BANKS NOW RUNNING DUMMY LEGAL FIRMS . . .

Media stories in the last two weeks will have come as a shock to many people. First there was the story of an estimated £1 billion underpayment in compensation accordingly due to borrowers further to the self bank admission of mis-selling Interest Rate Hedging Products.
Last week it was revealed that the Banks using threatening letters from 'pseudo' solicitor firms to make debtors pay up. Basically this is the process of issuing threatening legal letters from what appear to be solicitor firms are actually coming from a department of the Bank.

These stories, added to a recent admission by a main NI Bank to hiring Private Investigators, highlights the stress being caused to already anxious and distressed borrowers. Despite the extreme measures of the tactics being employed by the Banks, both the use of Private Investigators or letters signed by solicitors working within the Bank is legal.

at one of Irelands largest banks would hire Private Investigators to spy on distressed borrowers?What it does serve to highlight is that there has been a total breakdown in trust between the bank and the borrower, and where there is no trust there can be no solution obtained to their shared problems.Well it is absolutely true. The Bank solicitors do not deny the banks actions but defend them as being legal. Read more at the link.

Banks have had a lot of bad press in the last 6 years, some of which self inflicted and some of which is not. It is natural for people to look for someone to blame but the fact remains the Banks have been overwhelmed by the levels of debt in society and at the end of the day the banks are required for economic stability, economic growth and access to finance.

In the good times relationship between the banks and the borrowers were good and nobody had any reason to be paranoid of another. Since the economic recession and the property crash there has been a real lack of trust between borrowers and banks.

Our own view is that its companies like ourselves who bridge the gap between banks and borrowers, in particular were there has been a breakdown in communication and a loss of trust that was once shared. When feeling the pressure from the bank, you should have a team of professionals on your side to help you.

It has turned out a murky old world this bank and debt crisis and it has ruined many families and SME’s in the last few years.  Companies and traditions that have been built up over generations, wiped out in a flash.  Education though is still key to solving many of the world’s problems, and working out solutions with your bank, is no different. Informed decisions are the only way to progress.

Darwin Allen AABRP

Senior Relationship Manager

VULTURE FUNDS STARTING TO MAKE THEIR MARK IN IRELAND

In yesterdays Sunday business post, I read one of the headlines with interest; "Vultures Squeeze Irish Borrowers".  The story was around the fact that private equity giant CarVals, and financial heavyweights Goldman Sachs have acquired a portfolio of loans from IBRC and now appear to be taking a very firm line with borrowers.  Pepper, the Australian loan servicing company is also involved and their role is to manage the loan portfolio.  In laymans terms, what this simply means is that if your loan happens to be sold to one of these firms, you now owe them the money as opposed to IBRC.  Pepper will be in touch with you shortly and invite you in to make proposals to them on how you are going to pay 100% of the money back.  This is where the opportunity sits with borrowers.

We all know that funds are buying these loans at significant discount and the whole exercise is devised around them making a profit.  Depending on how aggressive Pepper are to the servicing of the facilities and also more importantly their instructions are from their clients, will determine the outcome for the borrower.  According to the article in the Business Post yesterday, 25 of these loans have been taken over by receivers already on the instructions of the new loan owners and its thought that many more receiver appointments are being prepared. 

There is a school of thought going round currently that many of these funds will enforce on the loans fairly quickly, appoint receivers, try and sell the assets, and get their money and run from this lovely Island.  A sobering enough thought if you happen to owe any of them any money.

Lets see how this one develops. . . .

Conor Devine MRICS   

*** PRESS RELEASE *** TASK FORCE REPORT INTO NI NEGATIVE EQUITY PROBLEM

GDP Partnership welcomes the recent publication of the Initial Research Report by the Repossession Taskforce. Since 2011 Our company has been obtaining sustainable solutions for distressed borrowers facing repossession proceedings and the impact of Negative Equity on their home and their lives.

There are a number of key points made in the report by the Repossessions Taskforce:

• The Borrower profile in an NI context;
• Negative Equity;
• Ability to pay / Arrears;
• Forbearance; and
• Possessions.

The NI Government has recognised they need to help create the right conditions for a stable and sustainable housing market. The starting point is support for those currently experiencing difficulties with their debts and sustaining home ownership. Nelson McCausland, the Minister for Social Development who instructed the Taskforce concluded: “The earlier borrowers receive advice and engage with their lender, the more likely they are to arrive at an affordable and sustainable solution.”

