I see Brown admitted this morning that he made a mistake re bank regulation.
I think I need to sit down!
I think I need to sit down!
Showing posts with label regulation. Show all posts
Showing posts with label regulation. Show all posts
Wednesday, April 14, 2010
Tuesday, March 2, 2010
The Seduction of The FSA
Lord Turner, the chairman of the Financial Services Authority (FSA), has told the Treasury Select Committee that the FSA was "seduced" into thinking that the economic boom was unstoppable.
In other words the FSA was asleep at the wheel.
He also noted, quite correctly, that another global financial meltdown could occur.
In the event that the Tory Party wins power at the next election, the FSA will become a footnote in the history books as the failed tripartite system (set up by Brown) is dismantled.
In other words the FSA was asleep at the wheel.
He also noted, quite correctly, that another global financial meltdown could occur.
In the event that the Tory Party wins power at the next election, the FSA will become a footnote in the history books as the failed tripartite system (set up by Brown) is dismantled.
Tuesday, February 9, 2010
Hector Sants Resigns
Hector Sants, the CEO of the Financial Services Authority (FSA), has resigned.
Sants will leave the FSA this summer. He will have held the job for 3 years.
He has been in a corner for sometime now and, in the event that the Tories win the next election, knows that the Tories will shut down (or most certainly emasculate) the FSA.
He has chosen a good time to jump ship.
Sants will leave the FSA this summer. He will have held the job for 3 years.
He has been in a corner for sometime now and, in the event that the Tories win the next election, knows that the Tories will shut down (or most certainly emasculate) the FSA.
He has chosen a good time to jump ship.
Tuesday, October 27, 2009
A Gnat's Piss On The Dung Heap of Debt
The government, in attempt to shut the stable door long after the horse has bolted, has come up with some proposals theoretically designed to force credit card companies to help customers reduce their debt.
Card companies will be forced to allow customers to pay off their most expensive debts first, rather than pay off the cheaper debts and allow charges to accrue for higher interest debt.
The minimum monthly repayment level would also be increased, to encourage people to pay off their debt faster.
The government said:
"Around one-third of people who don't pay off their credit card bill in full each month make only the minimum repayment. This can mean consumers take decades to pay off the debt."
Indeed so, but this is most likely due to the fact that they cannot afford to pay off much more than the minimum.
By forcing those already in debt to pay a greater amount, the government is in danger of pushing many hard pressed families over the "financial edge".
The government also proposes to ban the practice of credit card companies automatically increasing credit limits, without specific authorisation from their customers.
Will they also ban card companies from arbitrarily cutting credit limits on those card holders with good credit records, who clear their debts each month?
The government also wants tighter rules imposed on increasing the interest rate on existing debt without "proper explanation".
That will not make not one jot of difference to this rip off practices employed by card companies. They will continue to increase rates based on the "explanation" that they are finding their margins squeezed by "difficult trading conditions".
Until there is a thorough independent investigation of the make up/rationale of companies' charges, and the quasi "price fixing" scheme of arrangement wrt this practice operated by the companies, they will continue to charge what they like, because they know that they can get away with it.
The proposals are open to consultation until January 19 2010.
This particular horse has long since bolted and the British consumer is hopelessly mired in debt, these proposals are little more than a "gnat's piss" on the dung heap of debt that has been created by the Faustian collusion between greedy consumers and lenders.
Card companies will be forced to allow customers to pay off their most expensive debts first, rather than pay off the cheaper debts and allow charges to accrue for higher interest debt.
The minimum monthly repayment level would also be increased, to encourage people to pay off their debt faster.
The government said:
"Around one-third of people who don't pay off their credit card bill in full each month make only the minimum repayment. This can mean consumers take decades to pay off the debt."
Indeed so, but this is most likely due to the fact that they cannot afford to pay off much more than the minimum.
By forcing those already in debt to pay a greater amount, the government is in danger of pushing many hard pressed families over the "financial edge".
