Posts Tagged ‘Financial Services Reform’

The future of Libor – 2 key points from a comms perspective

On Friday I attended Martin Wheatley’s unveiling of the Government-commissioned review of Libor at Bloomberg’s offices. Wheatley, who will head the new Financial Conduct Authority, gave an hour long speech setting out the consultation. He’s set himself an ambitious task – the deadline for responses is only four weeks away and Wheatley will publish his final recommendations by the end of September.

The speech itself contained a mixture of detail and vision for the future of Libor or its replacement. From a Comms/PR point of view, there were two particularly interesting points:

1. Who Runs Libor or its replacement? At the moment, Libor is run by the British Bankers Association, the trade group and voice for the industry. Some people are concerned that Read the rest of this entry »

Europe’s troubleshooter takes on his latest challenge

THIS POST IS BY SALLIE BALE

Andrew Gowers, former Editor of the FT, is the man who claimed in 2005 that there is no future in print media, wrote a review of intellectual property for Gordon Brown, was once described by The Telegraph’s City Editor as “our man in a disaster”, was the head of media at BP during the Deepwater Horizon Crisis, and was previously Head of Communications at the ill-fated investment bank Lehman Brothers.

With a CV like that, he is surely the best choice to restore the battered reputation of Europe’s banking industry, isn’t he? Well, Reuters reported earlier this month that the Association for Financial Markets in Europe (also known by the slightly snappier acronym AFME) has appointed Gowers as their Director of External Relations in an attempt to reverse the increasingly negative public perception of the banking industry.

Financial industry body, AFME has a new troubleshooter

It would appear that Gowers has the experience to deal with big name players in crisis – but commentators question whether he is actually capable of success. Obviously the difficulty here is that by their very nature successfully-managed crises are not high profile and so we must look at other measures of success for those crises that are played out in the media.  How quickly and cleanly the company or organisation comes out of a crisis and is able to rebuild trust and reputation is perhaps a better measure.

Lehman Brothers is no more and not remembered fondly and BP is still struggling to regain lost ground. That said the crisis communications industry learnt a great deal both from the failures and successes of the BP Deepwater Horizon episode and hopefully for AFME, Gowers did too.

There is much to be learnt from BP’s Deepwater Horizon incident in 2010, and Gowers will be able to apply these learnings to AFME. Many commentators believe that the biggest obstacle facing the BP communications team was the legalities around what they were able to say, resulting in a ‘too little too late’ situation.

There are so many avenues that this journey could take; will Gowers pick a spokesperson to give the intangible concept of “The Bankers” a human face? Will he advise them to express empathy for what has happened in the past five years? Or will he just soldier on with the task of tackling the endemic structural failures of the European banking system? Will he go to where the people are and use social media to re-connect the masses with the banking industry? Would that work?

It will be interesting to follow his progress and see how his strategy will play out in the coming months, or more likely years. He has already spent three months as a consultant for AFME helping edit the AFME book Investing in Change, and so should be able to hit the ground running.

Is this the biggest challenge in Gowers’ career so far? Trying to increase transparency, please many diverse stakeholders and implement meaningful change is going to be a perplexing test for banks across Europe, but the task of communicating those changes to the European public and demonstrating that they have worked is arguably the greatest challenge of all.

FPS’ Friday Fiver

Happy weekend all! It’s been an incredibly busy week in our financial and professional services team this week, handling everything from the forthcoming surge in Christmas shopping, to understanding the world’s expats just a little bit more. Speaking of Christmas, it’s now just one month away – something our resident Christmas Enthusiast, Karen, reminds us of thanks to this handy iPhone app every single day.

Sadly, there isn’t actually a whole amount of Christmas cheer around at the moment, particularly not if you live in Europe, or indeed the US, as Ross blogged on yesterday. With that in mind this week’s Friday Fiver covers off the continuing economic situation, as well as changes for UK bank customers, and two of the biggest video games of all time. Enjoy, and happy weekend.

