Mac Millington

'It is back to basics as far as we are concerned,' he said. 'Abbey National has always offered a full range of savings accounts and savings plans, along with mortgages. It is very understandable that people are not so interested in the stock market at the moment.

'But I suppose the big thing that has changed, and which people are still struggling to adjust to, is that today we have a low inflation and low interest rate investment environment. That makes it impossible to achieve the high returns that clients expected in the late 1990s, and we could be in for a decade of this pattern'.

Mr. Millington is old enough to have lived through the stock market crashes of 1974 and 1987. But he says that 2000-2003 has been fundamentally different as the prevailing economic climate is one of low inflation, or even deflation, except in the housing market.

'This is one reason why people in the UK and also many expatriates have turned to housing,' he notes. 'It is an alternative investment to a pension for retirement, and a good way to save money'.

Equally, Mr. Millington thinks some UK investors have got carried away with buy-to-let schemes, and are relying too much on high house price inflation which may not last for much longer.
But will Abbey National be entering the new UAE mortgage market, and encouraging investment by UK expatriates into this market?

'No, we will be sticking to our offshore mortgages,' says Mr. Millington. 'Our lawyers have produced too many uncertainties in the UAE market for us to get involved'.

Meanwhile, many Abbey National clients that have invested in stock market related products from sister companies Scottish Mutual International and Scottish Provident International are nursing large losses.

'Almost everyone has lost money on the stock market in the past two and a half years,' notes Mr. Millington. 'We have brought our three companies under one roof in our new Dubai office and will be seeking to offer a better deal both to direct customers and those who buy through financial intermediaries'.

However, Mr. Millington refuses to disown financial advisers entirely as he sees them as a necessary and legitimate distribution channel. His view is that in falling markets the seller of the original product inevitably comes in for some criticism, whether justified or not.

On the other hand, the UK's sixth largest bank is gradually moving its sales agents from high upfront commissions to tail-end payments. And that may come as some compensation to those who feel that they have lost money while the intermediary has walked away with a nice commission.

'The investment market will be a simpler place now,' says Mr. Millington. 'It really is back to basics. If interest rates are around 4% and somebody offers you returns of more than double that then what looks too good to be true probably is too good to be true. A savings account has no risk and a guaranteed reward'.