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Has the City learned anything?

Robert Peston | 09:28 UK time, Tuesday, 14 July 2009

What I am about to write will - I suspect - make some of you laugh and some of you cry.

It concerns the attempt by a Guernsey-based investment group, Resolution Limited, to buy the UK life insurer, Friends Provident.

But it's really about the irrepressible financial creativity of the City of London - and whether bankers, investors and financiers have learned anything from the financial debacle of the past couple of years.

Let's start with Friends.

It was created in 1832 to "alleviate the hardship of Quaker families facing misfortune" (its words) and it was demutualised in 2001 to become a listed company.

These days it looks after the savings and financial interests of 2.5m policyholders, it has 739,000 shareholders and it has assets under management (as of 15 June) of £51bn.

Quite a pedigree, you'll agree.

Now let's look at Resolution Limited.

It's a Guernsey-incorporated company created at the end of 2008 for the express purpose of buying life insurance companies, asset management businesses and other financial firms.

According to its prospectus, it is "resident for tax purposes in Guernsey and is subject to the company standard rate of income tax in Guernsey at a rate of 0%".

But it is not an operating company. Again, to quote from the prospectus, Resolution has "outsourced most of its operating functions, including the identification and assessment of acquisition opportunities and the design and execution of the restructuring and disposal process for acquired businesses to Resolution Operations LLP".

John TinerAs for Resolution Operations LLP, that's another new business created and owned by the well-known financial entrepreneur, Clive Cowdery, and John Tiner - whose name may ring a bell, because he used to be the chief executive of the Financial Services Authority - plus three others.

What's in it for them? Well they receive an annual fee of 0.5% of the non-cash value of Resolution Limited, subject to a minimum of £10m per year, plus 10% of any value they create from their management of any financial businesses bought by Resolution Limited.

So the proposal that's been put to Friends Provident's board is that a non-taxpaying Guernsey company would buy this life company, and its £51bn of assets would then be managed by a newly created partnership of five individuals, who would scoop 10% of any value they create over and above the annualised gross redemption yield on three-month UK gilts (not exactly a challenging hurdle right now).

You might think this looks like tax arbitrage and financial engineering, of a sort that is surely out of fashion in a City that wants to win back the hearts and minds of a taxpaying population which feels a bit let down by its excesses of the past few years.

But perhaps that's the wrong way of looking at the proposed takeover.

As it happens, Friends' board rejected the initial proposal from Resolution Limited - but Resolution received what it calls "constructive feedback" and may therefore come back with sweetened terms.

Who'll decide what will happen? The owners of Friends of course. And the most important of these are Lloyds Banking Group, Aviva, Axa, Legal & General and Royal London, which collectively control more than a quarter of the life company.

You may notice that they're all in the life business too.

If it were to turn out that these giants of the life industry think that the skills of Cowdery, Tiner and the remainder of the Resolution quintet are worth 10% of any value created, well that implies something not very positive about the relative skills of their own employees - since their own managers are rewarded rather less handsomely than Resolution's crew.

Is that really a message that Lloyds, Aviva, Axa, L&G and Royal London want to send to their staff and customers?


  • Comment number 1.

    So really this proposed deal is just another piece of financial engineering of the type that creates nothing new.

    That being the case then a decent govt would step in now and tell Resolution to sling its hook.

  • Comment number 2.

    Basically this is a scam to take money off people's pension funds for doing nothing special. When will we be allowed to put our pensions into long term cash savings accounts. At least then they're guaranteed to grow every year, even if the results won't be steller. (like the returns of the last few years?????)

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    and i use the $ ..i should use the pound or euro

  • Comment number 5.

    If this goes through it will be another nail in the coffin for pensioners. USA and China are trying to create a healthcare system and pensions of quality for the old. Weused to have the best in the world system for healthcare and pensions. Now as Boris puts it most of us get paid ' chicken feed' so we might as well all book travel for the early 'journey to heaven' clinics.

  • Comment number 6.

    I'm always surprised that any large corporations actually pay tax (if they do)- why bother? Just register a company off shore and stash the cash...its not a difficult or even expensive process.

