Sir Fred Goodwin, Royal Bank of Scotland kingpin warned today that the turmoil in the credit markets is likely to continue for at least another year, and said the Bank’s “risk appetite is tempered”.

Discussing an “adjustment” in financial markets, Sir Fred said: “It is difficult to see it would take less than 12 months to work its way through.”

He added that “there’s clearly more bad news than good news, there’s almost exclusively bad news, but I don’t think we’re looking at the end of the world.” He saw “chinks of light” in some areas of capital markets and repeatedly reiterated that the bank “remains very much open for business”.

Sir Fred’s comments came as RBS, which raised £12bn from the biggest ever rights issue earlier this week, reassured investors in a trading update that its performance and writedowns on risky assets remain in line with previous guidance. RBS said in April that it expects a hit of £5.9bn before tax from its credit market exposures this year.

Banking shares rose on the news and were the top performers on the FTSE 100 in early trading as traders were relieved that there had not been a further deterioration in the RBS loan book. The bank’s shares climbed 4.75p to 238.5p but were down later, by 3p to 230.25p. HBOS was up 4.5p to 296.5p and Lloyds TSB rose 3.75p to 355.25p.

“The coming months I look to with caution but with a degree of optimism. It’s ’steady as she goes’ at this point. The business continues to perform satisfactorily on an underlying basis. There is business to be done and we’re doing it,” Sir Fred said, while acknowledging that the credit crunch is holding back the performance of many of RBS’s businesses.

ABN Amro, the Dutch bank acquired by RBS last year, is performing better than expected in terms of revenues and costs, it said.

Sir Fred said the bank is confident of selling its insurance arm for the price it had in mind at the start of the auction despite continued market turbulence. The operations, which include Direct Line and Churchill, were put up for sale in April with an expected price tag of up to £7bn.

“There are a number of people who would all ostensibly be good owners and capable of paying the price that we’re looking for,” he said. “We had a price in our minds that we were looking for at the start of the process and that hasn’t changed. We’re determined not to sell this for an undervalue, but at this point that doesn’t look like an option that’s going to come to pass.”

Sir Fred refused to give a forecast for UK house prices falls in the coming months but said it would “not be nearly as bad as in the US”.

Commenting on the £12bn rights issue, Sir Fred said “It was a good opportunity to be interacting with our shareholders but it won’t go down as an enjoyable experience,” referring to the “gyrations” which he said weren’t surprising given the size of the cash call and the “very exceptional market circumstances”.

In an effort to ensure there is no repeat of the Northern Rock fiasco, the Bank of England will have to draft in a panel of eminent City figures to ensure it is more alert to looming financial trouble, revealed chancellor Alistair Darling on yesterday.

Mt Darling has instructed City insiders to sit on the shoulder of the Bank’s governor Mervyn King, as part of an overhaul designed to put financial stability “right at the front” of its operations.

It is expected that, while Mr King may not welcome such oversight, there were signs that it could be a quid pro quo for him winning a related tussle with the treasury over the choice of a new deputy governor for monetary policy to replace Rachel Lomax.

Mr King has argued strongly that she should be replaced by Charles Bean, the Banks chief economist, on the grounds he needs a deputy with a strong monetary policy background to lead the fight against inflation. Mindful of the Banks weakness on financial stability issues, some Treasury officials have been promoting the claim of Paul Tucker, the head of markets.

Although Mr Darling has made it a priority to boost the Banks financial stability expertise, Treasury officials said the now expect the chancellor to back Mr Bean for the job. For this to be acceptable, the chancellor will demand that the bank accepts more external advice on city issues and formal oversight of its decisions on financial stability.

This reflects a considerable departure from the Treasury’s initially limited plans for reform of the Banks role in financial stability, set out in January.

Mr Darling told the Commons on Thursday “we should learn from the example of the monetary policy committee”, where outside experts were drawn in to help in making interest rate decisions.

He said there should be “a similar approach in relation to financial stability so that we can bring in outside expertise to advise the governor and of course the appropriate deputy governor”.

This reflects the Treasury view that the Bank is underpowered in the financial stability area; however Mr Darling’s team denies this because, after Gordon Browns shake up in 1997, much of the expertise in that area was transferred to the FSA.

