Member Article

Introducing Phil Dibbs on Finance

After many years in the corporate world I have decided to pursue the dream of running my own business.

What made me want to leave the warm comfort blanket of a salaried job with one of the UK’s most successful Banks?

Well, I am keen to use the 25 years experience I have amassed in banks and industry to help and support business owners in various areas of business. Help ranges from support raising capital, through to the wider issues of business planning, guidance and mediation with Banks and other stakeholders.

For sometime I have watched business owners struggle with increasing levels of Bank scrutiny, feelings of trepidation about the economy and the general direction that their businesses are taking. All of this has the potential to really inhibit success.

I want to use this column to highlight the issues that are relevant to you, and suggest how to address them, because there is one thing for sure, the Ostrich approach just won’t work! The most successful businesses are those that constantly identify their key risks, addressing them accordingly. I intend to use my experience, drawing upon real examples where possible to make my points as relevant and useful as I can. It follows that I would also appreciate feedback and debate.

Another Bank mis-selling scandal about to break?

Potential mis-selling of swaps has come up again in the business pages of the newspapers over recent days. My view is that it will rumble on and on unless the banks deal with it.

There is no doubt that these products do have a very real place in protecting you from adverse movements in interest rates, commodity prices, or foreign exchange rates.

As the market has developed, so the complexity and range of types of protection have also developed. We have reached the point where you need to be very experienced financially to understand the implications of entering into these arrangements.

I believe that there are many instances of people entering into these arrangements without understanding fully the mechanics of the contract or the potential downsides.

Banks use complex calculations to work out the profitability of these contracts over their agreed term. It therefore follows that if asked to break the contract, your lender may well ask for a substantial break fee to compensate it for the lost income. The size of these fees has surprised many people who feel ‘stuck’ with their current arrangements.

That said this is not necessarily the end of the story – If you expect your Bank to cancel the arrangement, you may be disappointed. However, providing you suggest a sufficiently robust and workable compromise, the chances are that you will be given a fair hearing and will reach a mutually acceptable agreement. After all banks don’t want to have unhappy customers.

So if you find that you are in just such a situation don’t assume that all is lost. Make sure you have all the paperwork in order and seek the advice from an appropriate adviser.

This was posted in Bdaily's Members' News section by Phil Dibbs .