Saturday, 29 November 2008

Financial Services Authority Does it Again...Not

The FSA has issued its latest design brief for the FS 'market', called the Retail Distribution Review - 'RDR' for short.
It's flawed. Why? Because it is impossible to design a free market. The RDR is just the latest iteration of the FSA's (the Government's poodle / attack dog) manual for more nationalisation lite.
Anyway, if you want to 'reform' distribution of product it can be set out on one side of A4. Tabulate the differences between those distributors who are the agents of the client and those who aren't. This will mean that all IFA's will be on one side and everyone else (Banks, Building Societies, Insurance and Investment companies etc) on the other.
Make it clear to everyone that IFA's sell advice, not product, and that products will occasionally be supplied as part of that advice. Secondly make it equally clear that every other market participant is selling product and that buyers should beware - caveat emptor applies. Thirdly make it compulsory to disclose the true full costs of distribution and commission on all product sales.
The essential message is that every product seller who is not the client's agent is not to be trusted and their product recommendations should be viewed with suspicion.
I mean, how hard can it be?

Monday, 24 November 2008

Brown to "Cut Taxes to Boost Economy"

Headlines today; 'Brown to cut taxes to Boost Economy.'

Excellent. An admission that taxation reduces the economy.

Next step. Cut State sepnding.

I mean, 'how hard can it be'?

Wednesday, 19 November 2008

More Regulatory Ranting...

We work with the 'regulator' of financial services and it is becoming more dysfunctional by the day. I think it thinks (knows?) the game is up for the Brown regulatory system.

In the last 12 months I have met FSA representatives twice, in open meetings, and challenged them on their proposals for Treating Customers Fairly (TCF) and the upcoming Retail Distribution Review. Both of these are unworkable since, for the former it depends on who defines what is 'fair' - impossible to do fairly (!) - and the latter 'designs' the market for retail financial services, also impossible. When challenged on these arguments the FSA people could not produce a sound philosophical rationale to support their proposals. They knew they were flawed, but as relatively junior people they no doubt do not have the power to do anything about it.

Ultimately the FSA rule book operates as a form of 'nationalisation lite' which goes a long way to explaining why it will, and has, failed.
It therefore does not surprise me at all that it is now carrying conflicting actions in regards to retail banking.

The trouble with the Brown type of overweening regulation is that it encourages the regulated to abandon common sense and abrogate responsibility by slavishly relying on the regulatory rules to run their businesses rather that adopting sound business practices. If some financial product passes the compliance check it must be OK. The fact that these bad rules are enforced by a Draconian and unaccountable and arbitrary fining process just reinforces the surrender of management responsibility because even if you put right an honest error you will get castigated.

So a key part of getting the banks working again is to wholesale reform the Brown inspired FS regulatory system

Saturday, 8 November 2008

The Blogging Party is Here! (UK Version)

The Launch of the Blogging Party
I hereby officially launch a new force in UK politics, The Blogging Party. This is in direct response the asinine statements of that fanciable fathead Hazel Blears on the nihilistic politics of bloggers.
The party's political stance can best be described as Anglo Saxon Mixed Race Non Internationally Interventionist Libertarian Democratic Judeo Christian free market socially just, thrifty and responsible with compassion and with a firm commitment to the rule of English Common and Commercial Law and the sovereignty of Parliament. It will also by definition have a very highly developed sense of the ridiculous and be able to laugh at itself. It has no ambition for power, holding to the Spike Milligan view that anyone who wants power (or a handgun) is constitutionally disqualified from having it (or owning one).
Membership is free. Donations will be sought in due course to field candidates. The first of these should be by rights in HB's constituency of Salford.
If anyone can be remotely arsed in getting involved - because I am having difficulty retaining my enthusiasm even as I type this - can comment below.