The full details of the new system have not yet been finalised, though Treasury and Bank officials said the new financial stability advisers would not acquire the decision-making powers of the MPC.

“It would not be a hard operational role, it might involve scrutinising decisions but potentially it’s more than that,” said one Darling ally.

At this point it is unclear how the Treasury intend to find panel members who were both credible yet had no conflicts of interest.

Mr Darling’s aides say giving the Banks enhanced City expertise would not mean he is ditching his plan to give the FSA controversial new powers to intervene in failing banks, which is the centrepiece of new banking legislation.

The bank is concerned however, that it will have responsibility to foster financial stability but few powers. Mr King has proposed having the power to intervene progressively in the supervision of banks as their financial positions weaken.

Independent Financial Advisers (IFA) and the charges which they will take from you have always been something of a controversial issue with many looking to sort out their financial security. To many people they are just the gap between those who need a service and those who offer a service, but is there more to it?

Many people seem to be under the impression that IFAs are simply there to take you money and pass you on when this is certainly not the case. On the whole they offer an excellent service and a service which many people will ignore at their peril. The financial markets and the number of financial products on the market is a minefield for the general public, but when fees are mentioned many people suddenly become experts!

The problem for many people is the fact that the IFA industry has, and continues to (to a lesser extent than years gone by), attract rogue traders and those willing to cut corners to get the fee income in. At the end of the day you get what you pay for, so if you are looking to cut costs to the bone, but still expect a high level of service, then you are taking a chance.

The subject of commissions has always been a rather contentious area with some IFAs in the past concealing the fact that they were receiving commission when guiding you towards a certain products or a certain company. Those days have gone and under law each IFA is now required to confirm what commissions they will be receiving with regards to any transactions they organise for you.

The services offered in general are of a standard which is far higher than in years gone by, and one fact which many people seem to forget, if it all goes wrong and you lose money through “bad” advice, there are ways and means to claim compensation. Not only can you sue the IFA involved but there are also a variety of industry funded compensation schemes which may be available to those who have suffered financial loss.

If your monthly salary is not covering the extra burden created by the increased food costs, gas and electricity bills, council taxes and water rates then what are the other options? For many UK families it is time to find that extra money to overcome the present difficult situation. Credit card providers are also using the ostensible ‘zero percent rate tarts’ to lure their customers to spend more through their credit cards. But, you should be aware of the rate charged by the credit card provider after the initial zero percent rate phase as the company will try to recover the money that they have lost earlier by charging higher interest rates.

The standard credit card rates these days are at 17.01 percent and the average unsecured personal loans are offered at 8.44 percent. So, the consumers should make a wise decision if they need extra money. If the credit history is good, then they can take personal loans than meeting the expenses with their credit cards. On the other hand, this is not a permanent solution to your tough financial situation and hence you need to work out some new methods to balance the income and expenditure graph.

Most of the borrowers are also embarrassed by the non-availability of cheaper mortgage deals. It is estimated that as many as 1.4 million people wanted to remortgage their loans which have higher rate of interest this year. But, the financial crunch has made the building societies and banks to pick their customers with caution. These institutions are carefully evaluating the customer’s credit record and equity before lending any mortgage loan. So, many householders are finding it difficult to switch over to another cheap deal. Also, those who are paying variable rates for their mortgages have to pay more from their pocket as the rates are hovering around 7.5 percent at this time.

The UK consumers are also facing increased car insurance premiums due to the raised petrol prices which had increased the cost of motoring. It is estimated that the premiums have gone up by 5% and you should think of some other cheaper deal if your insurance company is increasing the premium every now and then. Many insurance providers also charge for providing the monthly direct debit payment facility. So, you should add up the costs to your premium to calculate the exact amount that you are paying and then only you should sign up the car insurance deal from some other company.

To find a solution to the financial crunch you need to make a budget of the expenses that you have to meet and also try to note every penny that you spend. This will help in reducing frivolous spending and you can cut on the unnecessary expenditure. But, never take some hasty decision on a panic mode as this will further worsen the situation. Don’t get lured by the attractive offers that the financial institutions are offering; think twice prior to borrowing and calculate your repayment capacity before signing up the loan.

