The Treasury Select Committee has produced one of its most insightful reports this week on the accountability of the Bank of England. It puts the issue of accountability so firmly on the agenda that it actually goes much further and raises the question of whether a central bank should be independent of political control.
This has been the conventional wisdom among the major political parties for the last 15 years and when Gordon Brown moved quickly to cut the Bank free of political control in 1997 he was loudly applauded by the Liberal Democrats and quietly encouraged by the Tories. I have never supported the independence of the Bank of England and the Treasury Select Committee report's insightful analysis thoroughly vindicates that stance.
Of course the headlines this week have focused on the proposal that future governors should serve only a single eight year term - they are currently appointed for five years which can be renewed - and that the appointment should be subject to scrutiny and potential veto by the Treasury Select Committee. This has been sold by the committee's chairman Andrew Tyrie as a way of ensuring that, once appointed, the governor would be free from political interference: the rest of the report, however, sets out an aggressive agenda for future political engagement with the Bank.
Mr Tyrie summed it up well when the report was published on Monday: "Scrutiny of the Bank should reflect the needs of 21st century democracy. That means clear lines of accountability and more information made available to Parliament. It should be crystal clear who is in charge at a time of financial crisis. On all of these issues the government's draft legislation would benefit from improvement". It is in time of crisis that the select committee sets out a case for the Bank submitting to direct political control and it is these recommendations that I expect to meet the fiercest opposition from the Bank after the proposed veto on the appointment of the governor.
The recommendations on page 54 of the report do not leave much doubt as to who the select committee thinks should be in charge when there is a crisis:
"We strongly recommend that the definition of what constitutes a "material risk" for the purposes of Clause 42 of the draft Bill be contained in the forthcoming legislation. This definition should also take account of the fact that major liquidity operations by the Bank require Treasury approval--the material risk of these too must require notification to the Treasury....
"We further recommend that the Draft Bill be amended so that this early warning triggers a discretionary power for the Chancellor to be able to direct the Bank if he or she so chooses. The Bank should be required to provide such an early warning to the Chancellor as soon as the FPC becomes aware of a possibility of a material risk to public funds...
"To ensure proper accountability to Parliament, the responsibility of the Chancellor for all decisions involving public funds or liabilities in a time of crisis should be stated in the draft Bill".
These recommendations should start the debate about independence and political control of the Bank of England, one that should have been had a long time ago but which, with people pitching tents in the City to protest about their lack of influence over the financial world, is very much a debate for our time.
This has been the conventional wisdom among the major political parties for the last 15 years and when Gordon Brown moved quickly to cut the Bank free of political control in 1997 he was loudly applauded by the Liberal Democrats and quietly encouraged by the Tories. I have never supported the independence of the Bank of England and the Treasury Select Committee report's insightful analysis thoroughly vindicates that stance.
Of course the headlines this week have focused on the proposal that future governors should serve only a single eight year term - they are currently appointed for five years which can be renewed - and that the appointment should be subject to scrutiny and potential veto by the Treasury Select Committee. This has been sold by the committee's chairman Andrew Tyrie as a way of ensuring that, once appointed, the governor would be free from political interference: the rest of the report, however, sets out an aggressive agenda for future political engagement with the Bank.
Mr Tyrie summed it up well when the report was published on Monday: "Scrutiny of the Bank should reflect the needs of 21st century democracy. That means clear lines of accountability and more information made available to Parliament. It should be crystal clear who is in charge at a time of financial crisis. On all of these issues the government's draft legislation would benefit from improvement". It is in time of crisis that the select committee sets out a case for the Bank submitting to direct political control and it is these recommendations that I expect to meet the fiercest opposition from the Bank after the proposed veto on the appointment of the governor.
The recommendations on page 54 of the report do not leave much doubt as to who the select committee thinks should be in charge when there is a crisis:
"We strongly recommend that the definition of what constitutes a "material risk" for the purposes of Clause 42 of the draft Bill be contained in the forthcoming legislation. This definition should also take account of the fact that major liquidity operations by the Bank require Treasury approval--the material risk of these too must require notification to the Treasury....