The government also proposes to ban the practice of credit card companies automatically increasing credit limits, without specific authorisation from their customers.
Will they also ban card companies from arbitrarily cutting credit limits on those card holders with good credit records, who clear their debts each month?
The government also wants tighter rules imposed on increasing the interest rate on existing debt without "proper explanation".
That will not make not one jot of difference to this rip off practices employed by card companies. They will continue to increase rates based on the "explanation" that they are finding their margins squeezed by "difficult trading conditions".
Until there is a thorough independent investigation of the make up/rationale of companies' charges, and the quasi "price fixing" scheme of arrangement wrt this practice operated by the companies, they will continue to charge what they like, because they know that they can get away with it.
The proposals are open to consultation until January 19 2010.
This particular horse has long since bolted and the British consumer is hopelessly mired in debt, these proposals are little more than a "gnat's piss" on the dung heap of debt that has been created by the Faustian collusion between greedy consumers and lenders.
Wednesday, September 23, 2009
Turner Gets Heavy
Lord Turner, chairman of the Financial Services Authority, last night at the Mansion House launched another attack on the banking industry.
Turner said that bankers faced a future stripped of profitable businesses:
"British citizens will be burdened for many years with either higher taxes or cuts in public services because of an economic crisis ... cooked up in trading rooms where many people earned annual bonuses equal to a lifetime's earnings of some of those suffering the consequences."
He added:
"Top management, in particular of banks involved both in complex trading and retail banking, needs ... to be willing to recognise that there are some profitable activities so unlikely to have a social benefit they should voluntarily walk away from them."
I would make a number of observations:
1 The higher taxes, needed to plug the fiscal black hole, are in part due to the fact that Brown failed to "put something away for a rainy day" during the "years of plenty". Instead he chose to "spend, spend, spend".
2 Where was the FSA during the period of "reckless" lending, when banks "cooked up" these failed schemes?
3 The financial catastrophe is in no small part down to the failure of regulation, emanating from the "bugger's muddle" of the tripartite regulatory system created by Brown.
4 Labour was happy to "schmooze" with the City during years of plenty, and had its fingers in the till earning billions in tax from the profits and pay of the banks/bankers.
5 The country did well out of the years of plenty, we are a far wealthier and more advanced nation than we were 30-40 years ago. This is a direct result of globalisation and freeing of currency flows. The current financial crisis has not set us back 30-40 years; ie we are still better off.
There will always be financial crises, each one different from the other. Turner and the G20 are unlikely to find a panacea that will prevent the next.
Turner said that bankers faced a future stripped of profitable businesses:
"British citizens will be burdened for many years with either higher taxes or cuts in public services because of an economic crisis ... cooked up in trading rooms where many people earned annual bonuses equal to a lifetime's earnings of some of those suffering the consequences."
He added:
"Top management, in particular of banks involved both in complex trading and retail banking, needs ... to be willing to recognise that there are some profitable activities so unlikely to have a social benefit they should voluntarily walk away from them."
I would make a number of observations:
1 The higher taxes, needed to plug the fiscal black hole, are in part due to the fact that Brown failed to "put something away for a rainy day" during the "years of plenty". Instead he chose to "spend, spend, spend".
2 Where was the FSA during the period of "reckless" lending, when banks "cooked up" these failed schemes?
3 The financial catastrophe is in no small part down to the failure of regulation, emanating from the "bugger's muddle" of the tripartite regulatory system created by Brown.
4 Labour was happy to "schmooze" with the City during years of plenty, and had its fingers in the till earning billions in tax from the profits and pay of the banks/bankers.
5 The country did well out of the years of plenty, we are a far wealthier and more advanced nation than we were 30-40 years ago. This is a direct result of globalisation and freeing of currency flows. The current financial crisis has not set us back 30-40 years; ie we are still better off.
There will always be financial crises, each one different from the other. Turner and the G20 are unlikely to find a panacea that will prevent the next.
