Gordon Brown under pressure to bring some stability and confidence back into the financial markets here in the UK brings back from the political wilderness of European politics the man he feels will do just that and put New Labour back into contention in the run up to the election in 2010.
Sub Prime lending has certainly had an enormous amount to do with the downfall of banks across the globe and at the centre of this both here and in the States has been the appalling lending criteria adopted by banks with stories of nine times earnings and fabricated applications. Liar loans as they have become known have obviously been ignored by lenders anxious to increase mortgage books which they have neatly packaged up and sold on to unwitting (or stupid) investment banks.
And so it is quite a “master stroke” then for Gordon Brown to herald the return of a man (former enemy and now “joined at the hip”), who showed scant disregard to the pre requisite of being honest when submitting a mortgage application, to become the Secretary of State for Business, Enterprise and Regulatory Reform !
I have been out of the industry for quite a while now but I know how I would feel if I was still trying to run an IFA business struggling to earn a living and with unknown increases in the ICS liability over the next few years, that this man, whose political career shows no sign of disintegrating around him as he makes a third come back and did not have to worry about the actions that he took, be placed in a position where he will be lecturing businesses and of course at the heart of still further Regulatory Reform !!!
No doubt Mandelson will soon be telling you all how to treat your customer fairly and that if you don’t then you will be closed down with no chance of a comeback into your chosen career… EVER !!!!!!!
Brian Foster - Kingswood (ex IFA)
Financial services regulation in the UK is a mess. The manner in which regulation has been set up and run has added to the crisis. It has regulated the wrong things in the wrong way very badly. It has increased risk. The main achievement of the FSMA 2000 is that compliance departments end up running the business. It works like this. A banker has an idea for a new product. He takes it to his boss. ‘Before I even look at this, can you confirm that compliance has seen it and approved it?’. ‘No’. ‘Get them to check it and then come back’. ‘OK’. Later. ‘Compliance says it complies’. ‘Right, is it going to make money?’. ‘Yes’. ‘Get on with it’. In other words the bank or whoever never really thinks about the product. It relies on its compliance department. This is no good as compliance departments are staffed by people who are attracted by rules. They are especially delighted when the rule books are wonderfully, convolutedly prescriptive. They can spend hours playing games with the language and the rules. If the rules can be satisfied by a check box system, even better. Common sense is evident by its absence. The current regulatory regime is not only useless with its divided responsibilities it is useless because it is prescriptive and wildly over-complicated. It needs to be scrapped. Simpler regulation, or rather supervision, by experienced market professionals would be far more effective. The FSMA 2000 must be repealed.
| "Evan" <evan.owen@if 03/10/2008 11:37 |
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