    Again the implication is that there is morality in the city- modes of convention which prevent immoral profiteering without the need for regulatory oversight. Those days are long gone- if they ever existed. It is naive to think people- any people, you, I, us all- won't try to make the most out of (aka exploit) any opportunity we find.

    This particular example isn't even complicated, there's no product, no complex insurance and/or re-insurance business model. The reason the transaction/purchase can be considered is because they have finance at a time when there is none/illequidity globally. Some heavy-weight lending/borrowing or leveraging is going on behind closed doors.

    I'm less concerned about the fact they're based off-shore than how they're proposing to pay...isn't this the real story here? What is the answer? Only then can we assess the risk behind the deal. That they're off-shore merely tells us they're tax savvy, a little bit shy and don't want to do the government any favours- a shock given their FSA background. Hilarious.

  • Comment number 7.

    We here in dc with each other..but just wondering...

  • Comment number 8.

    It is quite likley that L&G or Aviva will be another target. Despite Robert's correct criticism that this is taking shareholders for mugs, the fact remains FP is too small to survive going forward and has been trying to sell itself for ages.
    As for beating guilts, with the economy today seen in deflation maybe that is a good thing after all, managing just to preserve the wealth of investors....

  • Comment number 9.

    All very depressing stuff Robert.

  • Comment number 10.

    Brown and Darling's pitiful handling of the financial crisis have served as a rubber stamp for the ongoing recklessness of the industry, whereas a rebuke and a severe slapdown may have been more appropriate.

  • Comment number 11.

    Silly me. I thought that Friends Provident was managed by its own board and management. But it turns out that it is managed by a motley collection of fund managers Lloyds, Aviva, Axa, L&G and Royal London.

    And who would have thought that their principal concern should be the signals they send to their staff and customers, rather than their investment return?

  • Comment number 12.

    How much would they pay for FP, how would that money be raised, and how much will it cost to repay?
    Surely the repayment cost will have to come out of the profits of the fund so in effect the policyholders will be paying for the Guernsey boys to buy their funds? And on top of that pay them £10mill a year.


  • Comment number 13.

    I guess u didnt like my comment..and i'm from the usa

  • Comment number 14.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 15.

    Has the City learned anything? No.

    Will the City ever learn anything. No.

    Why? Well, for the same reasons that betting shops never seem to run out of customers, and on-line bingo sites continue to flourish (if you believe all the adverts on the TV for them).

    It's a mixture of egotistical conceit and fantasy ("I'm the one great and brilliant judge of risks and where the wise place is to put your money") with a big dollop of straight forward old fashioned greed ("I'm going to be rich") thrown in for good measure.

    Oh, some will say, you mean it's just human nature? Well, yes, kind of, but the problem is it's the bad bits of human nature.

    I got a round-robin email recently that told a story of an elderly man talking to his grandson. They were American Indians (Cherokee, I think).

    Basically, the old man said that humans had two strong powerful wolves inside of them. One fighting for Good (joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith) and one fighting for Evil (anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego).

    The punch line is when the grandson asks "Which one wins?" The old man replies, "The one you feed".

    Similarly, the behaviours of the City, of the Grandees, the big bankers, etc., etc., are really only a problem because society and government FEEDS them.

    If Government changed the rewards systems by legislation or regulation, the behaviour could be changed for the benefit of society generally.

  • Comment number 16.

    tax tax tax awesome..we have a government that will be as broke as u soon!!!

  • Comment number 17.

    It seems to me a very simple question which has nothing to do with the way Robert reported it.

    If shareholders think the price being offered is a good price and the shareholders can do better things with the money than leave it with Friends why should they not accept the offer how Resolution manages itself is nothing to do with them.

    For people who have funds managed by Friends the issue is also simple. If Resolution can do a better job than current management then I have no problem sharing the benefit of the upside - however tracking that to gilt rate is the wrong way of looking at it if Friends management already exceeded that rate on average - it has to be tracked to the incumbent managements track record versus their direct competitors. Maybe that is part of the constructive criticism of their offer

  • Comment number 18.