Thursday, June 18, 2009
King Clashes With Darling
Mervyn King, Governor of The Bank of England, publicly clashed with Alistair darling at the Mansion House dinner last night over the best way to improve the regulation of the City.
King said:
"It is not sensible to allow large banks to combine high-street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure.
Privately owned and managed institutions that are too big to fail sit uneasily with a market economy."
However, as the Chancellor noted, restricting the size of banks is not that simple.
King also asked for more regulatory power to be given to the Bank:
"We need instruments to prevent the size, leverage, fragility and risk of the financial system from becoming too great. The resulting macro-prudential toolkit will contain a number of instruments to reduce risk, both across the system and over time."
However, the fundamental problem is the tripartite regulatory system which has no effective head. Until the system, which was introduce by Brown, is replaced regulatory issues cannot be satisfactorily addressed.
Unfortunately, as long as Brown is PM, the tripartite system will remain in place.
King said:
"It is not sensible to allow large banks to combine high-street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure.
Privately owned and managed institutions that are too big to fail sit uneasily with a market economy."
However, as the Chancellor noted, restricting the size of banks is not that simple.
King also asked for more regulatory power to be given to the Bank:
"We need instruments to prevent the size, leverage, fragility and risk of the financial system from becoming too great. The resulting macro-prudential toolkit will contain a number of instruments to reduce risk, both across the system and over time."
However, the fundamental problem is the tripartite regulatory system which has no effective head. Until the system, which was introduce by Brown, is replaced regulatory issues cannot be satisfactorily addressed.
Unfortunately, as long as Brown is PM, the tripartite system will remain in place.
Wednesday, April 15, 2009
The PPI Rip Off
The financial services industry doesn't seem to yet get the point that its reputation is in tatters; not just because of the recession brought about by the greed and stupidity of the banks, but because of a number of issues over the years that impugn its integrity and honesty eg endowment misselling, payment protection insurance (PPI), bank charges, debt collection, credit agreements etc.
Not content with having already severely tarnished its reputation wrt PPI, the insurance industry is seeking to further gouge its own self inflicted wounds by increasing the cost of PPI policies and reducing the actual cover provided.
The Times reports that millions are facing a 50% rise in the cost of PPI cover. Indeed the cost of some PPI policies has already increased by 170% over the last year. The Post Office has written to its PPI customers warning them that it plans to cut the maximum payment in the event of redundancy, and double the cost of some premiums.
Those who clamour for greater regulation of the financial services industry should remain calm, the addiction of those in the industry to destroying their own reputations will ensure that there will be very little remaining of the UK's financial services industry to regulate in ten years time.
By then people will have finally woken up to the fact that they have been ripped off on a continual basis, and will simply resort to putting their money under their mattresses as their grandparents used to do.
The financial services industry will be the author of its own downfall.
Not content with having already severely tarnished its reputation wrt PPI, the insurance industry is seeking to further gouge its own self inflicted wounds by increasing the cost of PPI policies and reducing the actual cover provided.
The Times reports that millions are facing a 50% rise in the cost of PPI cover. Indeed the cost of some PPI policies has already increased by 170% over the last year. The Post Office has written to its PPI customers warning them that it plans to cut the maximum payment in the event of redundancy, and double the cost of some premiums.
Those who clamour for greater regulation of the financial services industry should remain calm, the addiction of those in the industry to destroying their own reputations will ensure that there will be very little remaining of the UK's financial services industry to regulate in ten years time.
By then people will have finally woken up to the fact that they have been ripped off on a continual basis, and will simply resort to putting their money under their mattresses as their grandparents used to do.
The financial services industry will be the author of its own downfall.
Tuesday, March 31, 2009
Hissy Fit
President Sarkozy threw a hissy fit yesterday, and played to the domestic French audience, by threatening to walk out of the G20 summit if France's demands for tougher financial regulation and a global regulator are not met.
Sarkozy blames the "Anglo-Saxons" for the economic crisis.
Apportioning blame is all very well, but it is necessary to fix the problem first. As I noted before, if your neighbour sets fire to his house you do not sit on your hands and remonstrate with him, you help him put the fire out before it spreads to your house. Once the fire is out, you can then remonstrate with him.
