Blame and Circumstance

Jean Paul Getty once said, “If you owe the bank one hundred dollars that’s your problem, if you owe them a hundred million dollars then that is their problem” and while a global economic recession gives rise to worldwide fretting over trillions, democracy remains the process by which the "powers that be" choose to allocate the blame.

For  Antonio Horta Osario, chief executive officer of  41% tax payer owned banking giant Lloyds, it is over enthusiastic claims management companies swamping his administrators for PPI compensation who are getting his goat. Lloyds are expected to pay out an estimated five hundred million pounds to clients to whom they have miss-sold PPI. Mr Horta Osario says one in four claims submitted by these companies are for individuals who are not eligible for compensation nor have they been customers of the bank and says this blanket approach to the claims process is not only slowing it down but costing Lloyds money. His has publically stated “ it is fraud and it must stop”. However he has not felt the need to make such strong statements about Lloyds Banking Group’s own HBOS executives, despite the knowledge several are now facing criminal charges for alleged financial crimes which have cost the indivual and the economy billions.

Defence secretary, Philip Hammond, has also chosen to point his accusing finger this week declaring he is of the opinion it is the individual who “over borrowed in the economic boom who must now admit to their part in the financial crisis”. He says the banks had to lend to someone and these people should “accept responsibility for the consequences of their own choices” rather than conveniently cast the blame on the banks.  However, when speaking of the period in which he helped formulate David Cameron’s economic strategy in opposition he says, “We started living a lifestyle both in private consumption and in public consumption which could we not afford [and it] ran away with us” so unsurprisingly it appears the governments take on the financial is what is sauce for the goose is not necessarily sauce for the gander.

In contrast, Mervyn King, Governor of the Bank of England, previously reluctant to lay the blame at anyone’s door, now tells us it is “the failure of a system” that is at fault and not the individual. Speaking of “a slow and steady recovery coming during the course of 2012” he admits the Bank of England must take a “share of the responsibility” for the financial crisis and “with benefit of hind sight should have shouted from the rooftops that a financial system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called “ light-touch regulation hadn’t prevented any of this”.

It also seems HBOS auditors KPMG may well be shouldering some blame this week following reports an official investigation by the Financial Reporting Committee to investigate their conduct following HBOS whistle blower Paul Moore’s letter to the Treasury Select Committee sighting an inaccuracy in their forensic audit regarding his dismissal as global head of regulatory risk in 2005. Mr Moore was “let go” because he disagreed with the board’s attitude to risk and warned that HBOS’s lending strategy had become dangerously over heated. He believes KPMG’s decision to record this event as “a clash of personalities” was wholly misleading to the Lloyds takeover of 2008 and eventually cost the tax payer a further millions in government bailout support . Mr Moore blames the fact that, “money seems to be more important to KMPG’s strategy than integrity and professionalism”.

And

Stephen Hester, chief executive officer of 84% taxpayer own Royal Bank of Scotland is also casting the blame this week and its not, as one might expect on his predecessor Fred Goodwin who has already been stripped of his knighthood, is facing criminal charges for fraud and may well have past bonuses recalled to help fund PPI compensation. Instead Mr Hester’s eight gardeners on his 7 million pound, 350 acre Oxfordshire estate tell us rain has blighted attendance of the annual charitable opening of his twenty five acre gardens. It may not have crossed Mr Hester’s mind his infamous fight to keep his £963,000 bonus earlier this year despite a dip of 36% on its share price, a first quarter loss of 1.4 billion and further RBS job losses ,bringing the total to almost 50% of its pre- crisis work force, might well have had something to do with the public's disinterest in his garden.

Founder of the Firestone Tyre and Rubber Company, Harvey S Firestone once said, “A man with a surplus can control circumstance, but a man without a surplus is controlled by circumstance and often has no opportunity to exercise judgement”. However if this week is anything to go by, this rule seems seldom to apply and it is for this reason I live in hope that, despite a life now lived without surplus, I will have the opportunity to exercise my own judgement in my ongoing personal battle with HBOS and will, one day, enjoy a result as a consequence of public opinion insisting the banks ultimately accept the blame.