Bank policymakers of UK are concerned about the expected high inflation levels and the consequences the industry will face. It is feared that the inflation will increase over the period. Bank of England is struggling with the rising price pressures and slow growth rates and the soaring inflation expectations will also affect the interest rates as it will come down more slowly than expected. Bank of England in its February survey stated that the public expect the inflation to be around 3.3 percent in the coming year and also the current inflation levels have jumped to a record level of 3.9 percent.

Bank of England setters have also warned that the impending inflation originated by the rising and falling cost of worldwide commodities will worsen the situation further and the actual threat to UK’s economy will be further price hikes and more expectations of the public which may lead to higher inflation levels.

BoE has reserved the rates at 5.25 percent during the first week of this month however shareholders are making a bet that the rates will fall as low as 4.5 percent within this year. This kind of predictions also makes the position of the Monetary Policy Committee more difficult as this dampens the interest rate cut in the near-term. It is believed that the workers may demand higher wages to meet the rising prices of commodities and the industry will be forced to increase the wages to retain them.

Many economists feel that the consumer’s inflation expectations are overly influenced by the increased price of essential commodities such as petrol and bread. According to the economists, because of the latest price hikes and the increased rates of food price the public tend to expect the inflation to grow at a higher rate and the fact that this piece of information is widely exposed further supplements the belief.

The CPI inflation as per the last reading was 2.2 percent in January. The retail price index which also comprises of mortgage payments was 4.1 percent during this period and the news has created much concern for BoE as the high inflation expectations will reduce the chances of quick cut in interest rates. Since December, Bank of England has undertaken two quarter-point cuts and has kept the standard rate at 5.25 percent. So, for the moment the economists feel that the Bank’s apprehension about inflation has balanced its growth fears.

The prime factors that affected the CPI had also affected the RPI and the mortgage interest payments had a downhill effect on the RPI during this month. Also, the RPIX inflation on all the items excluding mortgage interest payments had risen to 3.4 percent in January from the 3.1 percent mark in December. Moreover, the largest growing pressure on RPI is due to the raise in the price of fuels. With oil prices at 110 dollars, the inflation rate may further rise to record prices and economists are also voicing their fears to the Government.

Get the much awaited debt relief with the online debt advice

The pressure of modern society makes one to spend beyond the limits of their monthly income. If you have so many credit cards then you tend to spend without even realizing the actual financial situation. As the credit card companies demand only a minimum payment every month, huge part of funds of borrowers are drained towards interest just for the privilege of availing services or to purchase goods without real income. All over the world, credit card companies, creditors, finance and Banking companies only encourage indebtedness amongst its clients to derive huge profits in order to build its own business.

Nowadays, achievement of financial independence has become a challenging and onerous task for an average man. When he gets trapped in the mounting debt, he makes a living with the support of his family members, charity or else made to work hard in order to survive the materialistic world. To prevent and avoid draining hard earned money to finance and credit card companies who lend money, services relating to debt advice are freely available over the internet. Services are provided for the general public to follow a successful and proven debt management plan.

Many of the credit card holders having middle class income never repay their balances and are unable to make their minimum payments by falling behind interest rates. Services on debt advices are provided to save the hard earned money which is legally stolen in the mode of different types of state and local taxes and interest on loans. Professional services on debt elimination by experts offer greater succor to the people affected by debt burden. Debt advice is given on a case to case basis depending upon the financial situation of the individuals to repair their credit score. The services are available online and due to heavy competition amongst debt advice agencies, the borrowers can avail these services at affordable rates.

A recent report in the UK financial press has indicated that some 25% of the UK population are suffering from unmanageable debt, and with the economic situation set to get worse this figure looks likely to rise substantially.  Are you stuck in a debt trap?

If you are stuck in a debt trap it is essential that you are proactive rather than reactive, and do not leave it too late to sort out your affairs.  Too many people in the UK would rather bury their heads in the sand and hope that all turns out well in the end – the chances of this are minimal!

Unless you tackle your debt problems head on there is every chance that you will get yourself into a situation where you have little control, maybe looking at an IVA solution or Bankruptcy and the problems associated with these situations.  By tackling your debt problems early it may be possible to consolidate your debts into one manageable amount, possibly spread out over a longer time scale. 