Sarkozy blames the "Anglo-Saxons" for the economic crisis.
Apportioning blame is all very well, but it is necessary to fix the problem first. As I noted before, if your neighbour sets fire to his house you do not sit on your hands and remonstrate with him, you help him put the fire out before it spreads to your house. Once the fire is out, you can then remonstrate with him.
Thursday, March 12, 2009
Be Afraid!
I see that Hector Sants, the head of the Financial Services Authority (FSA), is telling the City that people should be "very frightened of the FSA".
That will most certainly be a first!
He has warned that there will be a new, more proactive approach, to regulatory enforcement, which would be far more direct and intrusive. All very well, but this is shutting the stable door after the horse has bolted.
Whether or not the FSA finally develops some cojones is not the issue. The fundamental reason for the failure of financial regulation is the tripartite system created by Brown. As long as that is in place, the regulatory failings of the past will be destined to be repeated in the future.
That will most certainly be a first!
He has warned that there will be a new, more proactive approach, to regulatory enforcement, which would be far more direct and intrusive. All very well, but this is shutting the stable door after the horse has bolted.
Whether or not the FSA finally develops some cojones is not the issue. The fundamental reason for the failure of financial regulation is the tripartite system created by Brown. As long as that is in place, the regulatory failings of the past will be destined to be repeated in the future.
Wednesday, February 25, 2009
Protectionism Warning
A Belgian committee on financial regulation, chaired by Alexandre Lamfalussy (who designed the EU's current system of cross-border supervision), has warned that the European wide bailouts of banks could lead to the rise of protectionism and undermine the EU.
The committee has issued a report that recommends the creation of an EU wide supervisory scheme for banks and financial bodies.
Were this scheme to be implemented, what would be the role of the Bank of England and FSA wrt supervision?
The committee has issued a report that recommends the creation of an EU wide supervisory scheme for banks and financial bodies.
Were this scheme to be implemented, what would be the role of the Bank of England and FSA wrt supervision?
Thursday, February 12, 2009
A Failure of Regulation
The Times reports that the Financial Services Authority (FSA) claims that it raised concerns about internal risk controls at HBOS in 2002.
Yet nothing appears to have been done, why?
Moreover, why was Sir James Crosby (who has now resigned from the FSA), CEO of HBOS between 2001 and 2006, appointed deputy chairman of the FSA by Gordon Brown?
Yet nothing appears to have been done, why?
Moreover, why was Sir James Crosby (who has now resigned from the FSA), CEO of HBOS between 2001 and 2006, appointed deputy chairman of the FSA by Gordon Brown?
Thursday, January 22, 2009
The Bleeding Obvious
The Times reports that Lord Turner, the Financial Services Authority (FSA) chairman, said that aspects of the current regulatory system for banks and other institutions were "seriously deficient".
No kidding?
The failure of our regulatory system is as result of the tripartite structure, whereby the Bank of England, FSA and Treasury all have a role in regulation but no one knows who is actually in charge or who takes ultimate responsibility.
Gordon Brown created this seriously flawed structure over ten years ago.
No kidding?
The failure of our regulatory system is as result of the tripartite structure, whereby the Bank of England, FSA and Treasury all have a role in regulation but no one knows who is actually in charge or who takes ultimate responsibility.
Gordon Brown created this seriously flawed structure over ten years ago.
Friday, January 16, 2009
The Equitable Life Game Plan
The Treasury, via Yvette Cooper the Chief Secretary, issued an apology to the long suffering Equitable Life victims.
Quote:
"I think the whole House regrets the mismanagement of the society. I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."
However, there will be no compensation merely some possible payments to those who have suffered "disproportionately" (whatever "disproportionately" really means).
Those policyholders who are hooping that they may receive some form of payment need to be aware that the Treasury's game plan is very obvious:
- Delay
- Delay
- Delay
The objective being to offload the problem into the hands of the next government (unlikely to be Labour) after 2010, and to ensure that as many policyholders as possible have died of old age before any payment is finally agreed.
