper, the term tends to take far more pedestrian forms.

Helicopter cash refers to money bestowed upon consumers and/or companies by a given monetary authority, such as the Bank of England or the US Fed, with the aim of tackling deflation or springing the dreaded liquidity trap (much like the one we now face in the West).

Instead of dealing with the usual suspects (i.e. financial intermediaries), a central bank will airdrop these funds, like manna from heaven, directly upon your tired, your poor, your huddled masses yearning to breathe free.

During the Great Depression, for instance, Uncle Sam offered to buy gold at a price that was far greater than that set by the market, thereby making all those chappies lucky enough to own gold at the time very happy indeed.

And more recently, the US government took an even more direct route by granting American consumers a $160bn tax rebate earlier this year, most of which has found its merry way to Wal-Mart.

Rightly or wrongly, acting Fed chairman Ben Bernanke has been characterised as something of a fan of helicopter cash – so much so that he has been dubbed ‘Helicopter Ben’ by the press.

In a now notorious speech in 2002, Mr Bernanke suggested that, should the US find itself slipping into a recession, it could simply cut interest rates to zero and drop money from the sky.

Needless to say, the assumption that a one-off windfall in the form of helicopter cash can have any lasting impact on the so-called real economy certainly begs the question.

But even if you think that it can, what do you do when the economy shrinks at the same time that prices soar (like now, for example)?

What will Messrs Bernanke and King recommend we chuck from the helicopter then? 

Is it really any wonder that the dual pricing debate is still bubbling away? After all, isn’t there still a disparity between intermediary and direct-to-lender products?

While the issue (which was first championed by Mortgage Adviser last month) may not be monopolising the headlines to the same extent it has in previous weeks, the tension between the two camps is undeniably still there.

As reader David Oastler posted (in response to IMLA’s attempt to smooth things over by saying advisers are still vital to the mortgage market), he can’t “help feeling that its another of those comments from the lenders’ side of the fence that is designed to keep relationships on a ‘positive’ note whilst they carry on undercutting our businesses”.

FT Adviser’s own campaign for ‘Treating Brokers Fairly’ is still proving just as popular as when my colleague Sharon Flaherty first raised it in Speakers’ Corner last month.

As reader Derek Baillie posted yesterday: “Dual pricing is a symptom of lenders’ attitude towards the intermediary market. Perhaps the intermediary market should boycott specific lenders as a point of principle. IFA’s did it in the past and it worked.”

While on Tuesday (10 June) reader Shirley Widdicombe posted: “I have a long memory and will remember which lenders supported brokers for all of my career in this industry, but let’s tell every BDM, send emails, make a difference quickly.”

I guess that means recent claims that mortgage lenders are shifting away from dual pricing practices aren’t widely believed within the intermediary community.

Home Buyer Systems managing director Richard Angliss is openly dubious, claiming that his own research proves that lenders are still pricing intermediaries out of the market. He says a quick search proved that the cheapest two year first-time buyer product would cost almost £1,200 more over the life of the loan from an intermediary than direct from the lender.

But lenders do seem to be recognising that there is at least some error in their ways.

Legal & General’s Stephen Smith says that dual pricing is more of a mistake than a wider conspiracy to impact on intermediaries. Premier Mortgage Service and Nationwide have also clarified that the recent problems were actually the result of a knee jerk reaction to competitors and other market pressures.

And Smith has gone that crucial step further, admitting that the practice hasn’t lead to an upswing in L&G’s branch business. I wonder why?

So, is this the truth or just what intermediaries want to hear?

Either way, let’s not sugar coat the situation. Lenders are running businesses and, just like every other company the world over, the most critical thing is the bottom line.

As such, they shouldn’t necessarily be hung out to dry for trying to protect their profits (a light slapping should do it).

But let’s hope that lenders do continue their recently more frank approach to discussions with the intermediary community… and that dual pricing doesn’t cause too many brokers to leave the industry.

Open Market Option. OMO. While it kind of does say what it is on the tin, it’s hardly going to win any awards from the ’Plain English campaign’.

