Shocks & Stares » Retail Distribution Review H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 en hourly 1 FPS’ Friday Fiver Fri, 22 Jul 2011 14:08:08 +0000 David Chambers Hello All! It’s been another very heavy week of news, and equally heavy rain here in London – will summer ever raise its head again? Given the weather is playing havoc with any outdoor plans for the next few hours, we’ve put together another series of five key stories of the week from the world of financial and professional services. Thanks as ever to Ed, Mel and Jo for their contributions.

When is a default not a default?…Here are two rather intriguing and perhaps contradictory headlines for you from the same news website today: ‘Greece deal sparks bank-led European share rally‘, and ‘Fitch declares Greece default‘.

Greece - lives to fight another day

So which is it? The answer, rather confusingly, is both, depending on who you listen to. What isn’t in doubt is that eurozone countries have agreed another bailout package for Greece (though some have their doubts as to whether it’s big enough). This in turn, has sparked a market rally.

What also isn’t in doubt though, is that ratings agency Fitch have declared that because the deal involves private lenders ‘taking a haircut‘ on some of their debt, Greece has undergone a ‘restricted default’. At least in part. Confused? Quite possibly. What does it mean? That Greece continues to rage against the dieing of the light for a little longer, and that the other PIGS get some brief respite as well.

UPDATE – It seems we may have spoken too soon. According to Channel 4’s Economics Editor, Faisal Islam, Fitch is now not declaring Greece to be in restricted default.

Britain’s economy 2011 – what might we think in 2021?…What will be made of the Government’s economic policy in years to come? Will George Osborne’s approach be heralded as a masterstroke which got the nation back on its feet or criticised for paralysing the economy, engendering neither deficit reduction nor economic growth?

It’s a particularly intriguing question, given broad public support for the Government’s economic programme, both by economists and a significant proportion of the public. Are tough decisions being made now in the knowledge of public empathy undermining future economic growth? Ed pondered this issue in light of public sector borrowing figures rising last month, the corollary of this being missed borrowing targets set by the OBR, and subdued growth figures, emphasised by the depressing weather and decline in food sales.

The Chancellor has rebutted calls for a ‘plan b’ and there is little indication of a shift in his strategy. To be fair his hands are tied with the ever present threat of a downgrade in the UK’s credit rating. But it is continued suppression of growth that is alarming and the reluctance to use the domestic tools which are available, most notably VAT, to alleviate matters (something that some are pressing hard for).

George Osborne - hanging tough, but the pressure is growing (Image:

Of course, by the time the General Election comes round the issue of growth may be redundant as the economic cycle picks up and returns a Conservative led Government. The alternative of a Japanese style decade of slow growth is put forward by David Miliband in the Huffington Post and an assessment Ed’s more inclined to agree with.

Whilst he hopes it is the former which comes true, the analysis closest to reality will no doubt be the subject of textbooks for years to come. The added dynamic of a supportive public and the impact this has on political economic decisions will be a particularly fascinating area of study.

A right royal row over the retail review…The first rule Mel learned as a young diplomat is that you don’t launder your dirty policy in public, as witnessed by the unedifying swift exchange of “in the public domain” letters between the Treasury Select Committee (TSC) and the FSA this week, following the former’s recommendation to a one year delay in introducing the Retail Distribution Review (RDR). But relations, of course, deteriorated there a long time ago.

The fact that the FSA, as the TSC put it so bluntly, made a “precipitate” move to circulate an embargoed response to their report does look clearly premeditated and indeed “pre-emptory” and an act the TSC “deprecates”. This is regulatory blue language…

Not so, cried the FSA – apparently misunderstood – and planning to submit a considered response to TSC by the end of September. Meanwhile, other regulatory heavyweights waded in – predictably the Association of Independent Financial Advisers quickly offered its firm support for the TSC’s calls for delay. Against this were Which? and the Financial Services Consumer Panel, urging no delay from the timetable.

At stake, a regulatory bun-fight around the pace of reform to introduce higher professional standards in the advisory community. The TSC feels that the current timetable will – needlessly – put a large number of experienced financial advisers out of business.

A lasting regulatory peace around this issue remains elusive. The question is, where does this leave the consumer in the brave new regulatory era to come?

Andy Hornby - new CEO at Coral

Good week/bad week – Andy Hornby…Perhaps we should make this a new feature of the Friday Fiver with a different candidate each week? If so, then Mr Hornby is a good contender for the first slot. Having left Alliance Boots in March saying he ‘needed a break’ from the corporate world, the increasingly Lazarus-like Hornby surfaced again in his new role as CEO of Coral on Monday.

Timing is everything though, and scarcely had the champagne been poured, then it may have turned a little flat in the former HBOS man’s glass as the FSA announced an enquiry into the former bank’s collapse.

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