-David Kuo is director at the financial website The Motley Fool. The opinions expressed are his own.-
You could not make this up if you tried.
Britain gets its knickers in a twist over a hung parliament, Europe has been unceremoniously skewered by a Greek debt crisis, and if that wasn’t bad enough, the Bank of England’s Monetary Policy Committee sits idly by as the rate of inflation climbs.
-David Kuo is director at The Motley Fool. The opinions expressed are his own -
There is a well-trodden saying that markets hate uncertainty. Elections are inevitably uncertain, so until the votes in the next election are counted we cannot be certain which party will govern the UK.
Currently, there are suggestions that no single party may get sufficient votes to form the next government outright. It is true that the Conservatives have a strong lead over its rivals. However, with a first-past-the post voting system, it only takes a small swing away from the Conservatives to change the complexion of the next parliament.
-David Kuo is director at the Motley Fool. The opinions expressed are his own.-
If you thought 2009 was as bad as things will get, then think again: 2010 could be worse. It is likely to be a year of enforced austerity with both the government and households making obligatory cuts to their budgets.
High on the government’s agenda will be reducing the Budget deficit, if the UK is to avoid the embarrassment of having its sovereign debt rating cut by rating agencies. This will have a knock-on effect on households, which could see their disposable incomes slashed by hikes in both direct and indirect taxes.
-David Kuo is director at the Motley Fool. The opinions expressed are his own.-Banks insist on the right to charge customers who go overdrawn on their current accounts. They also say they have a right to set the amount charged.The Office of Fair Trading (OFT), on the other hand, claims that the fees banks levy on customers who exceed agreed overdraft limits are unfair. This is according to their interpretation of the Unfair Terms in Consumer Contract Regulations.The ding-dong battle has been going on for years. Round One, which was heard in the High Court, went to the OFT. Round Two in the Appeal Court went to the OFT too. Round Three is being heard in the House of Lords.The stakes are high. Collectively, banks that include Lloyds Banking Group and Royal Bank of Scotland stand to lose almost 2.5 billion pounds in revenues every year if they aren‚t allowed to charge customers up to 40 pounds a time for going overdrawn without permission. Additionally, banks will have to refund customers who have been wrongly charged in the past if they lose.Banks probably have a good inkling they are on shaky legal ground. Consequently, they have been refunding charges, and often in full, when confronted by disgruntled customers. But from a moral standpoint, shouldn‚t banks be allowed to charge customers who abuse overdraft facilities.And therein lies the problem. Should customers who neglect to take care of their finances be continually subsidised by those who ensure that they maintain a healthy cash balance at all times? On the other hand, should financially disadvantaged customers be further penalised to allow others enjoy free banking?Neither is correct if we accept that overdrafts are a privilege rather than a right. And with today‚s sophisticated information technology, there is no earthly reason why banks cannot properly control the outflow of money from customers‚ accounts that would stop them from ever going beyond their agreed overdraft.But then again, why should they? Don‚t bank customers have some responsibility to regularly check and ensure that their accounts stay out of the red?Clearly mistakes have been made and correcting the mistakes will be costly. Banks will insist it current accounts are essentially loss-making and costs money to provide. But how much of that is the fault of antiquated banking practices that breed complacency and inefficiency.The eventual outcome of the “unfair bank charges” case is a foregone conclusion. And a major shake-up of the outdated British banking system will happen as a result. Inefficient banks will attempt to mask their incompetence with a clumsy introduction of fees and charges. Efficient banks will cross sell and gain market share.But banking as we know it will change.
- David Kuo is director of financial website The Motley Fool. The opinions expressed are his own.-
The housing market is probably one of the most keenly followed markets in Britain. Every month we are hit between the eyes with no fewer than eight separate indices that provide pointers to the state of play in the property market. These include supply side figures from Rightmove, demand side numbers from Nationwide and mixed-adjusted indices from the Department of Communities and Local Government.
The plethora of indices is enough to make anyone draw the curtains and lie down in a darkened room. But it is important to appreciate that each set of data will be different because they are drawn from very different data pools. For instance Rightmove’s index is based on sellers’ asking prices, which tend to be more optimistic than say, Nationwide’s index which is based on agreed sale prices. Additionally, Nationwide’s index is derived from mortgage approvals, and not everyone may need to apply for a mortgage.
- David Kuo is director at The Motley Fool. The opinions expressed are his own. -
The Bank of England Monetary Policy Committee decided to leave interest rates unchanged at 0.5 percent in May. This came as no great surprise given that the Central Bank has already slashed interest rates to a level where further cuts would have made no discernible difference to the cost of money.