Quote:
"I think the whole House regrets the mismanagement of the society. I wish to apologise to policyholders on behalf of the public bodies and successive governments responsible for the regulation of Equitable Life between 1990 and 2001, for the maladministration we believe has taken place."
However, there will be no compensation merely some possible payments to those who have suffered "disproportionately" (whatever "disproportionately" really means).
Those policyholders who are hooping that they may receive some form of payment need to be aware that the Treasury's game plan is very obvious:
- Delay
- Delay
- Delay
The objective being to offload the problem into the hands of the next government (unlikely to be Labour) after 2010, and to ensure that as many policyholders as possible have died of old age before any payment is finally agreed.
Wednesday, September 24, 2008
FBI Investigation
The Times reports that the FBI is investigating a number of executives from Fannie Mae, Freddie Mac, Lehman Brothers and AIG.
The Times states that are investigating as to whether the executives lied to shareholders, and whether fraud helped caused some of the troubles at these organisation.
The investigation includes whether executives deliberately misled the stock market about the state of their businesses.
Needless to say the politicians who oppose the $700BN Paulson bailout have latched onto this as another reason not to give money to greedy Wall Street bankers.
All well and good.
However, moral hazard and regulation can be addressed after the crisis has been dealt with.
When your neighbour's house catches fire (even if he started it deliberately) you do not stand idly by watching it burn (remonstrating with him about his stupidity), you help him put it out.
Another point that those who hate greedy bankers should remember is this, people were happy enough to borrow the money when it was cheap and to saddle themselves with debt; no one put a gun to their heads.
The Times states that are investigating as to whether the executives lied to shareholders, and whether fraud helped caused some of the troubles at these organisation.
The investigation includes whether executives deliberately misled the stock market about the state of their businesses.
Needless to say the politicians who oppose the $700BN Paulson bailout have latched onto this as another reason not to give money to greedy Wall Street bankers.
All well and good.
However, moral hazard and regulation can be addressed after the crisis has been dealt with.
When your neighbour's house catches fire (even if he started it deliberately) you do not stand idly by watching it burn (remonstrating with him about his stupidity), you help him put it out.
Another point that those who hate greedy bankers should remember is this, people were happy enough to borrow the money when it was cheap and to saddle themselves with debt; no one put a gun to their heads.
Thursday, July 17, 2008
Apology Demanded
Ann Abraham, the parliamentary ombudsman, in a long delayed report has called for Britain to apologise to more than a million policyholders in Equitable Life and offer them compensation.
The apology, not that it will ever come, will be a tad late as the Equitable Life scandal occurred in 2000.
Equitable Life almost collapsed in 2000, after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.
Ms Abraham has been investigating the scandal for four years, and is quoted in The Guardian:
"(Those) responsible for undertaking financial regulation should act in a way that is compatible with the duties and powers which parliament has conferred on them.
Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report."
Vanni Treves, who became chairman of Equitable Life in 2001, said that the regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.
"Year after year, the regulators failed to do anything about problems that were absolutely evident to them.
We have paid all the bills we felt we had a duty to pay. Now the government must pay the bills for its own failures."
Abraham noted that the bodies overseeing the insurer were "passive, reactive and complacent", allowing one person to be both chief executive and appointed actuary for more than six years thereby neutralising the appointed actuary's "whistle-blower" role.
Abraham's report recommended a compensation scheme to redress losses, and called on the government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business.
The FT estimates that the cost of compensation will be around £4BN.
It is all very well calling for compensation. However, there are two issues that will ensure none is given:
1 The government is broke and cannot afford to pay any.
2 The regulatory regime that failed the policyholders was set up by Gordon Brown, to pay compensation would be an admission of failure. Brown does not do "failure" or "apologies".
Given the recent financial scandals, eg Northern Rock, it is evident that the regulatory regime in the UK has not improved one jot since the days of Equitable Life.