BYE BYE FREE MONEY…..When is a free bank account not free? Pretty much always in the opinion of the Financial Services Authority. According to this morning’s Financial Times, the financial regulator is of the belief that free current bank accounts have “distorted the landscape and led to damaging decisions about what products are available”. In other words, the costs of providing free current accounts have been made up elsewhere by retail banks charging higher fees for other services (and by selling occasionally dubious products such as PPI).

The result of all this? The FSA believes that customers should be charged for their current account to negate this problem. It may appear a controversial idea, but the UK is something of an anomaly on bank accounts in the West – lots of other countries charge for this service, albeit at a low level, so we shouldn’t really be surprised that charging may happen here too. That would certainly make starting a retail bank far easier, something Metro and Virgin would probably welcome. Any move is likely to require concerted action though – as the FT also noted, if one bank were to unilaterally start charging, customers would simply get up and walk down the road to a ‘free’ competitor.

Read the rest of this entry »

FPS’ Friday Fiver

Hello All, and welcome to a surprisingly sunny Friday in central London. There’s certainly not been a shortage of financial services and politics related stories this week, and we’ve tried to give you a flavour of some of our favourites below. Thanks as ever to Ed Jones and Jonny H for their contributions.

TAXING TIMES…..Barely a week goes by without the EU sparking controversy on our idyllic isle. Among other things it was the EU’s proposed financial transaction tax causing consternation. As noted by the Telegraph this week, John Cridland said: “The likely effect of many of Brussels’ current proposals will be to damage the UK’s prospects for growth. Nowhere is this more acutely the case than for professional and financial services, which are being bombarded with unwarranted regulation.” He went on to describe the proposals as “a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”. He didn’t stop there though, also slamming Brussels’ plans for Solvency II…

Cridland’s point was very clear - this will lead to the demise of London as a financial centre, to be overtaken by the perennial competitors New York, Singapore and Hong Kong. Sad times.

A TOUGH WEEK FOR GOLDMAN…..A lot of people like to have a dig at Goldman Sachs, but the first time in a while investors now have a reason to complain as well. It’s been a grim week for the world’s premier investment bank. Having their name dragged back into the mud following Raj Rajaratnam’s sentencing to 11 years in prison for insider trading didn’t help. Being accused of dodging a large UK tax bill didn’t exactly add to the party mood either.

Read the rest of this entry »

FPS’ Friday Fiver

posted by Edward Jones

Known unknowns…

Frank Portnoy, Professor of Law at the University of San Diego has written a fantastic article in today’s FT on market uncertainty, rogues, risk taking and trust in banks. The best we’ve seen and rather frightening, Dr Doom would be proud, because ultimately, however much we regulate, we are only basing decisions on what has happened in the past, rather than what could happen in the future – i.e, Greece defaulting.

Every picture tells a story…

Photograph: Dan Kitwood/Getty

Read the rest of this entry »

FPS’ Friday Fiver

Hello All! A little late this week, and we apologise for that, but as it’s now officially the end of summer that means it’s the start of the business season and we’ve all been a little flat out here at H&K Towers. Still, we wouldn’t want to miss out on reporting another busy week in the world of financial and professional services. And what a week it’s been. Thanks to our contributors this week: Ed, Ross, Clare and Rachel.

Turn that frown upside down…At the end of a pretty crazy August, there have been some fairly gut-wrenching figures this week from the Markit/CIPS Purchasing Managers Index (one of our clients). Declines in manufacturing output prompted fresh talk of double-dip recession, construction continued to be weighed down by weak confidence in the housing market, and all eyes are now on the all-important Services PMI which comes out on Monday.

Happy faces are hard to come by in the UK at the moment. But are we talking ourselves down too much?

Worrying indeed, but could it be that the UK economy is going through stage four of what could be termed ‘post financial crisis bereavement’ (PFCB)? According to one description, this involves ‘a feeling of listlessness and tiredness’ and possibly ‘wandering around in a daze.’