    Blimey its the return of Corporate Raiders of The Lost Sark..well, almost. Jimmy Goldsmith, Carl Icahn,T Boone Pickens, you should be living at this hour!

    If this is going to be a leveraged buyout then as always,its a question of whether Reolution Operations can persuade enough shareholders that the current management of Friends are not looking after their interests..i.e that they have a business with a huge pile of assets and a moribund share price. The normal demand is that these assets should either be used more actively to grow the business or that they should be partly liquidated and the proceeds returned to the shareholders.

    To be honest I don't follow Friends Provident very closely so I don't know whether their share price is fair, below average or relativly good. Given that they operate in a sector which has been hammered in the last eighteen months I suppose the shares may be cheap at the moment, especially if they are sitting on a large cash pile and doing nothing with it. That latter scenario is usually what has the asset strippers sniffing around and will be the crux of any argument that the current management are 'not maximising shareholder value'. Sadly, many shareholders will be receptive to such blandishments and a soundly run if somewhat stolid finacial institution could be ransacked by these appalling vultures.

  • Comment number 19.

    I beg to differ.
    Has the City learnt anything? The answer has to be yes.
    It has learnt that it is all powerful and that it calls the shots over any Government attempt to temper their profit making ability.
    Will the City ever learn anything? Again the answer has to be yes.
    It will always look to find a way to make money, and having someone that has been head of the FSA able to benefit from contacts that have been developed over the years will help in raising the finance for such a deal.
    This highlights the real problem in that regulation can only be a set of aims, it cannot be restrictive as the institutions will find ways around them to increase their profits. As they become more successful they will draw in other investors or financial institutes willing to work with them all looking for a part of the Golden Egg. This then forces their competitors to follow the methods and so on.

    The City is always learning. As many entreprenours say, they never fail - they only learn lessons.

  • Comment number 20.

    Myself and many others have had their endowment and pension profits whisked away. Why has 'jo bloggs' not learned there are sharks after their money. Do not to trust city wide boy schemes

  • Comment number 21.

    NO they haven't ..learned anything.

    Until they are assessed punitively on income (cruel and arbitrary rules would be best) and taxed on landing in any Fair deal countries.....they won't learn anything.

    Fair Deal Countries could be USA and UK to start it (as we did...start it all...that is) and no doubt EU, Brazil, Japan, Australia, Germany , Japan and so forth would sign up..

    Then off shore tax haven company directors would pay a tithe on landing in any signatory country ..... as I say punitive and arbitrary...before being allowed to leave again..

    Cayman Isles, Antigua, Guernsey, Monaco, et al are all very nice.,..but sooner of later the attraction of tap dancing around in them would pall....

    Then countries get some money...and the utterly pointless 'off shore system' gets slowly eroded.

    AND..they would learn then.... and maybe domicile properly in a place, pay proper taxes both personal and corporate...and rejoin the human race...

  • Comment number 22.

    Sounds like a future asset stripping venture, rather than an asset management company.
    The greed word springs to mind.

  • Comment number 23.

    Of course the City learns, that's how it exists and grows.

    Lately it has learned that you can get away with anything provided it generates tax revenues for the crooks in Westminster.

    It has learned that banks can print their own money and issue their own debt and go bust and be bailed out by the public.

    It has learned that you can go offshore to make serious money and pay no tax to anyone.

    It has learned that it runs our country.

  • Comment number 24.


    I would guess that 90% of the country dont care if the city has learnt anything!! One day you and the the BBC will realise that the business world goes on outside the 5 mile radius of your offices. Get out there and talk to real business people.

  • Comment number 25.

    "This deal is so good it pays for itself" Gordon Geko.

    This resolution lot are slimey parasites attempting to pocket millions in avoided corporation tax and savings made by slashing jobs and cutting service levels while doing a dodgier less regulated version of something not done so well already.

    Why don't they stop spiving for just long enough for the rest of us to forget why we find them so nausiating.

  • Comment number 26.