"We further recommend that the Draft Bill be amended so that this early warning triggers a discretionary power for the Chancellor to be able to direct the Bank if he or she so chooses. The Bank should be required to provide such an early warning to the Chancellor as soon as the FPC becomes aware of a possibility of a material risk to public funds...
"To ensure proper accountability to Parliament, the responsibility of the Chancellor for all decisions involving public funds or liabilities in a time of crisis should be stated in the draft Bill".
These recommendations should start the debate about independence and political control of the Bank of England, one that should have been had a long time ago but which, with people pitching tents in the City to protest about their lack of influence over the financial world, is very much a debate for our time.
Anyone trying to keep track of the various proposed reforms of financial services regulation over the next few years will have to have eyes in the back of their head.
It seems that almost wherever you look in the UK, Europe and beyond someone is cooking up some changes. The major reform in the UK, of course, will be the replacement of Labour's tripartite regulatory system - the Bank of England, the Financial Services Authority and the Treasury - with a range of new regulatory units with new powers. A key element of the Coalition government's proposals is a substantial strengthening of the powers of the Bank of England coupled with the creation of a new Financial Conduct Authority. The FCA is the current front-runner as the name of the organisation that was originally penciled in to be called the Consumer Protection and Markets Authority.
Europe gets in on the act
The list of directives and regulations making their way through the labyrinthine procedures of the European Union is intimidatingly long. So long that a cynic might be tempted to wonder whether there isn't a deliberate policy of swamping the sector with consultations and drafts that it wearies of responding to them. There is hardly a sector of the retail or wholesale financial service market that isn't affected by this: hedge funds, derivatives, banking, insurance, pensions, securities, retail investments, venture capital and audit are all on the list.
If practitioners think that negotiating a way through this deluge is bad enough imagine the challenge facing those on the regulatory side of the fence. Financial Services Authority chief executive Hector Sants summed up the problem when he published the FSA's business plan back in March: "The 2011/12 business year for the FSA will be a difficult one. We have to ensure that we are operating effectively as a supervisor as well as taking forward the key policy initiative. The principal ones are progressing the domestic consumer protection strategy, implementing a number of key EU directives and influencing the continuing international regulatory reform agenda, all this has to be done at the same time as taking forward the preparations for a new regulatory structure. The regulatory reform agenda remains on track to ensure the new structure will be ready in 2012", said Mr Sants.
Parliamentary passage fraught with challenges
The FSA may find itself marking time if it is indeed ready before the end of 2012 because the pace of the Treasury's consultation and the increasing likelihood of a tough Parliamentary passage for the new structure suggests that we will be well into 2013 before the new regime is properly in place and operational. We are currently only at the stage where consultation has recently closed on a draft Financial Services Bill to enact the government's reform proposals. The huge number of responses (which can be found on the Treasury's website) will now be considered by a joint committee of both Houses of parliament which has been asked to report by 16 December. Faced with that deadline it is very hard to a Bill proper emerging before the end of the first quarter of 2012.
This would not leave sufficient time to debate it properly even allowing for the spill-over session in September, especially given the huge interest there will be in its progress and the vast scope there is for potential mischief making with it. As one example, you can already see Parliamentary forces being marshaled by the independent financial adviser community to use the debate to delay the implementation of the Retail Distribution Review. The influential Treasury Select Committee has positioned itself aggressively on this issue following a report it produced on RDR during the summer.
The committee asked for a delay in the timetable for implementing RDR beyond the current plan of 2013 and when this was rebuffed by Mr Sants and the FSA, the committee's chairman Andrew Tyrie went on the attack: "We need good conduct of business regulation but we have to make sure that the successor bodies are accountable and explain their decisions, not only to the industry but even more importantly to the millions of consumers who pay for their services". He said that the Treasury Select Committee planned to open a formal inquiry into the accountability of the Financial Conduct Authority - and that is before the Bill has even been presented to Parliament.
This all suggests the progress of the Bill will straddle two Parliamentary sessions and that it is likely to take about a year from start to finish, meaning implementation could drift deep into 2013.
While all this is going on the EU will be producing directives on Packaged Retail Investment products, Market Abuse, Financial Sector Sanctions, Audit Policy, Insurance Mediation, Money Laundering, Insurance Guarantee Schemes, not to mention a continuing debate about the implementation of Solvency II.