While there is no pain free way to “fix” your personal debt problems, the longer you put them off the worse they will get.  A simple call to your credit card company, your bank, etc to alert them to your problems may well yield a lot more useful information than you might expect.  It is in their interests to keep you solvent and keep you from the clutches of either an IVA or Bankruptcy, where they will be forced to write off large amounts of debt.

Do not be scared to admit that you have problems, as this is the first stage of your fight back.  That is not to say that either an IVA or Bankruptcy may not be the best option for you, but either way you will take more control of the situation and relieve some of the pressure in the long term.

As consumers gear up for what promises to be a good, if not spectacular Christmas shopping period, it seems that we will soon see a stand off between the consumer and the retail sector.  Stuart Rose of Marks and Spencer recently pleaded with his retail counter parts to hold firm in the face of pressure to start early Christmas sales – forecasting that the consumer was ready to spend, and spend at full prices.  So who will win?

While this is the first time we have actually seen such a formal declaration from a leading member of the retail sector, in truth, this battle has been going on for decades.  Who will blink first, the consumer or the retailer?

In recent years we have seen a number of main retailers break ranks before the New Year’s sales and implement what have been drastic price cuts in some areas.  This year seems set to be little different, and the fact that the UK economy is forecast to decline over the net 12 months has some what handed power to the consumer.  Retailers will surely break rank as the competition heats up, and if the consumer is careful and willing to wait, there are surely many bargains to come.

So the moral of this post is, don’t be too hasty to get your credit card out just yet, because while you will save yourself interest payments the longer you wait, you also have the chance of getting your chosen items at a reduced price.   This year will be very interesting, now that Stuart Rose has most definitely drawn the battles lines.  Weapons at the ready!

While those with children will always want to do the best by their family, it is essential that you do not leave your planning too late.  You need to ensure that you are making use of the most tax efficient forms of investment and saving as soon as possible.  Why? Simple, you do not know what will happen tomorrow………

As much as nobody likes to consider the worst, we do not know what may happen tomorrow, and more importantly how this will effect the children and family we may leave behind.  It is the lack of planning, and a fear of the unexpected, that sees thousands of people give back millions of pounds to the tax man each year, which they could have retained in their family.

From an early age, where money is available and assets need protecting, it is vital that you make full use of any possible protections and tax efficient vehicles that you can.  Whether you look to put your assets into trust, use up your children’s ISA allowances each year, or even start contributing to their “pension” pot from an early age, you need to act as soon as possible.

All of the advice that you will ever require is available on the internet, or from an IFA, as each and every person will have slightly different requirements and a slightly different situation to consider.  Do not fall into the trap of considering how to protect your assets when it is too late, as there are rules and legislation to counter-act blatant “tax avoidance”, but long term planning will always be a major part of the financial industry.

Do not leave it until the last minute, act now and ensure that your finances are able to with stand any shocks or surprises in the future.

In a  move which will deeply embarrass the government, especially Gordon Brown and Alistair Darling, over 12,000 people have signed a Downing Street online petition to demand that the government repeal the recent capital gains tax changes announced in the budget.  Supposedly announced to hit the big money earners in the Private Equity Market, they have effected a vast number of the population and businesses.  Will the petition actually prompt a change?

While it will take a big shift in the position of the government to review the situation, opposition is growing to what now appears to have been a badly thought out plan.  All of the headline winning changes have disappeared, and the bare facts are that if anything the less wealthy of the country are actually worse off.

What next on the fight back agenda?

The next obvious target for attack is the recent rise in fuel duty, which has been magnified after the rise in the price of oil to over $90 a barrel.  Few people realises that the government actually earn a percentage of the price of petrol at the pumps, so a higher oil price hits business and the consumer, but is in effect a stealth tax against the rest of us.

There have been rumours of pickets at the various refineries around the UK, in a throwback to the events of just a couple of years ago, which brought the country to a stand still.  It seems that now more than ever the situation needs to be resolved, and the government will have a growing opposition for some time to come.

Can Gordon Brown afford yet another climb down?