    This is a good example why there is so little desire in British politics and in 'The City' to clean up tax havens and offshore banking.
    Many of the current regulators, as well as former regulators (e.g. John Tiner), bankers, pension funds managers, former politicians and their 'City' friends probably like the idea that, one day, they too could make a few millions for themselves if they can design an offshore company and then receive a little help from their friends. This is currently not illegal, but the system is surely morally corrupt. Offshore banking and tax havens form an essential part of the global shadow banking system that played a crucial role in wrecking the global economy and then left normal citizens and tax payers worldwide with a bill of 10 trillion British pounds (and the bill keeps rising).
    You can read more about the foolishness of a financial system which has few laws for the super rich (sooner or later the nations' wealth destroyers) and strict laws for those without expensive lawyers (e.g. average tax payers and the vast majority of voters) on the following web site:

    The New Statesman recently published a series of good articles exposing the foolishness of the current global shadow banking system. In one article the HSBC Chairman Stephen Green ('Seeking Salvation', 2 June 2009, New Statesman) admitted the recklessness of the current financial system and wrote:
    "Third, government oversight, regulation and, at times, intervention are essential. Markets cannot be relied on to be stable and self-regulating. Nor are markets alone sufficient for balanced social development. It is clear that a new global order will need stronger institutions which preserve the dynamism of market forces while taming their excesses."

  • Comment number 27.

    As you say: "feel like crying" - not just because some extremely rich men are going to get even richer (whilst the poor get even poorer) BUT because I've got a small Friends Provident policy which was worth £8,403.42 in February 2007, it is now worth £6,400.37 (i.e.) three quarters of what it WAS worth 2 years ago. I dunno, perhaps these other guys could have done better for me whilst at the same time enriching themselves?

  • Comment number 28.

  • Comment number 29.

    Has the City learnt anything? Yes it has learnt it can steal the peoplesmoney, come back , and steal it again. No General Election but a revoluton is required. Job/Wage sharing, nationalisation of Banks,Railways,Water,Gas and Electricity supplies and a new PM - well call him Clement Atlee.

  • Comment number 30.

    Financial engineering can sometimes be just a way of gaming the system - in this case it may be a way for these fund managers to bid for the upside in Friends' assets while sheltering themselves from the downside.

    Indeed it offers an excellent opportunity for them to arbitrage several different strategies by gaining control of multiple life insurers and picking different market tactics with each. One of them has to work and if they can collect the profits on that one, without bearing the losses on the others, they'll do just fine.

    But the financial sector - and the associated "engineering" - does have a genuine role in the productive economy. At the moment, its primarily role is to aid economic restructuring and reallocate resources from declining to growing sectors. Stephanie Flanders also has something to say about this today:

  • Comment number 31.

    Game keeper turn poacher?

    "Has the City learned anything?"

    Yes. They learned they have got away with it, handsomely. They are now certain they will get away with more in the future. But have they, and we, seen the paradox and the coming BIG catch?

  • Comment number 32.

    Has the City learnt anything? The answer has to be yes.... they have learned that they cannot fail, they take the profits and the taxpayer pays the losses.

  • Comment number 33.

    "Has the City learned anything?"

    Yes. The City has learned that they can come up with schemes to make themselves rich and when it goes wrong they walk away with the cash and leave the tax payer to carry the can. They're not fools. They'll do it for as long as they are allowed to.

  • Comment number 34.

    Has all this government intervention within the markets made us forget that we live in a competitive and capitalist society, isnt this just business.

  • Comment number 35.

    The City is, and has always been, a drain on the Nation.

    They learn nothing because there is nothing for them to learn. They have been sucking the Nation dry for generations. They need curbing through strict regulation - nothing else will do.

    The City knows through it experience that by supporting conservative policies of both Tory and Labour parties they can continue to act leech like on the wealth of the Nation. So why should they bother. They have financed whole schools of wrong economics to justify their appropriation of wealth and these people it has trained tell, us, the people that the City is a valuable national resource. and we, the fools that we are, we believe them!

    The trouble is that the City has so milked the Nation it is now unable to provide any more milk. This will come as a hard lesson for the City but arithmetic will tell!

  • Comment number 36.

    It's hard to see how Resolution's proposal makes sense when its that easy for the new owners to take serious money from business in exchange for not that much. If it were still a mutual the members would have a say. But they took the shiny shilling and they're now at the mercy of the large shareholders who may be under pressure to liquidate some of their assets.