Although we always welcome a proactive approach to problems, our overwhelming view for the most part would be that there is no new information in this report , which is somewhat disappointing.  We certainly welcome the interest now being shown by the Government into this serious “bread and butter” matter for the general electorate. We encourage this activity but at the same token fail to understand why the Taskforce was unable to obtain a full understanding of the NI debt problem.

In order to do so, our view would be that the Taskforce needed to engage with all of the stakeholders involved. The key stakeholders are the banks, the judiciary, the professional debt advisors and most importantly the distressed borrowers. Since 2011 GDP Partnership has been Irelands leading team of debt mediation professionals having engaged with banks on behalf of 100’s of borrowers and SME’s facing repossession and negative equity challenges.

This report has been eagerly awaited since its inception and unfortunately no new solutions have been offered by the report.  I would suggest it has been a useful fact find for Government, however we find ourselves asking the question, What happens now?

For example, In the Republic of Ireland over the past 18 months there are a number of solutions being made available to distressed borrowers, which has helped many people move forward.  AIB offer a number of options such as “debt for equity” and “split mortgages” which goes some way to solving some of the issues.  It’s very disappointing then that First Trust Bank in Northern Ireland for example, owned by AIB, do not offer similar solutions to their NI customers.  Why would this be so?

The fact remains post the report that the position of many borrowers, households and communities continues to be blighted by negative equity, repayment arrears and the risk of repossession. Unfortunately with our Finance Minister Simon Hamilton confirming of late that the austerity program will continue through to 2020 along with the rise in interest rates – this problem is about to exacerbate. 

 

Education around any issue is key to finding a solution.  We would echo Minister Mc Causland’s view, that borrowers need to engage with their lenders.  However to qualify this, in order to do so they need to come from an informed position, and have a full understanding of the process.

 

Darwin Allen AABRP

Senior Relationship Manager

HAVE YOU BEEN SOLD A FIXED RATE BUSINESS LOAN?

A new bank mis-selling scandal is sweeping the Nation that has led to small businesses going bust. If you were sold a fixed-rate business loan in 2007 with the promise that it will protect you against interest rate changes you may be affected.

Most small businesses were told by the Banks at this time that these fixed-rate loans were there to protect them in case of rate rises, many being told it was effectively a "free cap".

The fact is, the Banks secretly added a swap which had the reverse effect. Unlike standalone interest rate hedging products (IRHPs), widely referred to as “SWAPS”, the Financial Conduct Authority (FCA) classes these “Embedded SWAPS” as unregulated.

The mis-selling scandal is basically as follows:

-          Banks had access to market data that the customer did not;

-          From 2007 market data forecast a big fall in long-term interest rates (they went to 0.5%);

-          Despite this, the Banks continued to sell fixed-rate loans priced at around 6%;

-          The derivative traders would receive the fixed rate of around 6% from the customer;

-          They have only been paying out at the true market rate of only 0.5% for the last five years;

-          The Banks have been pocketing the difference; and

-          In addition to that, the Banks received large commissions for introducing the deals.

The Treasury Select Committee is scrutinising the regulatory process of embedded swaps. Committee MP John Thurso said: "There is nothing wrong with selling a business a fixed-rate loan, however where the bank adds a hedge and fails to tell the customer I regard that, at best as mis-selling and at worst, immoral."

If you have taken out a fixed-rate loan by your bank in and around 2007, you should get in touch with us at GDP Partnership.

Darwin Allen AABRP

Senior Relationship Manager

BREAKING NEWS FOR MORTGAGE HOLDERS

Attention!!!! Mortgage holders with the Lloyds group -  including Bank of Scotland, Birmingham Midshires, TMB, Halifax and GE Money.

 

Breaking News! Breaking News! Breaking News! We have been advised that there is an issue with Mortgages in arrears with the above mentioned companies.

We understand from our legal sources in the High Court of Justice in Belfast that a number of cases are currently under review by the High Court as to a degree of overcharging and/or Malpractice pertaining to the above mentioned companies. This has prevented the companies from enforcement action against borrowers in default and you should contact GDP immediately if you have or are in difficulty with any of the above lenders.

There may be a solution to resolve of your issue with these lenders so please contact us as soon as to determine if our TEAM AT GDP EQUITY EXPERTS can help in the resolution of your problem.

 

EQUITY EXPERTS

IS HISTORY REPEATING ITSELF WITH DEBT. . .?

There has been a lot of discussion about a recovery of late and some economic indicators would suggest this is the case, such as an increase in employment and forecasts from the IMF which predict the highest growth amongst the big G7 economies. However, a closer look at the fundamentals of this recovery causes concern.