So, we can hardly blame people approaching retirement for not taking to their heels and marching en masse to their nearest IFA, demanding to exercise their ”OMO” by searching for the best, most suitable annuity (if not drawdown or ‘third way’) product for them, and expecting to get it at the best available price.

Having explored this topic for a forthcoming FA feature, I was shocked that this process is not a default, but something people have to effectively ask for. As if some-one might actually say, “Please use sleight of hand to keep my lifetime’s savings in your back pocket; Please don’t bother me with details of other products that better suit my lifestyle or give my family greater financial security when I’m not around; And for heaven’s sake, don’t go on about where I might buy the same thing more cost-effectively some-where else. How tedious.”

An annuity is the most important financial product we will ever buy – and the only one the government forces us to buy. It converts a lifetime’s earnings into monthly income (a retirement ’salary’) and once purchased is fixed for life – come pensioner poverty or high fuel prices. The default option is a single lifetime annuity, yet for married couples the income dies with the annuity holder. If they had opted for a joint-life annuity instead, part or all of the payments continue at death for the surviving spouse.

A standard form sent from each and every insurance company, clearly outlining these differences to their ‘at retirement’ customers would no doubt hammer home the importance of the OMO and inspire thousands to visit their local IFA. The ABI has vowed that this is in the pipeline but stressed it will “take time to have a positive affect.”

Call me crazy, but if a simple administrative task such as standardising letter content or even standardising a portion of a customer-facing letter takes more than a few days to complete, what hope is there for tackling the bigger issues within our industry?

Perhaps a bigger issue is the time it takes to send a customer’s money to their OMO-selected annuity provider (up to six months in some cases, and by snail-mail cheque naturally) or how about the 1-2 per cent commission that gets creamed off the top of your hard-earned savings if you do choose to stay with the same pension provider for your annuity – with or without any advice dispensed.

Now, why on Earth would people feel so hostile towards pensions?

Congratulations to Lloyds TSB. The banking giant has never admitted it put a rescue bid in for Northern Rock prior to the Newcastle-based bank having to call on the Bank of England’s emergency reserves. However many industry insiders are willing to stake their reputations on it was Lloyds TSB that was prepared to cough up £5 a share for the now nationalised lender.

Lloyds TSB’s offer was rejected because the government was too scared to tell Northern Rock shareholders, or rather voters, the shares they thought were worth £12 were now only worth £5. As a result the lender had to turn to the Bank of England, savers queued up to pull out their cash, the rest is now history and egg all over the face of Gordon Brown plus his Badger-like pal Alistair Darling.

Last week Northern Rock entered into a three-year agreement that will see its mortgage book shift across to Lloyds TSB. When I say mortgage book, what I mean is top customers. Northern Rock’s sub-prime and high loan-to-value customers have been left high and dry as have mortgage advisers that helped make the Newcastle-based lender become so big so quickly.

Under the new agreement, Northern Rock will write to mortgage customers who are approaching the end of their current fixed rate term and who meet certain criteria to provide them with the opportunity to apply for a Lloyds TSB product. The deal is only available to customers with a loan-to-value up to 80 per cent and will be subject to Lloyds TSB lending criteria.

Lloyds TSB will do well out of this deal. I bet their top bosses – who at one point were willing to pay a good sum for this mortgage book – are smiling right now. They would be right to smile and should not be criticised for doing a good business deal that their shareholders will reap the rewards of. It is those who have let Northern Rock become the pebble skimming stormy waters that it is today that get annoy me.

What about the borrowers who need assistance? What has been done for those who opted for 125 per cent LTV deals? Surely, the government does not want to have to end up repossessing people’s homes? If they thought telling people their shares were worth £7 less than they thought would result in voters turning to the Tories they want to see what will happen if they continue to stab mortgage intermediaries in the back and end up kicking the electorate out of their homes.

Recent communication sent out by one well-known website to its independent financial adviser (IFA) members has been causing quite a stir.

Unbiased.co.uk/IFA Promotions, a website which promotes the services of IFAs, has updated its offering. This may sound like no big deal, but right now,  as its current membership stands, the change could potentially impact on 5,800 IFA firms.

