The Future Depends on Due Diligence

The inevitable is just that - inevitable and as received wisdom has it that the only two certainties in life are taxes and death, I suppose I'll have to acquiesce. That said, I've yet to come across anyone who has cheated death, but I rather think over the years I may have shaken hands with one of two individuals who have succeeded in cheating the former.

Which brings me neatly to the Spending Review. I couldn't put finger to keyboard until we at least had a skeleton of what the future holds. To a large extent, the Treasury being the sieve it has been in latter years,we already had many of the bones, and what bones that were added merely served to fill in the gaps.

I've spoken to friends and colleagues and not one disagrees that a sick economy needs medicine ... possibly even some element of surgery. I suspect that in the last months of the previous administration, they had attempted to staunch the flow with bandages.

Will Messers Cameron and Clegg pull it off? They just might. They've managed to keep Vince Cable on message despite all of the u-turns he has been forced to make. Kenneth Clarke is once again a voice to be taken seriously and those reassuring rounded Yorkshire soundbites from William Hague have ensured that the coalition front bench is manned by heavyweights despite the lack of experience in Government of the two leaders.

Which is all at odds with what has happened in Banking and Industry at large since the early 1990's. Then, age and experience was rejected in favour of the thrusting bright new things who would shake up the system as never before. And they certainly succeeded in that! However, having never experienced a recession, let alone a depression, come "Lehman-Gate" they were caught like the proverbial rabbits.

As a result we live with an industry where the drivers are no longer in charge of the vehicle which to a large extent is being run by learners and passengers - no wonder we have arrived at a very real crossroads which could define the whole direction of society for the rest of the century.

So where now? Whilst the Government busies itself with worrying about households that may attempt to defraud the Tax Credit system, I worry about the future of a world where people who are already well remunerated would consider doing such a thing in the first place. Are we really living in a country where an annual household income of less than £44k is considered in need of state aid?

Don't get me wrong, I am reasonably optimistic about the current Government's commitment to tackling the deficit, and broadly agree with many of the measures already in place. However, I can't help but think that there are still a number of people who do not pay enough tax and others who continue to benefit from a banking system that rewards risk ... and even in some cases, unsuccessful risk.

The bonuses this year - if paid - are thought to total 8 billion. Asking the Public Sector to lose weight whist allowing bonuses to some of the bankers who are, to all intents and purposes, in the public sector by default,may prove unacceptable to say the least. On a lighter note, if I am to believe what I read,Wayne Rooney will be a net contributor to the Revenue's coffers to the tune of about £14,000 per day - £5m per annum. So all in all, perhaps his commitment to MU wasn't quite as much an affront to public decency after all.

For the last two years, whilst MP's and bankers have been in the spotlight, there are tens of thousands of senior civil servants, leaders of NHS Trusts, local authority chiefs and other public purse dependents who have slipped quietly under the radar. If Mr Cameron does want his Big Society, with citizens voluntarily plugging the gaps in previously funded areas of social service ... or to work voluntarily for “social care” credits they can cash in when they themselves need help, he still needs to address the greed factor that his once illustrious predecessor, Mrs Thatcher, brought about as a result of her assault on a society that had been brought to its knees by the ill-wielded power of the trade unions that brought the country to a halt.

So as we stare another Christmas down the barrel, is there a very real possibility that we can have a Big Society? I certainly hope so - let's face it, without it,we're definitely looking at a difficult 2011. I prefer to imagine that there is a sea change in the fiscal morality of our society.The numbers suggest that in the final quarter of 2010,mortgage default is holding steady, corporate and personal insolvency is reducing year on year - all in all, the majority of borrowers are doing their utmost to meet their liability, whilst trade has learned how to redress their exposure.

So to 2011? This is purely a personal view, but I do hope that financial savvy will overcome fecklessness - and I can only trust that our industry does its best to work with people who are doing their best to make a fist of working within their means. So bring it on - White Chrismas, It's a Wonderful Life and The Railway Children - let's immerse ourselves in a festival of the sentimental - we've all worked hard this year and there's still a couple of tough years to come, but there are lessons to be learned and the financial services community now recognise that the future of the industry depends on transparency, due diligence and lending based on the ability to repay. And that before they commit to over the telephone hand-outs, they take measures to ensure who and what is all that it seems -sorry, I was slipping to a parallel universe where everything was conducted as we all presume it should be. That said, what has happened since the Northern Rock debacle has given us all pause for thought ... and if we all close our eyes, we can once again believe in fairies -monetary morality is now an imperative.

We can never return to the period prior to Big Bang, but we all can draw from the Dickensian values of Mr Micawber. This is a short term fix. The flood doors will re-open, but let's hope the lessons of the recent couple of years have been taken on board. At London House,we are often called upon to meet with clients with a view to formulating repayment plans that are feasible for both parties - and we feel very positive that the current market means that both parties are now realistic about what is possible.

May I take this opportunity to wish all our readers, our staff, our clients and all our Franchise Owners a very Merry Christmas and a very healthy and prosperous 2011. London House is now 15 years old, and a benchmark brand in the risk assessment sector.This has all been achieved by playing a straight bat ... we can only hope that England can use the same technique to bring the Ashes back to where they belong!

by Godfrey Lancashire