There are other scandals waiting to break.
The apology, not that it will ever come, will be a tad late as the Equitable Life scandal occurred in 2000.
Equitable Life almost collapsed in 2000, after being forced to honour unsustainable guarantees stretching back 30 years. It eventually closed to new business in one of Britain's most dramatic financial scandals.
Ms Abraham has been investigating the scandal for four years, and is quoted in The Guardian:
"(Those) responsible for undertaking financial regulation should act in a way that is compatible with the duties and powers which parliament has conferred on them.
Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report."
Vanni Treves, who became chairman of Equitable Life in 2001, said that the regulators' failure to tackle problems at the society meant the government should compensate policyholders who suffered losses as a result.
"Year after year, the regulators failed to do anything about problems that were absolutely evident to them.
We have paid all the bills we felt we had a duty to pay. Now the government must pay the bills for its own failures."
Abraham noted that the bodies overseeing the insurer were "passive, reactive and complacent", allowing one person to be both chief executive and appointed actuary for more than six years thereby neutralising the appointed actuary's "whistle-blower" role.
Abraham's report recommended a compensation scheme to redress losses, and called on the government to act swiftly, as tens of thousands of policyholders have already died since Equitable Life closed to new business.
The FT estimates that the cost of compensation will be around £4BN.
It is all very well calling for compensation. However, there are two issues that will ensure none is given:
1 The government is broke and cannot afford to pay any.
2 The regulatory regime that failed the policyholders was set up by Gordon Brown, to pay compensation would be an admission of failure. Brown does not do "failure" or "apologies".
Given the recent financial scandals, eg Northern Rock, it is evident that the regulatory regime in the UK has not improved one jot since the days of Equitable Life.
There are other scandals waiting to break.
Friday, April 25, 2008
A Pyrrhic Victory!
Britain's banks lost their battle in the High Court yesterday over unauthorised overdraft charges.
Mr Justice Andrew Smith ruled in favour of the OFT, stating that it can apply consumer contract regulations to decide if bank overdraft charges are fair or not.
In summing up, Judge Smith said:
"I reject the banks' contention that the Relevant Terms (the bank terms being challenged by the OFT) are exempt from assessment as to fairness under the 1999 Regulations.
This does not mean that the Relevant Terms are necessarily to be regarded as unfair or that they are not binding on consumers under the Regulations.
Those are not questions for me to decide in this judgment."
The OFT can now decide if the charges are unfair and, if so, what a fair fee should be.
However, the banks will undoubtedly appeal.
Those who expect to see a compensation cheque dropping through their door, in the near future, had better not hold their breath.
The rest of us, who did not slip into unauthorised overdrafts, can expect the banks to introduce charges on our accounts in the future.
A Pyrrhic victory!
Mr Justice Andrew Smith ruled in favour of the OFT, stating that it can apply consumer contract regulations to decide if bank overdraft charges are fair or not.
In summing up, Judge Smith said:
"I reject the banks' contention that the Relevant Terms (the bank terms being challenged by the OFT) are exempt from assessment as to fairness under the 1999 Regulations.
This does not mean that the Relevant Terms are necessarily to be regarded as unfair or that they are not binding on consumers under the Regulations.
Those are not questions for me to decide in this judgment."
The OFT can now decide if the charges are unfair and, if so, what a fair fee should be.
However, the banks will undoubtedly appeal.
Those who expect to see a compensation cheque dropping through their door, in the near future, had better not hold their breath.
The rest of us, who did not slip into unauthorised overdrafts, can expect the banks to introduce charges on our accounts in the future.
A Pyrrhic victory!
Thursday, January 31, 2008
Who's In Charge?
Alistair Darling revealed his plans yesterday to "beef up" financial regulation, in the wake of the Northern Wreck fiasco.
Rather perversely, despite the Financial Services Authority (FSA) being given a drubbing for it slack lustre approach to the Northern Wreck fiasco, the government wants to give the FSA more powers.