Keeping abreast of that lot will tax the best-resourced public affairs departments in the City.
Based on an article originally published in The Actuary, November 2011
It seems that almost wherever you look in the UK, Europe and beyond someone is cooking up some changes. The major reform in the UK, of course, will be the replacement of Labour's tripartite regulatory system - the Bank of England, the Financial Services Authority and the Treasury - with a range of new regulatory units with new powers. A key element of the Coalition government's proposals is a substantial strengthening of the powers of the Bank of England coupled with the creation of a new Financial Conduct Authority. The FCA is the current front-runner as the name of the organisation that was originally penciled in to be called the Consumer Protection and Markets Authority.
Europe gets in on the act
The list of directives and regulations making their way through the labyrinthine procedures of the European Union is intimidatingly long. So long that a cynic might be tempted to wonder whether there isn't a deliberate policy of swamping the sector with consultations and drafts that it wearies of responding to them. There is hardly a sector of the retail or wholesale financial service market that isn't affected by this: hedge funds, derivatives, banking, insurance, pensions, securities, retail investments, venture capital and audit are all on the list.
If practitioners think that negotiating a way through this deluge is bad enough imagine the challenge facing those on the regulatory side of the fence. Financial Services Authority chief executive Hector Sants summed up the problem when he published the FSA's business plan back in March: "The 2011/12 business year for the FSA will be a difficult one. We have to ensure that we are operating effectively as a supervisor as well as taking forward the key policy initiative. The principal ones are progressing the domestic consumer protection strategy, implementing a number of key EU directives and influencing the continuing international regulatory reform agenda, all this has to be done at the same time as taking forward the preparations for a new regulatory structure. The regulatory reform agenda remains on track to ensure the new structure will be ready in 2012", said Mr Sants.
Parliamentary passage fraught with challenges
The FSA may find itself marking time if it is indeed ready before the end of 2012 because the pace of the Treasury's consultation and the increasing likelihood of a tough Parliamentary passage for the new structure suggests that we will be well into 2013 before the new regime is properly in place and operational. We are currently only at the stage where consultation has recently closed on a draft Financial Services Bill to enact the government's reform proposals. The huge number of responses (which can be found on the Treasury's website) will now be considered by a joint committee of both Houses of parliament which has been asked to report by 16 December. Faced with that deadline it is very hard to a Bill proper emerging before the end of the first quarter of 2012.
This would not leave sufficient time to debate it properly even allowing for the spill-over session in September, especially given the huge interest there will be in its progress and the vast scope there is for potential mischief making with it. As one example, you can already see Parliamentary forces being marshaled by the independent financial adviser community to use the debate to delay the implementation of the Retail Distribution Review. The influential Treasury Select Committee has positioned itself aggressively on this issue following a report it produced on RDR during the summer.
The committee asked for a delay in the timetable for implementing RDR beyond the current plan of 2013 and when this was rebuffed by Mr Sants and the FSA, the committee's chairman Andrew Tyrie went on the attack: "We need good conduct of business regulation but we have to make sure that the successor bodies are accountable and explain their decisions, not only to the industry but even more importantly to the millions of consumers who pay for their services". He said that the Treasury Select Committee planned to open a formal inquiry into the accountability of the Financial Conduct Authority - and that is before the Bill has even been presented to Parliament.
This all suggests the progress of the Bill will straddle two Parliamentary sessions and that it is likely to take about a year from start to finish, meaning implementation could drift deep into 2013.
While all this is going on the EU will be producing directives on Packaged Retail Investment products, Market Abuse, Financial Sector Sanctions, Audit Policy, Insurance Mediation, Money Laundering, Insurance Guarantee Schemes, not to mention a continuing debate about the implementation of Solvency II.
Keeping abreast of that lot will tax the best-resourced public affairs departments in the City.
Based on an article originally published in The Actuary, November 2011
Well, their shares went up this morning on publication of the Banking Commission report so the markets obviously think it could have been alot worse. To me the proposals look messy, indecisive and overly complex and lack the courage to drive through to the obvious conclusions.
First a caveat. The full report is 214 pages long and I haven't had a chance to read it in detail. I think I have got the main points straight but if there are nuances I have missed then I'll catch up with them later.
