THE recession is officially over. Or so we are being told by the United States Federal Reserve chairman, Ben Bernanke, and the Confederation of British Industry.

And in Guernsey, it seems, there has never been a recession at all and it is unlikely that there ever will be, some say.

How ironic that last week’s statements coincided with the first anniversary of the collapse of Lehman Brothers, the largest corporate crash in living memory, which affected 27,000 workers worldwide. In hindsight, it should never have been allowed to happen, say pundits.

The US government should have stepped in. Then all this recession stuff would never have escalated.

At the same time some downbeat souls, such as union bosses and the Institute for Policy Research, are warning that the banks have learned absolutely nothing from the recent global economic crisis and are already at it again, bumping up their end-of-year bonus payments and devising all kinds of complicated financial structures – even more complicated than the previous ones – that are bound to end in tears.

Unfortunately, as someone said to me the other day, the official view of the recession has not yet filtered down to the ordinary man or woman trying to earn a few pennies to keep body and soul together. Unemployment in the UK is currently at a 14-year high, and in Jersey, although job losses seem to have slowed, it is clear that banks have not yet finished trimming their sails, with a further 36 job cuts announced at HSBC earlier this month.

So where does this leave the Island’s economy? Last week the messages were somewhat mixed. On the one hand, both Jersey bank deposits and the net asset value of funds were down on the previous quarter. Bank deposits were quite a lot down, actually. By £21 billion, to be exact – almost certainly the biggest fall in the history of the statistics compiled by the Jersey Financial Services Commission. Only a couple of years ago the finance industry was rubbing its hands with glee at passing the £200 billion barrier. It may take quite a long time to climb back up from the current total of £174 billion.

Guernsey has fared little better, although it is a little difficult to make exact comparisons because this month they chose to alter the basis on which their statistics are calculated.
In truth the decline is not unexpected, given that the early part of the year was probably the lowest point for the global industry. And as Jersey Finance spokesman Geoff Cook remarked last week, the financial markets are definitely showing increased signs of life.

At the same time, last week’s International Monetary Fund report will have given Jersey’s finance industry promoters a major advantage, not least because Guernsey has yet to be assessed by the IMF.

Although it has taken longer than anticipated for the final score to come through, it has been worth the wait in terms of global reputation – if this week’s BBC Panorama programme had not broadcast a Lloyds TSB adviser in Jersey telling a potential customer how to avoid UK tax, that is. Although the authorities are playing down the impact – and even if the banker’s comments were taken out of context – this has got to be major coup for anti-tax haven campaigners.

Nevertheless, if the offshore finance industry can ride out the current avalanche of accusations, the IMF’s conclusions should carry some weight in terms of further forthcoming reports – including one commissioned by the UK Treasury on offshore financial centres – and might also encourage countries that have hitherto sought to blacklist Jersey as a badly run tax haven to reconsider their conclusions.

That can only be good for the finance industry and, as a consequence, good for the 13,000 Jersey workers who contribute to it. It does not take much imagination to foresee that if people are feeling more secure in their employment they are likely to spend more in the economy. Equally, if businesses are securing new work, they are likely to be taking on new staff, looking for expansion and possibly considering capital expenditure.

It’s just that it take a little longer than first thought before the high street starts to see any benefit.

THE high street banks, however, are still buried under recessionary rubble. Last week the UK’s Financial Ombudsman Service reported that more people than ever had made complaints.

For the first time ever the Ombudsman chose to name the top five. Not surprisingly the list included the big four banking groups – Lloyds TSB, Royal Bank of Scotland, HSBC and Barclays, plus Abbey National.

The Ombudsman said there had been a larger than usual number of complaints about payment protection insurance, which until fairly recently was insisted on by some banks as a prerequisite for a loan.

In fact I fell foul of this some years ago. At the time I applied for a loan the bank made it abundantly clear that if I did not accept the terms of the bank’s own insurance they were likely to turn down my application.

At the same time, I was also offered a credit card and the insurance option was also applied to that card. So not only was I paying insurance on any credit card debits, but also on the insurance that was added to my monthly statement.

I have absolutely no recollection of approving that insurance. If memory serves me correctly, the banker asked for my signature on the application form and said he would fill in the rest of the form later. But this is not at all easy to prove.

In Jersey, although we do not have our own ombudsman service, we are entitled to use the UK service if we want to complain about UK-based banks. However, the rules say that you have to complain to the banking institution first. So I did.

The bank sent me a copy of the original application form. It shows that the details were filled in by someone else, as they are not in my handwriting. Even the date after the signature is not in my writing.

But I did sign it. The bank said: ‘We can confirm that you selected to have payment protection cover on your original application form which you have signed.’

I have learned a couple of lessons from this exercise. The first is never to sign anything without reading and understanding it first.  The second is never, ever, to trust a banker. Even if the recession is all but over.