The site currently offers IFAs a basic listing on its website, which includes an IFA name and phone number, for which there is no charge. However, it also offers an online marketing package for £250 a year, which displays the subscribing IFA’s email address and website URL.

Around 3,200 IFAs are signed up to this service, out of a membership of around 9,000.

The recent change to its website, however, have prompted IFAs to question whether unbiased.co.uk is actually now biased towards the fee-paying IFA.

So what is this change?

Well, when consumers are filling out the initial form on the website to find an IFA, there is a line which says: “Tick this box if you would like to display only IFAs that have website and email links”. The fact that the box is pre-selected is what is causing the strife.

Some believe this change means the public are essentially being steered towards the IFA who pays a fee and if the consumer doesn’t notice this, they will not benefit from access to all of the IFAs that are registered on the site.

The other argument is that it could be misunderstood and the consumer could think that they are choosing between a firm that has a website and email and one that doesn’t. And let’s face it, in this day and age not many people would choose a firm that had no internet presence.

As one IFA put it: “Consumers will clearly think such firms are dinosaurs.”

However, chief executive of Unbiased.co.uk David Elms has strongly defended the move. He said that because 94 per cent of all enquiries are dealt with online, Unbiased is trying to give consumers what they want – easy access to websites and e-mail addresses.

From Unbiased’s perspective it is only fair that those who pay the online marketing package fee - and hence contribute to the funding of the site - receive a greater proportion of the leads that are generated.

“If they choose not to, why should they expect the same as those who are paying?” Elms told FT Adviser.com.

In essence, he said those who choose not to support the change were in effect not supporting their own brand campaign and letting other IFAs subsidise it instead.

For an online marketing fee of £250 a year, and the average case size being £650, Elms just does not understand why IFAs would not want to pay the online marketing package fee, given the potential for returns.

However, after some IFAs have failed to receive many leads from the basic listing, can you blame them for being reluctant to stump up the fee?

In the words of another IFA: “I genuinely believe this is a sad day for the IFA profession.”

Do you agree?

We are told that The Lord works in mysterious ways. The Lord of the Stock Market, however, is a rather more predictable deity, over the long term at least. 

The rules are simple: markets have historically gone up more often than they have gone down. Those with money to invest and time to wait usually make more money in return. 

But just to keep things interesting, every few years the almighty God of Markets sends down a plague of locusts to ravage the financial landscape: these plagues we call bear markets. 

And when he feels his subjects are being particularly sinful, he gives his old friend the Angel of Death a call: these are the Great Financial Crises… 

The term was coined in 1914 when the biggest gold outflow in a generation posed a serious threat to American finance. The Wall Street Crash and the Great Depression came several short years later. Many more crises have followed, and they have not been confined to western markets. 

Perhaps the worst financial crisis in the UK happened in the 694 days between 11 January 1973 and 6 December 1974. All major world stock markets were affected, but the London Stock Exchange’s FT 30 lost 73 per cent of its value. 

At the same time, GDP was halved, the property market was also failing and the Bank of England was forced to bail out a number of lenders. Markets improved in 1974, but unlike in the United States, inflation in the UK continued to rise, hitting 25 per cent in 1975, giving way to the era of stagflation. 

Slowing growth. A failing housing market. The Bank of England bailing out giant lenders. Spiralling inflation. Sound familiar? 

There was more in the air last summer than water particles; there was the anticipation among money-men that the tide was turning. The God of Markets was summoning locusts, but did he dig out the Angel of Death’s business card?

Well it looks like any dreams of a base rate reduction may well be over.

Even though yesterday’s decision by the MPC to hold the rate at 5 per cent for a second month in a row came as little surprise given its recent hard line approach to taming rising inflation, it is still going to be hard for some to swallow.

Especially as the MPC’s decision came hot on the heels of Halifax’s announcement that average house prices fell 2.4 per cent in May, compounding the record 2.5 per cent reduction seen in March.

The Organisation for Economic Cooperation and Development (OECD) added to such woes, forecasting that growth in 2009 will be even weaker than this year, at just 1.4 per cent. That’s on top of its predictions that house prices will fall by 10 per cent by the end of next year, unemployment will creep upwards and consumer spending growth will stall.