 

In 2013 the UK economy grew by 1.7%. When broken down by expenditure household expenditure accounted for 1.5% of this growth. This means that people are spending more to get the economy going again. Some but not all of this expenditure can be accounted for by the PPI claims paid out by the Banks. However a worrying sign is that people are spending more but wages have not increased and have actually fallen by 0.5% when adjusted for inflation. People are therefore spending money they do not have which means that debt is financing the recovery. Debt in moderation is good; however the debt to household income in the UK is currently 140% and rising. In 2008 this figure was 170%, which suggests that history could repeat it’s self. This debt is mainly driven by increases in house prices in London and Dublin. Increases in house prices only make people feel richer and encourage consumer confidence without actually increasing their spending power.

 

All is not well with SME’s in the UK and Ireland, the IMF recently released data showing that the number of non performing loans in small companies has been rising since 2009 and now stands at £800 billion across Europe. Ireland is one of the main culprits of this debt. The Central Bank of Ireland announced a total of 41% of loans to SME’s are in arrears. While these firms continue to struggle to pay down their debts they will not invest in their businesses and employ more personnel and growth, they will more than likely stagnate and eventually run out of steam. This is evidenced by the statistics which show that manufacturing actually had a negative impact of -6% on the UK economy. In a true recovery this would be more like +6%.

 

With the impending increase interest rates, this may rise to 5% within the next decade, making debt more expensive to service. What is the solution to this debt crisis? The central Bank of Ireland and England will not introduce radical measures such as those in Iceland where the government implemented a policy of debt write offs. Therefore it is up to both the SME and individual to tackle their debt problem now before they run out of steam. Debt can be restructured by the Banks on a case by case basis but it is up to the borrower to instigate these negotiations and be pro active. Specialised help is available to assist in negotiations however the first step is to take ownership of the problem and not to simply hope it will sort itself out. Once the debt is restructured growth will follow as you will focus on the future and not on paying down historical debt.

 

LOUIS WATTERS ACA
SENIOR RELATIONSHIP MANAGER

 

*** PRESS RELEASE ***

 GDP Partnership Sponsors Fermanagh Business Awards…Innovate or Evaporate

Last Friday the 2014 Fermanagh Herald Business Awards were launched with leading members of the business community present. Amongst them was our very own Fermanagh man and Senior Relationship Manager, Darwin Allen.

GDP Partnership will be sponsoring this year’s Young Entrepreneur of the Year Award, an award which will go to one of the most entrepreneurial minds in the area, and be in recognition of the progress the winner has achieved in their young career to date. 

The practice has built a reputation in the last few years, for providing innovative solutions for clients through our areas of expertise such as bank mediation, restructuring, asset management, corporate finance and real estate advice.

Conor Devine of GDP Partnership confirmed, “GDP are always looking to the future and trying to spot future trends and problems.  We tend to look at things slightly differently to our peers and the approach to date appears to be very successful with our client base.  We are a young innovative team of professionals and we are delighted to be sponsoring this year’s Young Entrepreneur of the year award at this ceremony.”

Darwin added “this is a great opportunity to recognise the young talent of the Fermanagh area. Many of the country’s most creative entrepreneurs and industries come from the district so it’s especially pleasing to get the opportunity to recognise some our young talented entrepreneurs.  At GDP we encourage all of our staff to be creative, innovative and inquisitive and that’s exactly the type of skills and characteristics we will be looking for in this year’s short list of applicants.”

The Award is for businessmen or women in the Fermanagh area who have demonstrated a visionary business leadership role. Applicants will be assessed on their business background, success and vision. 

Pictured at the launch of the 2014 Fermanagh Herald Business Awards are (back row L-R): Tom McBride, South West College, Sean Darcy, First Trust Bank, Lauri McCusker, Fermanagh Trust, Gerard Gildernew, Cavanagh Kelly Chartered Accountants, Redmond McFadden, Danske Bank, Darwin Allen, GDP Partnership.

(Front row L-R): Agnieszka Szczepanek, 02 Enniskillen, Declan Devlin, 02 Enniskillen, Maurice Kennedy, Fermanagh Herald editor, Cllr Bert Johnson, Chair of Fermanagh District Council, Mary Gormley, Invest Northern Ireland and Cllr Rosemary Barton, Vice Chair of Fermanagh Lakeland Tourism.

Also in attendance (not pictured) Arlene Foster, MLA & Minister of Enterprise, Trade and Investment, Michelle Gildernew MP.