Well it certainly does feel like that sometimes but if the theory holds at least this is the final stage before acceptance sets in and the economy ‘regains its energy and goals for the future.’  It may just be the time for a bit of Vince Cable style positive thinking.

Breaking News – Football clubs spend less…The last minute wheeler-dealing of transfer deadline day was interesting for many reasons. But it’s the debate it has started about financial fair play which poses the biggest question for the future of the beautiful game. We’ve commented before on the ownership of football clubs, particularly in the immediate future. The onset of the Financial Fair Play from UEFA, requiring elite clubs to record a maximum debt of £39.5m over a three year period, may also have implications. Read the rest of this entry »

FPS’ Friday Fiver

We’re back, providing another round-up of some of the big stories from the world of financial services, the economy and Westminster this week. Contributors this week include Clare, Linzi, Jo and Ed, who bring us an overview of banking, pensions, retailers, and our new feature – Good Week/Bad Week.

Banking – fundamental flaws and failed customers…On Tuesday, Vince Cable held court at the Which? Banking Reform – An Agenda for Competition and Growth discussion at the Commonwealth Club, where he re-iterated his opinion that “banking is a structurally flawed industry that has fundamentally failed customers”.

Vince Cable - on the attack on banking once again (Image: Which.co.uk)

That the current system of banking is flawed is a no-brainer, but the harder question to answer is where exactly do the flaws lie? The conversation on Tuesday spanned the topics of increased competition, universal banking, ring-fencing, culture and behaviour along with new entrants into the banking market, but it seems that, nearly three years since the start of the global financial crisis, more questions continue to be posed than answered.

Is universal banking really the root of all banking evil? Do customers really feel their banks have failed them given so few of us have switched? With the array of initiatives, commissions, inquiries, and comite des sages taking place at the national, European and international levels, one has to hope that between them they will be able to identify and remedy the flaws that exist. However, there is the potential for all of these to come up with different flaws and different answers which complicate and confuse structures and customers alike!

Paying more for retirement…The spotlight returned to public sector pensions this week as figures leaked to The Daily Telegraph revealed exactly how much workers in the public sector will pay extra each month for their pensions.

Danny Alexander was asked how much more he personally would have to pay towards his pension this week (Image: Thesun.co.uk)

As expected, higher earners will take the brunt of the increases and the lowest paid workers, earning less than £15,000, will escape any increases at all.

Here are some of the figures from the proposals:

  • Those earning over £100,000 will pay £284 a month (£3,400 a year) more
  • Public sector workers in the £50,000 bracket will pay between £684 – £768  more
  • Those on a £35,000 salary face paying an extra £516 a year more

Despite the backlash, which was always going to happen, you can’t escape the welcome news that low paid public sector workers, some 750,000 people, will be exempt from any increase in contributions and those earning £21,000 will be out of pocket £108 a year, or just £9 a month. The fact remains that even with these increases, public sector pensions are still a valuable benefit.

We still aren’t buying much on the high street…Another worrying week for retailers as figures on Thursday showed that sales fell at their fastest pace for a year as consumers become increasingly reluctant to spend. This is brutal news for the already struggling retailers and may be a sign of further deterioration and shop closures to come.

Only one in three retailers claimed their sales volumes were up on a year ago, with food retailers being particularly hard hit – either we’ve all been hit by the rise in food costs and are watching the pennies like hawks or the nation is on a collective pre-holiday diet.

However, one retailer that isn’t afraid of the UK high street (or shall we say Oxford Street) is cut-price U.S. brand Forever 21, which opened its doors for us on Wednesday. Some critics state that we are not ready for ‘cheap, fast, American’ fashion’ but with the way things are going on the high street we may not have a choice.

George Soros - the latest financial veteran to retire

Good week/Bad week – George Soros & George Osborne…A tale of two George’s this week. For the first (the man who ‘broke the Bank of England’), the effective end of a remarkable 40 year investment career. While the manner of his retirement was a little sour, blaming US regulations, you can’t argue with his success over the years. He will likely be missed.