So pegging interest rates at current levels will offer little comfort to householders struggling with step rises in the cost of living, higher monthly mortgage payments and the very real threat of redundancy. Norwich Union’s announcement today that 1,800 people are to lose their jobs over the next two years brings home just how real a threat that is.

Worst still, the majority of economic indicators are now pointing to a rate rise as being the most likely next move.

The Bank of England said it all last month with its forecast that consumer price inflation will rise over the summer to 4 per cent, as food and energy costs skyrocket.

European Central Bank President Jean-Claude Trichet added further fuel to the rate rise fire yesterday afternoon by stating that an interest-rate increase in the Euozone in July is “possible”. So it appears that the ECB at least is more inclined to fight inflation than protect growth.

All this has led to such positive comments as Brown Shipley chairman David Rough’s statement: “This might be the worst set of financial conditions globally since the Great Depression of 1929.” Brilliant!

But let’s not get too carried way with such doom mongering. As while the decision to hold rates will be painful to some householders, the very real alternative of inflation spiralling out of control – pushing prices up further – would be far worse.

What would you rather?

The year 2012 will be significant for this country in more ways than one. Not only will Britain be hosting the Olympics, it will also be the year when personal accounts are pencilled in to be introduced.

It is, therefore, somewhat ironic the two events seem to be causing so much debate over cost and implementation. However while the wranglings over the Olympics seem to merely exasperate, those now taking place over personal accounts appear to be threatening its future. And there are two words which sum up why. Means testing.

Means testing was once a hurdle which has now become akin to something you would find in a steeple chase. No one appears to want it as the issue gets ever insurmountable in stature. Former government employees, political parties, advisers and industry providers have all shown remarkable solidarity virtually falling over themselves to criticise its continued existence.

Yet while Mike O’Brien, the pensions minister, has been trying to paper over the cracks and imply an almost Brady-bunch consensus from the industry, he has also made it perfectly clear means testing will never be scrapped, stating outright it would cost the Treasury too much in lost revenues.

So where does that leave personal accounts?

Nowhere too secure that’s for sure. The Tories appear to have only held back on an all out attack due to olive branches from the government promising to investigate the issue.

With means testing set to remain in the scheme’s blueprints it does not look like Labour will be passing the baton on to an over-enthusiastic Tory party in 2010, if they win the next election.Nigel Waterson, shadow minister for pensions, has refused to say if personal accounts would be scrapped in the event of a Tory victory, however industry insiders are hardly gearing up for its implementation.

In fact it seems Mike O’Brien, is the most enthusiastic advocate of this particular project, confident that it will eventually see the light of day, describing it as the “biggest reforms since 1908″.

Yet in the midst of all this talk about “making history” it seems the veritable army of civil servants have forgotten to read their history books. Directors of stakeholder schemes – the government low-income pensions wheeze that failed – have been talking with Pada for months about how means testing penalised and discouraged the targeted savers.

It is therefore a shame, but not surprising, that priorities continue to remain with the Treasury coffers as all efforts seemingly go into squeezing every last penny out of the working man and woman.

What appears to have been forgotten in all of this is the need to encourage people to start taking control of their financial future. While the government waxes lyrical on the subject it continues to dole out millions in benefits while making life harder for the people who get up in the morning and keep this country running.

Personal accounts are meant to be aimed at low-income workers and, if this is the case, means testing must go. Its mere presence will deter people from the system, leaving them to wonder whether it pays to save.

Pensions experts claim that any miscalculations will only show up in 30 years, by which time this generation of politicians and civil servants may well be in Bermuda or drawing rather large public sector pensions.

While personal accounts have become a political football, they are most certainly not a game.

A friend posed an interesting question to me the other day – how long should she wait for the market to right itself before purchasing a house?

Having been within a hair’s breadth of taking on her first mortgage in March, she pulled out due to the increasing price of mortgages, particularly for borrowers with less than 25 per cent deposit. She is now armed with a slightly larger deposit – albeit still less than the magical 25 per cent mark - and is keen to put her money into bricks and mortar rather than her landlord’s pockets.