    I'm not sure why some people blame the Government though. Not this government at least. You could blame the Tory Governments of the 80s that pushed through the changes in the law that enabled demutualization. But if I'm remembering correctly 75% of members had to vote in favour for it to happen. I think we all need to take more personal responsibility. Expecting the City to do the right thing is like expecting a fox to choose not to eat your chickens. You can call for more regulation but what? And how?

  • Comment number 37.

    It sickens me to hear that this, basically, corporate vampire John Tiner used to be in charge of the FSA. Mind you, he did seem amongst his kin at his time there!

  • Comment number 38.

    It nice to see another set of asset strippers moving in on the insurence market

    They are only interested In taking money out of the company and not interested in putting any thing back in to the company

    If Friends Provident where to go belly up the government would have to cover some of the cost to policy holders but the government gets nothing in tax from Friends Provident if Resolution Limited gets there hands on it

    Resolution Limited will take 10.5% off the profits of Friends Provident before the policy holders get a penny plus of course Resolution Limited will all so take there share dividend as well

    So this is a win win for Resolution Limited and it's board if it go's forward

  • Comment number 39.

    Dennis the Menace could manage funds better than Friends Provident. I say that as an ex policy holder and current shareholder. Put your money in fog. It has more substance. Glad to see someone has worked out how to generate cash from this company!

  • Comment number 40.

    Hey, wasn't demutualising such a great thing...much better than all those fuddy duddy mutuals. Strange thing is, most of those old fashioned mutuals just seem to slog on. The older I get, the less I believe those high flying super chaps/chapesses who proudly proclaim the latest fashions in theories of the way forward.

    Working on the basis of history repeats itself, first time around what term was coined for insurance funds taken over by the consolidators. Erm....zombies was it - the walking dead....? I wonder if history will repeat itself yet again.

  • Comment number 41.

    Robert, you seem to imply that somehow Resolution will somehow be able to draw off some extra portion of the £51bn, or the profits on the £51bn. That isn't the case at all. The £51bn belongs to the people who have the policies with Friends Provident, and Resolution are buying Friends Provident itself. It should be pointed out that (a) this is a change of control but doesn't mean policy holders will be subject to higher fees and (b) Friends Provident is worth much less than £51bn. It's no different to buying any other business.

    And as I mentioned on an earlier thread and will keep mentioning whenver tax-free offshore companies are mentioned, the 0% tax rate does NOT mean that suddenly Friends Provident will stop paying tax, or Resolution Operations LLP won't pay tax, or UK investors in Resolution Limited won't pay tax. All of them will pay UK tax. The point of the 0% tax offshore company is to prevent amounts being taxed at multiple levels (i.e. paying tax on amounts already taxed). Laws have been put in place specifically to allow it, because otherwise investment would suffer badly.

    Robert, either you're not as clued up as you need to be to write this sort of article, or you're scare-mongering. Either way, it doesn't reflect very well on you as a BBC journalist.

  • Comment number 42.

    Robert, overgeared football clubs and city takeovers within "the rules" is not new news - while the old rules remain the same game continues with typical exploration of the boundaries.

    Can you move on to some bigger issues tomorrow such as why not try to draw together the poor financial position in the UK with what still really appears like there is a holding back by the banks in calling time on some failing businesses? Why is this happening? Is there a false holding back going on as a result of government influence on the banks? Is there a flood gate waiting to burst in the Autumn?

  • Comment number 43.

    By my reckoning 0.5% of 50 billion is 250 million per year. Not bad work for doing absolutely nothing.

    Personally I think all these managed funds and pensions are really just a scam to cream money off the honest hard-working folk of this country. The managers are not creating real wealth, they are just getting rich at others' expense.

    Personally, apart from my company pension which I have no control over, I will not pay anyone else to manage my investments. Better just keep some on deposit, buy a few shares through an online broker, and stash some as gold. I bet on balance you would do better than if you had entrusted the money to some fancy-sounding fund.

    As someone said looking at all the luxury yachts owned by Wall St traders: 'Where are all the customer's yachts?'