Darling also rejected the Treasury Select Committee's call for the Bank of England to play a greater role in monitoring individual institutions. Instead the Government plans to legislate to make the Bank of England's role in financial stability more formal.
John McFall, the chairman of the Treasury Select Committee, was unimpressed and described the proposals as "vague".
He is quoted in The Independent:
"The financial stability links between the Bank of England and the Financial Services Authority didn't work, so we need that to be strengthened.
I am looking for a mechanism to increase the financial stability area and that is vague at the moment."
Darling has also proposed that authorities be allowed to give a bank covert support, in the event of a serious problem arising that would affect consumer confidence.
The fundamental weakness of the proposals are that:
1 They give more power to the FSA, which has yet to get its house in order
2 It still does not clarify who, within the tripartite system (Treasury, FSA and Bank of England), is in charge.
Until point two, at the very least, is addressed the financial markets will be exposed to more potential Northern Wrecks.
Rather perversely, despite the Financial Services Authority (FSA) being given a drubbing for it slack lustre approach to the Northern Wreck fiasco, the government wants to give the FSA more powers.
Darling also rejected the Treasury Select Committee's call for the Bank of England to play a greater role in monitoring individual institutions. Instead the Government plans to legislate to make the Bank of England's role in financial stability more formal.
John McFall, the chairman of the Treasury Select Committee, was unimpressed and described the proposals as "vague".
He is quoted in The Independent:
"The financial stability links between the Bank of England and the Financial Services Authority didn't work, so we need that to be strengthened.
I am looking for a mechanism to increase the financial stability area and that is vague at the moment."
Darling has also proposed that authorities be allowed to give a bank covert support, in the event of a serious problem arising that would affect consumer confidence.
The fundamental weakness of the proposals are that:
1 They give more power to the FSA, which has yet to get its house in order
2 It still does not clarify who, within the tripartite system (Treasury, FSA and Bank of England), is in charge.
Until point two, at the very least, is addressed the financial markets will be exposed to more potential Northern Wrecks.
Monday, January 14, 2008
High Noon
Today marks high noon for the banks, as the the much vaunted court case begins that will determine the legality and fate of bank charges for unauthorised overdrafts.
The Office of Fair Trading (OFT) is seeking to prove that bank charges fall under the remit of consumer contracts regulations, which state that "penalty fees" must be proportionate to their cost. The banks claim that the charges, of £30 for bouncing a cheque or exceeding an overdraft limit, are not punitive and so do not fall under the terms of the act.
In the event that the OFT wins, it will begin a second case aiming to prove that fees levied on customers are too high because they exceed costs of £4 a transaction.
If the banks win, they will continue charging customers with impunity.
However, in a perverse twist, whatever the outcome of the case customers can still claim back late payment fees on credit cards of more than £12.
The banks going to court today are Abbey National, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland Group and the Nationwide Building Society. They have every reason to fight, as they make around £3.5BN per annum from these charges and stand to repay consumers £5BN if they lose.
However, whatever the outcome, you can be assured that the hapless consumer will be charged one way or another by the banks.
The Office of Fair Trading (OFT) is seeking to prove that bank charges fall under the remit of consumer contracts regulations, which state that "penalty fees" must be proportionate to their cost. The banks claim that the charges, of £30 for bouncing a cheque or exceeding an overdraft limit, are not punitive and so do not fall under the terms of the act.
In the event that the OFT wins, it will begin a second case aiming to prove that fees levied on customers are too high because they exceed costs of £4 a transaction.
If the banks win, they will continue charging customers with impunity.
However, in a perverse twist, whatever the outcome of the case customers can still claim back late payment fees on credit cards of more than £12.
The banks going to court today are Abbey National, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland Group and the Nationwide Building Society. They have every reason to fight, as they make around £3.5BN per annum from these charges and stand to repay consumers £5BN if they lose.
However, whatever the outcome, you can be assured that the hapless consumer will be charged one way or another by the banks.