But the purchase market at the moment seems to be one step forward, two steps back. Matthew Carter, divisional director for mortgages at Nationwide, said while markets remained volatile it could be expected that frequent changes to fixed rates would occur.

There was some hope of a reprieve for buyers in late May, when a dip in Libor meant some lenders, including RSB, Abbey, Cheltenham & Gloucester, Halifax and Bank of Ireland were able to lower their rates on some of their fixed rate mortgages. However, Abbey and Nationwide have recently increased their fixed rate deals.

While the base rate may be heading downwards, when we will see mortgage interest rates go down and stay down is still far certain, particularly as swap rates have risen significantly in the last few weeks.

A recent mystery shopper by Mortgage Adviser posed the same question to advisers in Glasgow. While some were only too happy to take the customer’s details and look at some possible rates, others were quick to advise waiting another few months could be a wise move.

Are first-time buyers wise in biding their time in the rental market waiting for cheaper deals to come along or is it time to bite the bullet and accept that 6 per cent is the new 5 per cent?

Being a journalist and working in the financial services industry basically means there’s never a dull moment.

Except, in the last couple of weeks there have actually been quite a few of them.

With less bad news around, some people even thought we had begun to turn the corner on the credit crunch.

But with yesterday’s revelations, that now seems like it was just plain wishful thinking and I can’t help but wonder if the worst is yet to come.

Sitting in the Highlands of Scotland in my local beauticians’ yesterday morning, I was blissfully unaware of the latest round of bad news to hit the mortgage market.

That was until my beautician, who usually talks to me about weddings and holidays, asked me if I’d heard about Bradford & Bingley.

I hadn’t yet read the paper and was a little stunned, thinking how times must have really changed for this to become the new topic of idle chitchat in a beauty room.

I suppose, following on from Northern Rock, any lender that hits troubled waters is bound to be the talk of towns up and down the country.

However, the talk of a rights issue was not new for B&B (the UK’s biggest buy-to-let lender), but the restructuring of it certainly was. As was the confirmation that private equity firm Texas Pacific Group (TPG) is to invest £179m in buying a 23 per cent stake.

The lender, which has a market capitalisation of £545m, was approached by TPG after launching its £300m rights issue last month to repair its balance sheet. Now it is also to scale back its existing rights issue to £258m at 55p a share.

The fact that the bank has been forced to take these painful steps, less than a month after announcing plans for a share issue, shows just how quickly the British housing and lending market is deteriorating.

But it also raises questions about who the next victim will be? As other UK banks also began to look less stable this week when their share prices plummeted.

And does this latest level of distress simply mark the beginning of what could be a steep fall in British property market and hence the UK economy?

Is the worst of the credit crunch over, or is it still to come?

Investing in futures sounds like another cheesy political initiative to ease the concerns of our long-suffering citizens.

In fact, it is one of the nemeses of the financial markets. Nick Leeson brought down Barings trading futures contracts. Jérôme Kerviel came close to the same feat at Société Générale, despite losing billions more than Leeson. 

Since they are an agreement to trade a product for a certain price on a future date, futures help insure against rising or falling prices. One of their aims is to manage risk, not create it.

UK fund managers routinely use forwards – tailor-made futures sold over-the-counter – to convert between sterling and the currencies which they use to buy assets.

Equity managers often use index futures to hedge the risk of their benchmarks, while bond managers use interest rate futures to mitigate their interest rate risk. But financiers insist on risking their own futures by using these types of instruments to speculate. 

The source of greatest speculation at the moment is commodity futures. Nobody seems to have been put off commodity futures by the sudden price collapse in 2006 and the boom and bust of commodities hedge fund Amaranth. Prices are soaring and there are no end of cheesy political initiatives to ban speculation and keep commodity prices low for consumers. 

In fact, while futures should be benign, they are frequently depressing, or else just too wacky for the mainstream consumer – anyone needing to hedge against the risk of the US election should check out the US Presidential Election Markets at the University of Iowa.

Maybe someone has a future in producing futures to hedge against the future risk of the futures market. Or maybe they’re all too busy trading commodities.