  • Comment number 44.

    If we allow these financial 'genius' to continue unabated, a great depression is assured, followed closely by WW3.

  • Comment number 45.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 46.

    demutualising of insurance and building society's as worked to give some people a quick profit at the time but they sold them selves short as insurance and building society's no longer worked for the benefit of there members but for the benefit of shareholders

    We are now reaping the cost of the big sell off's of the 80's changes to the laws on insurance and building society's

  • Comment number 47.

    Following the same line of thought with pensions. What we could do is persuade companies to put their pension funds in the hands of small pension fund management companies who would charge a percentage of contributions for their fees. They in turn could put the portfolios in the hands of slightly larger pension management companies who would also take a proportion of the contributions as fees. They in turn could put the portfolios in the hands of even larger pension management companies who would also cream of a proportion of the contributions as fees. Using this line of practice, lots of pension fund managers can make a mint. The only minor drawback is that the original contributor will have no investment left for their pension on retirement.

    Or has someone thought of this idea already.

  • Comment number 48.

    Didn't somebody once say that to create wealth you either have to dig something out the ground, grow something or transform something to add value. Everything else is just shuffling wealth around. Looks to me like these guys just want to shuffle wealth around - and skim a hefty chunk for themselves for doing, er, what exactly?

    Yes, I agree. The banking and financial services industries still strike me as havens for legalised (?) gangsterism and sharp practice. One only has to sniff Goldman Sachs' results today to smell a rat.

    Meantime, us poor bloody taxpayers, incompetently led by our political elite (ha!), are standing the current and future costs of all this. The guy interviewed by Adam Shaw on the Today Programme this morning (Jim Rogers, I think) had it right: we should have let the banks collapse.

  • Comment number 49.

    Post 2 you aren't a million miles from the truth.

    Clive Cowdery is well known in the life assurance business as a rather smart cookie. He bought up a load of under priced life funds often closed or so called "zombie funds" in that they didn't seek new policyholders but were administering current savings and pensions accounts only.

    After 9/11 a number of composite insurers such as RSA, for example, as well as Swiss Re and Abbey National saw their life businesses as a drag on profits and with the fluctuations in share prices added volatility to their earnings. They wanted out of the business so sold up to a company who would adminster them. This business Cowdery built up as Resolution plc which he sold in July 2007 before the crash.

    The following link is informative as to just who Resolution managed before being sold to Pearl Insurance in 2007

    If anyone is interested it was an agreed merger with Friends Provident in July 2007 that caused a huge bun fight in the life assurance market that led to Resolution plc being sold. It is interesting Cowdery is using the Resolution name, albeit in a different way, again.

    I'm surprised Robert that you don't feel the need to elaborate on Friend's and Resolutions past history.

  • Comment number 50.

    #41 have you thought about applying for Robert's job? You seem to have a better idea of the business of this takeover offer than he does.

    It is very noticeable that the one person to admit to actually being a shareholder in Friends is profoundly critical of their performance.Robert how about analysing how friends have done over say the last 3 years compared to their competitors - if the performance is bad then why not ask the difficult questions such as why was performance worse than competitors and why did the shareholders not kick the management out rather than simply having a go at Resolution

  • Comment number 51.

    There have been no punishments for previous misdoings, so what is the risk. After every major kill the jackels show up. No risks and no liability, and if it doesn't work the taxpayers can bail it out. Sounds like the good old days. Since no one has changed the rules, why wouldn't the game continue as usual?

  • Comment number 52.

    Having worked with/for Mr Cowdery, I doubt whether what I think about him will get past the moderators, so I won't even try.

    Move one chumk of money from A to B, taking a nice little cut for yourself. Add no value to policyholders whatsoever. That seems to be the rule of thumb - and all perfectly acceptable apparently.

    Fair play to the FSA (never thought I'd write those words) they have issued a pretty stiff guidance note to Financial Advisers regarding their responsibilities for their clients who might have funds with Friends Provident, to ensure that they are getting suitable pensions advice. This, at least, might mean a lot of money transferring out of Friends Prov if any when Mr Cowdery and his parasitical friends get their hands on the funds.

  • Comment number 53.

