Merryn Somerset-Webb

Mostly I wouldn’t suggest that too many of us pay any attention at all to letters noting minor looking changes to the terms of conditions of corporate deposit accounts at Natwest and RBS (which owns Natwest). Not so this week. This week we all need to pay a lot of attention. The letter in question notes that 'global interest rates remain at very low levels' – something I think we all know. But goes on to say that 'this could result in us charging interest on credit balances' in the event that the UK base rate falls below zero. Yes, instead of paying its business customers interest on their money, the bank is warning them that it may soon be charging them interest on their money. This wouldn’t be a global first of course: the ECB has a negative interest rate of 0.

Take a quick look at the UK buy-to-let market and you might find it tough to understand exactly what it is that makes it so very popular. Dealing with tenants is difficult and boring. House prices have a horrible tendency to go down as well as up (Londoners — ask anyone living in the north of England about this). And rents have long been so low relative to prices that getting a worthwhile net yield is all but impossible after costs. Given this, you might wonder, why on earth would 14.5 per cent of all mortgage lending in the UK in the third quarter of last year have been to buy-to-let investors? Good question. The answer (as is the case with everything to do with modern money) is that it is all about leverage.

There was a time, not that long ago, when financial advisers as we know them today didn’t really exist. Pension and tax advice came from accountants. If you bought shares you bought them via a stockbroker (who gave you advice along the way). Unit trusts came directly — you responded to advertisements or perhaps got your accountant to do it for you. Occasionally you used an insurance broker. And that was that. It wasn’t particularly complicated and as a result no one (your accountant aside) was officially qualified to do anything. Brokers and dealers didn’t take exams to prove their proficiency and no one really thought they should. In the June 1963 edition of the Stock Exchange Journal, a Mr H.H.

The best time to buy an asset is when no one else can stomach it. Great fortunes are made in uncertainty. The self-made rich aren’t the ones who hung around on the edge of an iffy situation thinking about the possible disasters. They’re the ones who calculated the odds and bought before anyone else was sure of the answers. So where is there uncertainty in the UK today? Most English people are utterly uninterested in the prospect of Scottish independence — or in Scotland generally. But if they were actually to look up north they’d see pretty serious turmoil. It is less than a year until every resident of Scotland gets to vote on whether they want to live with the devil they know or the devil they don’t.

I know a lot of people who work in the financial industry. One on one, they are decent and kind. I’d trust them to look after my handbag in the pub while I went to the Ladies. But you know what? I wouldn’t trust many of them to look after my pension or my ISA. In fact I’m pretty damned sure that if I bought a financial product from them, they would devote themselves to slowly stealing my savings. I’m not alone in feeling like this. PressChoice does an annual survey asking journalists how much they agree or disagree with the statement ‘the financial services industry conducts itself in an open and honest way’. In 2008 the majority agreed.

Thank goodness for Shinzo Abe. Back in 2007, I wrote here that ‘over the next two to five years Japan will turn out to be one of the best investments UK-based investors can make’. By the middle of 2012, nearly five years on, that wasn’t looking like much of a prediction. Then prime minister Abe appeared on the scene. Since his election in November the yen has fallen 20 per cent against the dollar and the Japanese stock market has risen not far off 50 per cent. Phew. So what’s so great about Mr Abe? The short answer is that he has promised to do something about the Japanese economy after two decades of slow growth and semi-deflation, and — crucially — everyone believes him. He has what he calls a ‘three arrow’ strategy for change.

A decade ago I wrote here about the way financial advisers are paid. I told you how, instead of giving you a bill, your adviser is allowed to sell you investment products in exchange for a commission from the product provider plus a cut of your assets every year for as long as you continue to hold those products. So if you buy an investment fund from an independent financial adviser (IFA), he will receive a payment up front and then another payment every year,  whether you ever have the good fortune to come across him again or not. All these payments will come out of your money — you just won’t know much about it.

The government wants you to save more. You might think that odd for two reasons. First, because if you are an average person you’re unlikely to have much extra to save; your mortgage payments may be lower than they were, but what the financial crisis has given you with one hand it is ripping away with the other. High inflation is destroying the purchasing power of your net income. Secondly, if you watch the news at all you will know about the paradox of thrift. If we all start saving at once our horribly ill-balanced, consumption-based economy won’t be able to cope: economic growth will continue to collapse and we will all end up worse off.

The shocks won’t end with the summer The world’s stock markets have had a ­pretty gruesome August. Listen to most of the financial press and you might think the reasons for this are ­hideously complicated. Not so. It boils down to the simple truth neatly summed up by Tim Price, director of investments at PFP Group: ‘What is unsustainable by ­definition cannot indefinitely last.’ If there isn’t enough real money around to repay debt, be it Greek, Irish and US sovereign debt or next door’s mortgage, it won’t get paid back.