Gina Miller calls for senior members of the City regulators to leave
Time Gentleman Please – time for senior members of the City regulators to leave:
How many scandals will it take before the government replaces senior management within the endemically ineffective Financial Services Authority (FSA) and the Bank of England (BoE)?
Let us remind ourselves of the roll call of dishonour:
– Barclays et al LIBOR fixing – regulators warned by analysts, US Federal Reserve and whistleblowers as far back as 2007.
– Widespread bank interest rate swop mis-selling – regulators (FSA) ignored this for years and years before a national newspaper published an expose in 2012 and then finally acted.
– MF Global – went into administration nearly a year ago affecting thousands of UK clients but have so far just got back only 26p in the pound as against 76p to 100p in the US and Canada where foreign regulators protected clients.
– This follows are just three of numerous scandals with £millions lost by individuals; many elderly:
– KeyData: At first, concern around the firm centred on an unpaid tax bill, but then administrators discovered a black hole in its books – over £100 million of investors’ money had been stolen from a Luxembourg-based fund in which Keydata invested. The Financial Services Compensation Scheme (FSCA) declared Keydata in default, and indicated that 21,000 investors would be able to seek financial redress. The FSCS has had to pay out more than £300 million in compensation.
– Arch Cru: The mislabeling of recent Arch Cru retail funds may have acted against the public interest and contributed to the £400m+ financial scandal. In this example the industry body, the IMA, chose to classify a fund investing in unquoted African and Greek investments as being ‘Cautious Balanced’. This no doubt gave many of the elderly investors who chose to invest their life savings in these funds a completely illusory sense of security.
– AIG bonds: Coutts & Company has been fined £6.3 million by the Financial Services Authority (FSA) for mis-selling an investment fund to customers. Numerous failings were uncovered in the way the private bank sold the AIG enhanced variable rate fund to its clients. Various banks sold these AIG bonds to customers with the total amount invested being over £1.4 billion. The FSA sharply rebuked the bank over a string of failings related to the way the investment was sold. It said customers were offered the fund as an alternative to a bank or building society account, which meant they may not have realised the risks involved.
What are the two common factors to link these all – the repeated failure by regulators to do their job properly or learn from their mistakes and the lack of transparency? This immoral, though not illegal, state of the City left us with no alternative than to launch a True and Fair Campaign (http://www.trueandfaircampaign.com) and detail within an in-depth report the atrocious transparency together with a suggested code and system to improve it. The FSA has completely ignored the report.
If clients, individuals or organizations, were given 100% transparency and allowed to know clearly, simply and fully how much their financial product was costing and how it worked, such scandals would have been dramatically reduced. Yet the regulators have allowed the self-interest of the three key trade bodies, the BBA (bankers), the IMA (fund managers) and the ABI (insurers) to become quasi-regulators setting the rules. This has been an unmitigated disaster.
If it is right that senior executives at Barclays deemed culpable in the LIBOR scandal resign, does the same not apply to the senior executives at the FSA and Bank of England. Astonishingly, candidates for the next Governor of the Bank of England include the current Chairman of the FSA who presided over countless financial scandals and the BoE Deputy Governor who is alleged to have explicitly/implicitly ordered the LIBOR deceit?
Around one million people work in the UK’s financial services industry and it generates around 10 per cent of this country’s economic output. We cannot let self-serving and lax regulators destroy our biggest industry and allow its reputation to be further eroded. There was a time in the City when the phrase ‘my word is my bond’ mattered, without the right regulatory framework this is unlikely to return.
Transparency is the key – it will leave no place to hide and for the first time in decades clients will be put before self interest.
Founding Partner – Chief Executive, SCM Private
Initiators of the True and Fair Campaign, London, UK
excellent reporting, i fully endorse everything that gina says, its about time the country stood up and shouted, for far too long we’ve just rolled over like lap dogs and accepted everything that was thrown at us.
Thank you Antony. I wholeheartedly agree.
It’s a very interesting article and indeed about time someone made this point out and loud.
Bankers are only half the story of what happens in most scandals in Finance Industry, the other half are regulators, politicians and central bankers. Sadly they are all on one side and support each other and do their best to put all blame on bankers for all the wrong doing, but in fact the truth is they are all in this together.
Great work Gina for exposing this to wider audience!
I have always despised authority of any kind, and it distresses me to see how right I have been proved. All authority figures from bankers to chief executives of major companies, from politicians to journalists, from the FSA to BoE…the list is endless… are riddled with greed, inefficiency and corruption. The original hate list of used car salesmen and estate agents etc. is full of amateur crooks compared with today’s pirates. What I do not understand is why, when many of these criminals are exposed, they do not receive custodial sentences. In the USA, they hand out frightening prison sentences. It may not stop criminal acts, but it surely acts as a deterrent. As Voltaire put it so succinctly in Candide, at the hanging from the yard arm of Admiral Byng, and I translate,’ we have to execute an Admiral from time to time to encourage the others.’
I would like to complement my ex business partner Michael Proudlock on an excellent piece that really just hits that financial ‘G’ spot! This spot is of course “gain” and what the bankers have been enjoying at our expense, and it’s about time that we should all be better protected from this type of banking abuse. If a cricketer can go to prison for fixing a game then why can’t any banker be treated identically. Although sometimes we consider the US to be a quasi police state compared to the UK, in financial areas they exceed and punish severely those who abuse. We should now take a lead and start afresh with a sharper, tougher policing financial body with powers to meter out more exacting governance linked to perhaps a new type of judicial court system in order to accelerate dealing with these illegalities instead of waiting for the various so called qangos to spend more of our money whilst investigating the loss of more of our money!!!!
Here here. How can any mere mortal in this society have any faith left in the banking system and the financial world in general after the latest scandal. Sadly we have a weak government with a weak prime minister and chancellor who consistently fail to remove the rotting head at the top of the rotting corpse. This direction should come from the very top and if they had any backbone they would proceed immiediately.
It seems all contributors feel the same way and are reflecting the views of most right thinking people.
Reflecting upon why all this has occurred for what it is worth much of this seems to have come about following the “Big Bang” in the UK where traders retreated from the trading floor to sit behind their Computer screens where “my word is my bond” ceased to exist. Moreover the computer based trading facilitated the creation of “exotic” derivatives which many people even their users didnt fully understand their implications.
At around the same time the retail arms of the Banks progressively removed the traditional Bank Manager in favour of centralised decision making and call centres in the pursuit of profits. Effectively distancing them from their “Customers”. Decision making became arbitary refusing overdrafts to the deserving whilst promoting credit cards to the undeserving.
We are no longer Customers just Profit Centres and hence the Banks do not need to relate to the people who keep them in Business so treat us accordingly.