It seems to me that the complex proposals for splitting retail and investment banking operations within single ownership structures are acknowledging that the two activities are far from compatible with each other and that one - retail - needs protecting from the extreme hazards of the other - investment. If that is really what the Banking Commission thinks then why doesn't it advocate the cleaner, simpler solution of enforcing separation? By giving the major banks the option of remaining broadly-based banking groups the Commission is in danger of creating a very costly regime. It will cost the banks substantial sums to implement it and it will require very close supervision to ensure that the internal walls are effective.
Of course, the Commission may think that it is being clever by not opening itself up to accusations that it is merely trying the turn back the clock to the era of Glass-Steagall (the post Great Crash of 1929 US legislation that enforced separation until it was repealed by the Clinton administration in the 1990s). It may feel that this more draconian solution could be vulnerable to attack by the banks and that the whole report could fall as a result. Certainly the very tame initial response from the British Bankers' Association suggests that the report is not easy to attack from the banks' perspective. It would be going too far to say that the Commission has wrong-footed the banks but it appears to have given them just enough that they know a knee-jerk response would not be appropriate.
Politically, the report strikes a very careful balancing act. It makes looks to be something that both Conservative and Liberal Democrat ministers could sign up to without too much difficulty. There is little point in producing reports that have little chance of becoming reality because they lack the requisite political sensitivity. The world is littered with well meaning reports on all manner of subjects with have never been implemented because they are lacking in this crucial political awareness. That said, I still think the Commission has almost tied itself in knots in trying to offer something to everybody.
Where it definitely falls down is in the recommendation that Lloyds sells off more branches.
The prompt for this is a sensible concern that there is a lack of competition in the retail banking sector but this is not going to be resolved by swapping a few branches and making it easier to switch accounts. We need more players in the market and a diversity of ownership. This is where the report disappoints as it fails to propose that the government use its ownership of large slabs of the banking sector to explore the options for breaking them up into smaller units as they are returned to the private sector. Alongside this the government should be looking to create greater diversity of ownership by introducing some mutual ownership back into the banking sector. The Treasury Select Committee saw the potential for this when it reported before last year's General Election and it would be worthwhile people re-reading that report as they digest and debate today's recommendations from the Banking Commission.
Minutes of meeting on RDR now available
04 Jan 2011
The formal note of the meeting on the Retail Distribution Review held just before Christmas has been published. APPG - note of meeting _RDR_ 201210.pdf
We are planning to arrange some further meetings on this topic to complement the short enquiry being carried out by the Treasury Select Committee and further details should be available soon.
We are planning to arrange some further meetings on this topic to complement the short enquiry being carried out by the Treasury Select Committee and further details should be available soon.
Yesterday's meeting of the All Party Parliamentary Group on Insurance & Financial Services to discuss the implications of the Retail Distribution Review for Independent Financial Advisers attracted alot of interest from MPs as well as a full public gallery.
It heard from four different perspectives but there was an underlying consitency around their messages : RDR is going to happen and happen largely in the form now proposed. There were, of course, differences about the detail and, especially from the IFA representative calls for the Financial Services Authority to review some of the important details.
Those presenting to the MPs were:
The meeting was also important because it heard the consumer viewpoint that was strangely absent from the debate in the House. While Which? praised IFAs over tied advisory channels it made clear that there was considerable scope for improvement if the sector was to move on from the dark days of mis-selling and enter the bright new world of genuine professionalism.
Did all of this persuade MPs like Harriett Baldwin, Mark Garnier and Heather Wheeler that all is sweetness and light with RDR? No, far from it so the debate will run for sometime yet in Parliament. We have the Treasury Select Committee set to take evidence and produce a report and we have already seen the FSA get in with a blunt opening salvo on that front. This enquiry will produce a report that will also be debated in Parliament and which, unlike the November debate, will probably lead to a vote. Just because nobody apart from Treasury minister Mark Hoban rushed to the defence of the FSA and RDR in the last debate shouldn't lead to the conclusion that a vote on a Treasury Select Committee report (which may or may not come out against RDR or certain features of it) will result in triumph for the opponents of the perceived harsher aspects of the regime. If there is any real danger of that happening the government whips will be out to ensure it doesn't. They will have their work cut out, however, judging by the success of the lobbying that has been done to date.