On the flip side, it was a less than stellar week for the younger George, who, as yet more vanilla growth figures rolled in, suddenly found himself the victim of attacks from several fronts. How he must be wishing for the summer break to roll around quickly.

FPS’ Friday Fiver

Hello again all. It’s been a frantically busy week here in the Financial & Professional Services team, but as ever we bring you the Friday Fiver which rounds up this week’s events. Thanks to contributors Mel, Nick, Jo and Jonathan this week.

Freedommmmmm…Braveheart bonds, kilt edged bonds, Connery bonds and Jonathan’s own personal suggestion of shortbread bond are just some of the names being used to describe new powers that will allow Scotland’s government to issue debt.

Mel's adopted country is about to issue its' own bonds

The Scotland Bill makes provision for the country to raise up to £2.2bn from markets to fund infrastructure projects. There had been calls to permit up to £5bn of borrowing but this idea has been dismissed and Treasury ministers are at pains to emphasise that this does not amount to writing a blank cheque. It remains to be seen what ratings agencies will make of Scotland’s credit worthiness.

Read the rest of this entry »

FPS’ Friday Fiver

Hello All, and apologies for a slightly late Financial & Professional Services Friday Fiver this week, but we’ve all been a little hectic. To round out the week we bring you banking, more banking, an Archbishop and Blackpool football club. Happy weekend all!

The Big Four Banks feel the heat….The big four revealed deep divisions on restructuring at Wednesday’s treasury select committee appearance as their CEOs jockeyed for position with the powers that be. Stark divisions were revealed on the Independent Banking Commission proposed scope for ring fencing core retail banking functions. RBS’ Stephen Hester alluded to the “moral hazard” problem if government effectively insulated the market, which could perversely encourage excessive risk taking, a view supported by Barclays.

In contrast, HSBC and Lloyds support a broader separation and more diverse mix to encourage the much needed supply of credit to the market – note the Q1 figures which reveal banks failed to stay on track with “Project Merlin” pledges.

Vince Cable - back on the banker bashing trail this week (image from Telegraph.co.uk)

Finally, Vince Cable rattled the sabre again, unveiling a not so “veiled threat” to link bank bonuses to SME lending! Will this create the required traction on this fragile detente between the City and the Government? Watch this space, but maybe don’t hold your breath.

Read the rest of this entry »

FPS’ Friday Fiver

Yes, it’s back. After a break for the Easter holiday, some glorious weather and that dress, we return with the Financial and Professional Services team’s Friday Fiver. We also have a fresh contributor this week, our new regulatory and government expert, Melanie Worthy. Other pieces this week come from regulars Ed Jones, Ross G, Karen and myself.

Crunch time for RBS and the FSA…The Treasury Select Committee and the FSA announced this week that they’ve asked City heavyweight Sir David Walker and lawyer Bill Knight to conduct an independent review of the report the FSA is producing into the failure of RBS. They will examine whether the report fairly reflects the findings of the FSA’s investigation of RBS, as well as analysis of its own regulatory activities.

Sir David Walker - charged with reviewing the demise of RBS (image from guardian.co.uk)

Walker’s unique attributes of being both a credible City figure plus a trusted Government adviser make him an obvious choice for the role. His track record helps too – he has headed Government enquiries, such as in 2009 when he examined governance at the big UK banks.

Just as well then, as he’s going to have his work cut out. However “complex” the issues were, as the FSA cites somewhat reluctantly, there will be strong media interest and expectation for answers as to the causes of RBS’ demise; the excessive cost to the public purse from bailout; and the wider malaise that played out across the banking sector as the financial crisis ensued.  Whilst Walker and Knight tread through a minefield to avoid the legal conflicts to RBS employees, they’ll be mindful of the need to show teeth and forensic review on both sides of the regulatory fence.

Read the rest of this entry »