    I think the point you are making is that the current owners of Friends Provident, mainly banks and insurance companies, have the choice of selling to external managers a company that they themselves have allowed to be mismanaged to the extent that they no longer think it is generating adequate returns for their collective investment. Rather than sort out that problem they prefer a 'quick fix'. This will include some handsome bonuses no doubt after the deal goes through.

  • Comment number 54.

  • Comment number 55.

    Buying a company with its own money (which is what this deal is about) used to be illegal.

  • Comment number 56.

    #44. JavaMan1984 wrote:

    "If we allow these financial 'genius' to continue unabated, a great depression is assured, followed closely by WW3."

    Depression? WW3? Bad, bad idea for most of us but unavoidable because great wealth can be made from all sides - losers loses many times, winners lose too. Just look at the Iraq invasion - both UK and US are in record public deficit and public debt.

  • Comment number 57.

    The creation of money should be nationalised, not the banks themselves. Government should create new debt free money in a controlled manner, not the banks by issuing more debt money. Banks can still lend, but only up to the overall value of deposits held within the banking system. Each unit of money held within the banking system could be electronically registered to facilitate this process, and new government money would also be registered in the same way. Suddenly much less debt, less interest to pay, less tax, less inflation and more to spend on public services. Unfortunately the politicians will serve the bankers' interests before those of the public so we will probably persist with the present flawed system.

  • Comment number 58.

    @ #27 tedtheblog
    three quarters of what it WAS worth 2 years ago. I dunno, perhaps these other guys could have done better for me whilst at the same time enriching themselves?

    Ted these guys dont make profits for you, their asset stripping will make you even poorer and them richer!

  • Comment number 59.

    Rent out the Film 'Wall Street'.

    Gordon Gecko would be proud !

    Will the American Bankers repay their Taxpayers BEFORE taking any bonuses ?

  • Comment number 60.

    # 52 MarkofSoSH

    Kind of nicely makes my point at # 48.

  • Comment number 61.

    44: The next twenty years may well be known as the great Stagnation.

    The Children are still running the sweet shops !

    Lots of sticky fingers all round............

    Best advice, don't have a Pension with the aforementioned individuals.
    You'll retire to an empty chocolate box.....

  • Comment number 62.

    No one arrived with handcuffs, no effective laws have been created. Naturally, they've learned they can call the tune, whatever tune they like, in just about any country they like.

  • Comment number 63.

    under this government the lesson has failed to hit the mark and sadly it is bound to happen again.
    any government foolish enough to sell off businesses to overseas (european)conglomerates deserve to be hauled out of office and placed in stocks ( the only sort of stocks they should be allowed to touch).
    never has so much of what was british been handed to non british organizations crippling this countries chances of ever being independent again, from now on we are a second class citizen within europe.
    thanks alot neu-labour call a general election and begone please.

  • Comment number 64.


    The resolution name went with Clive Cowdery under the terms of the sale to Pearl. Since then the Resolution brand has been reborn, under a rights issue last year.

  • Comment number 65.

    I have very modest shares in Friends by default of having had a 10 year endowment and insurance plan in place. (Thankfully not as part of any mortgage - although this was recommended at the time). Combined, both presently are performing (or not) at break even. As the monthly sum paid in is 'once a month pub crawl man's drink budget' I'm letting it run its course for the final 8 months. Whilst this keeps me off the fire water and contributes to my physical health is this a good idea for my financial well being? Your views are really welcome.

  • Comment number 66.

    The City is incapable of learning as learning requires sanity and intelligence. I use to work for one of the Icelandic banks and the traders and senior executives there had the sort of towering self esteem and unshakable confidence that you find only in the stupid or the psychotic.

  • Comment number 67.

    Good to see that awareness is being raised on this before it is a fait accompli and it is right to pick on the "professional" shareholders and ask why they can not put management in place that can generate good returns without bringing the sharks in, to steal the shirts off shareholders' and savers' collective backs.

    I do not see that there is a conflict of interest between shareholders and savers, unless the former only have an eye to the immediate future (and of course, many will be both shareholders and savers). Steady may well be better than going for the great returns offered by the sharks who are prepared to gamble to maximise their returns, but who risk nothing in the process......oh dear when did we last have a lesson on that?