Friday, January 4, 2008
More Powers
The Chancellor of the Exchequer, Alistair Darling, has said that the government will give regulators greater powers to monitor and intervene in troubled banks. This follows on from the destruction of Northern Rock by the then board.
Darling stated that the Treasury will propose legislation in May to allow the Financial Services Authority (FSA) to question banks about their "day-to-day cash", as well as allowing the Bank of England and FSA to "conduct more efficient surveillance".
I am bound to point out that had the FSA been more proactive that, within the powers that they had at the time, they would have been able to intervene earlier and probably prevent the destruction of Northern Rock.
Another aspect of this failure is that of the tripartite monitoring system; whereby the FSA, Bank of England and Treasury fight amongst themselves as to who actually is in control of the financial markets.
The result being that no one actually takes any proactive action.
Under the current rules, the Financial Services Authority supervises banks while the Bank of England sets interest rates and controls market credit costs. Darling and the Treasury manage taxpayer money and the regulation of the system.
One of these three bodies needs to be put in charge of the other two, when it comes to market regulation. That of course will not happen.
Darling stated that the Treasury will propose legislation in May to allow the Financial Services Authority (FSA) to question banks about their "day-to-day cash", as well as allowing the Bank of England and FSA to "conduct more efficient surveillance".
I am bound to point out that had the FSA been more proactive that, within the powers that they had at the time, they would have been able to intervene earlier and probably prevent the destruction of Northern Rock.
Another aspect of this failure is that of the tripartite monitoring system; whereby the FSA, Bank of England and Treasury fight amongst themselves as to who actually is in control of the financial markets.
The result being that no one actually takes any proactive action.
Under the current rules, the Financial Services Authority supervises banks while the Bank of England sets interest rates and controls market credit costs. Darling and the Treasury manage taxpayer money and the regulation of the system.
One of these three bodies needs to be put in charge of the other two, when it comes to market regulation. That of course will not happen.
Tuesday, November 27, 2007
Contact4
I wrote earlier this month about the plague of cold calls that I had been receiving from Contact4 who hide behind a variety of phone numbers (eg 08445560022, 08445560020 and 016131787000) in order to evade call blocking.
I had, at the time, raised a formal complaint with the Information Commissioner's Office (ICO).
I have now received a written response from the ICO. The ICO confirm that Cobntact4 has breached the requirements of the Privacy and Electronic Communications Regulations 2003.
So far so good!
The ICO then goes on to say that the Commissioner has no powers to punish an organisation for breach of the regulations, all that he can do is write to Contact4 reminding them of their obligations.
The ICO have written to Contact4.
Seemingly Contact4 have to continue to make a pain in the arse of themselves, before the ICO will pass on my complaint to the Regulatory Action Division.
Clearly this is not a system designed to help the individual complainant.
My question therefore is this:
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
I sent the ICO a link to this post today, together with the following questions:
"Thousands of people are being plagued on a daily basis by Contact4 (do a Google on them, or their phone numbers), why do you sit back and do nothing (ie merely write to them "reminding them of their obligations")?
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
Kind regards
Ken Frost"
I had, at the time, raised a formal complaint with the Information Commissioner's Office (ICO).
I have now received a written response from the ICO. The ICO confirm that Cobntact4 has breached the requirements of the Privacy and Electronic Communications Regulations 2003.
So far so good!
The ICO then goes on to say that the Commissioner has no powers to punish an organisation for breach of the regulations, all that he can do is write to Contact4 reminding them of their obligations.
The ICO have written to Contact4.
Seemingly Contact4 have to continue to make a pain in the arse of themselves, before the ICO will pass on my complaint to the Regulatory Action Division.
Clearly this is not a system designed to help the individual complainant.
My question therefore is this:
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
I sent the ICO a link to this post today, together with the following questions:
"Thousands of people are being plagued on a daily basis by Contact4 (do a Google on them, or their phone numbers), why do you sit back and do nothing (ie merely write to them "reminding them of their obligations")?
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
Kind regards
Ken Frost"