The Good, the Bad and the Ugly

Eighteenth century Irish statesman, author orator and political theorist Edmund Burke once said, "Bad things happen when good men do nothing" and I cannot help but wonder if over the last seventeen years of marriage my “doing nothing” was pivotal to our subsequent financial demise.  

When I retired from the financial services industry on grounds of ill health in 1998 I handed the bread-winning reins over to my husband, confident my financial reputation was safe in his hands.  At the time, I was half way through my pregnancy with our second child and suffering from exhaustion and chronic migraine brought on by over work, along with hypothyroidism and something which was later diagnosed as Chronic Fatigue Syndrome.

At the age of forty and on the recommendation of my very supportive GP, I moved from a business life in the fast lane to one with my family and home at its center.  For the first two years we were supported by my accruals from the insurance industry and an income protection policy which paid out in the event of my ill health.  My husband was confident he could use the time provided by this short-term financial safety net to build a business using the capital we already had and in so doing take over the responsibility of providing for our family.  He showed me his figures for a ten year plan which involved selling our seven bedroom house together with my former matrimonial home to fund a “buy to let” portfolio which was to replace my income.  The balance from the sale was to provide seed money for a property development business he planned to run alongside the lettings business.  His research was extensive and his figures were both realistic and plausible. This supporting evidence, together with his track record for the successful refurbishment of two previous properties led me to believe I could relax into my role of housewife and mother for the first time in my adult life.  
  
Ten years on I was still basking in the knowledge my husband’s carefully constructed business plan had proved to be a successful one.  I was further encouraged to buy into the illusion of affluence when it was suggested we pay school fees well in advance so as to enjoy a discount. We enjoyed regular visits to our beautifully appointed apartment on the Costa Del Sol and commissioned a high quality finish for our sixteenth century grade two listed barn conversion which was to become our home. The sad and untimely demise my mother-in-law from Motor Neurone disease left my husband with additional capital of £200,000 in the summer of 2007 providing me with no reason to think we had any financial problems.

Within a year I discovered my husband was contemplating taking his own life with his shotgun and we were one million pounds in the red with not a single asset to our name.

When I exchanged my status as a business woman of integrity for the role of house wife and mother I had no reason to believe that, along with my financial integrity, I was giving up my right to make informed decisions about borrowings in my name.  Now, nearly three years on from the “Grand Opening,” I realize my husband made a permanently life changing decision when he risked my much valued reputation along without our home, our livelihood and our financial future and chose to withhold information from me about our joint borrowings. It is my belief he was suffering from mental health issues resulting from his unresolved grief following the long period of illness and the loss of two of his closest family members. Circumstances of which our lender and mortgage broker were both fully aware of at the time.

However, the Bank of Scotland had no such  excuse and they chose to remove my right to the information which could have saved my home and my financial reputation because I was married to the co- borrower. Instead, through unadulterated negligence, they joined forces with my unstable, grief stricken husband and set in motion a course of events which  I continue to pay the consequences of today.

Having made this enormous contribution to our financial demise the Bank of Scotland  now tell me it is I should who pick up the cost of their mistake. Before this act of gross negligence, I had a good reputation which was threatened by my husband’s bad judgement.  However, the ugly business practices of the Bank of Scotland have not only turned my family’s difficult circumstances into impossible ones, they have also relieved me of my financial reputation along with home and financial future and while it may well be true  bad things happen when good men do nothing, I have learned many things since finding myself in such unfortunate circumstances.  One of them is I am not, and never have been, comfortable with doing nothing.

These days I now find myself wondering what the going rate is for a reputation. To me it was priceless but it is almost certainly worth a lot more than a £217,000 shortfall.