    The savers do have a say in their own right if they are unhappy with the gambling or asset stripping takeover; move your pot. Government should legislate to give savers more choice and control and of course this is going to be the single biggest issue in the near future, with an ageing population. They need to assist ordinary people to help themselves, rather than assisting the sharks to help themseves at the expense of the ordinary people.

    I am not sure that the 0% tax rate is totally relevant as the pension element of funds already have a tax favourable regime.

  • Comment number 68.

    The types who do this have learned all they need to know, and most of us can't a) stand them and b) can't do anything about their incorrigible behaviour. They spin very good tales, are glib, charismatic, bright, and often very sexy to boot. It's why things got so ugly in the USSR and PRC, and why we are constantly at war with so called 'evil-dooers' who would treat such people very harshly if they had their way.

    It's all very depressing, as others have rightly said.

  • Comment number 69.


    It's not venal, it's all quite legal. I'll never forget that nice Mr Stelzer explaining that on Newsnight. It's all about language and its abuse. These days, one can render what used to be crimes against people quite acceptable, if not 'good for the economy', by passing the appropriate legislation, and the magic/chutzpah of it is, most people simply won't notice.

  • Comment number 70.

    29 HonestGradGrind said it all for me - and many others. The City can learn, but will our politicians learn? Will the citizenry learn?
    Can't we get it in our thick heads that the show is being run for a few very rich people and centres of interest, and that 98% of the world are simply serving the interests of this minority of 2%?

  • Comment number 71.

    Well the worlds taxmen are going to after play follow the money as business move to country's who's banking system do's not allow information to be passed to other governments

  • Comment number 72.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 73.

    Here's a money saving idea. Trident will need to be mothballed, but in the interest of saving additional de-commissioning costs, we could see if it actually works, by doing some target practice on these tax havens, preferably when these City chaps are resident.

    10% cut, and a minimum of £10m and one of the parties is ex FSA! There's commission on the policy, there is insurance on the policy and there is an annual fee.

    My pension contributions, my endownment policies - what an absolute mug I am! My neighbour who I increasingly admire for her genius has a council house, and has access to holiday accommodation in Kent also state owned. She must think I am idiot, I surely am.

  • Comment number 74.

    #20,#27,#49,#50 all making sense where smoke and mirrors are profligate.
    Personal experience of "With Profits" endowments at FP is that adding up the returns it wasn't worth keeping them going so I baled out, (surrendered) and reduced overhead by buying cheap life insurance.To pay for the funeral.
    That's all these "products" are, expensive life assurance.
    Miss selling, poor performance, even when "anyone" could appear to make money with 5%+ inflation, all add up to the inheritance from deregulation and the Thatcherite Friedman rubbish about markets.
    If it looks like it's too good to be true, it generally is.
    Asset strippers like this crowd are the uncontrolled social psychopaths who used to deal nylons, chocolate and food coupons in the war years, and who would have been jailed if caught and convicted.
    There is no appetite to change anything, except as previously stated many times, the colour of the smoke and the angle of the mirrors.
    Sell all your financial "products" and see how your life goes without them.
    We don't need them or their "products" and they sure as hell won't last long if they can't make what they deem a return (£10m + 0.5%, Fat chance with Zombie funds, so £10m it will be, for what? Changing the position of the ice bucket on the Titanic)
    Insurance it isn't.
    Endowments they aren't.
    Wealth doesn't do it either.
    #73 you aren't a "mug", you are a victim, but there aren't any "police" to report the "crime" to.
    Sadly the mugs working in the "admin" bits of FP in Salisbury will be the ones to lose their jobs.

  • Comment number 75.

    Will the government never learn? By borrowing billions of £ to give to other countries. The message for the British public is borrow today & get into so much dept someone else will bail you out. I was brought up to save for what I wanted & do without till I had enough money to buy. The government will give £2000 to anyone with a 10year old car to scrap. These owners then have to borrow £5000 to pay for a new car. Just encouraging more borrowing. Lets all be sensible & live within our means.


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