The Bank of England Seems Incapable of Understanding the Boom in House Prices. Worse, It Isn't Warning Us That the Ensuing Economic Growth Will Be Perilously Unbalanced. (the Business)

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Jonathan Compton is an unlikely City rebel. The former stockbroker has made his pile working for big establishment names such as Barings and Credit Lyonnais. He once confessed to me that he had built up a personal portfolio of 14 properties simply by using his annual bonuses. A bad year would yield a modest flat, a good year an entire London house.

But you have to admire his chutzpah in exposing the fat fees and spineless investment philosophies of the big City investment houses. Compton's sandwich-board men have been parading outside the offices of Cazenove, Merrill Lynch, Schroders and other firms that invest the nation's pensions and ISAs, with slogans such as "They're bleeding you dry".

Compton has his own agenda. He is drumming up publicity for his own new fund management firm, Bedlam, so-called, he says, because of the insanity of the entire industry. Bedlam, he claims, will be different, charging clients fees only when they do well. It will also be transparent, actually telling clients what their money is invested in.

He has already caused a stir. Wisely, he has the law firm Mishcon de Reya on standby as he accuses the industry of "ignorance, duplicity, greed and deception". The Investment Management Association, an industry body, has rather lamely responded by accusing him of spreading scare stories.

But Compton is only spelling out what we already know -- that fund managers, on the whole, do worse than a monkey with a pin and the FT share prices page. And they charge heavily regardless of performance. Bedlam is not entirely squeaky clean itself. Its "no win, no fee" promise applies only to distinct quarters. So, in theory, it is possible for Compton to collect fees for the occasional good three-month period while his clients lose money over the long term.

Even so, he deserves a following wind, especially for saying what the industry knows in its heart to be true. Bedlam's biggest backers are -- you've guessed it -- rival fund managers, investing in a personal capacity, of course.

There were a few burnt fingers in the money markets the other day when the Bank of England wrong-footed dealers by leaving interest rates unchanged. Most had expected a cut and many had bet on it. The Bank decided on no change, not least because it was privately alerted by the Halifax to a rise in house prices of 31 per cent -- a speed not seen since records began in 1983. …