IFAs do have a chance to extract some concessions from the FSA and the agenda put forward by AIFA looks sensible, realistic and achievable. Of course, it is not backing those IFAs fighting a broader front against RDR but it has them to thank for the fact that there is a fresh engagement with their agenda. Indeed, I would go as a far as to say that the whole industry owes the anti-RDR IFAs a debt of gratitude as there have been very few times in the 25 years plus I have been covering the financial services sector and its relationship with Parliament when so many MPs have been willing to attend and speak in a debate on an issue of genuine concern and importance to the industry. When it has happened in the past it has usually been because of some serious failing on the part of the industry - Equitable Life, pensions mis-selling, the endowment scandal and so on. But then, those issues are the reasons why we have RDR in the first place and why it shouldn't go away.
It heard from four different perspectives but there was an underlying consitency around their messages : RDR is going to happen and happen largely in the form now proposed. There were, of course, differences about the detail and, especially from the IFA representative calls for the Financial Services Authority to review some of the important details.
Those presenting to the MPs were:
- Stephen Gay, Director General, Association of Independent Financial Advisers
- Sandy Scott, Chief Executive, Chartered Insurance Institute
- Dominic Lindley, Principal Policy Advisor, Which?
- Sheila Nicoll, Director of Conduct Policy, Financial Services Authority
The meeting was also important because it heard the consumer viewpoint that was strangely absent from the debate in the House. While Which? praised IFAs over tied advisory channels it made clear that there was considerable scope for improvement if the sector was to move on from the dark days of mis-selling and enter the bright new world of genuine professionalism.
Did all of this persuade MPs like Harriett Baldwin, Mark Garnier and Heather Wheeler that all is sweetness and light with RDR? No, far from it so the debate will run for sometime yet in Parliament. We have the Treasury Select Committee set to take evidence and produce a report and we have already seen the FSA get in with a blunt opening salvo on that front. This enquiry will produce a report that will also be debated in Parliament and which, unlike the November debate, will probably lead to a vote. Just because nobody apart from Treasury minister Mark Hoban rushed to the defence of the FSA and RDR in the last debate shouldn't lead to the conclusion that a vote on a Treasury Select Committee report (which may or may not come out against RDR or certain features of it) will result in triumph for the opponents of the perceived harsher aspects of the regime. If there is any real danger of that happening the government whips will be out to ensure it doesn't. They will have their work cut out, however, judging by the success of the lobbying that has been done to date.
IFAs do have a chance to extract some concessions from the FSA and the agenda put forward by AIFA looks sensible, realistic and achievable. Of course, it is not backing those IFAs fighting a broader front against RDR but it has them to thank for the fact that there is a fresh engagement with their agenda. Indeed, I would go as a far as to say that the whole industry owes the anti-RDR IFAs a debt of gratitude as there have been very few times in the 25 years plus I have been covering the financial services sector and its relationship with Parliament when so many MPs have been willing to attend and speak in a debate on an issue of genuine concern and importance to the industry. When it has happened in the past it has usually been because of some serious failing on the part of the industry - Equitable Life, pensions mis-selling, the endowment scandal and so on. But then, those issues are the reasons why we have RDR in the first place and why it shouldn't go away.
IFAs drive RDR concerns up the political agenda
10 Dec 2010
One group certainly took the advice I offered last month about doing more to connect with MPs and Parliament and it has paid off already.
Independent Financial Advisers up and down the country have been lobbying hard to bring MPs' attention their many concerns about the progress and implementation of the Retail Distribution Review. A few months ago you would have said they were wasting their time as all the arguments had been heard before and had failed to shift the Financial Services Authority from its chosen course. A combination of IFA perseverance and alot of new MPs still keen to engage with businesses in their constituencies has produced a result that few, including the FSA, expected: RDR back on the political agenda with the resultant pressure on the regulator to re-think some of its proposals.
The big break though came a couple of weeks ago when the Conservative MP for Wyre Forest, Mark Garnier, secured a two hour debate on the floor of the House of Commons. Over 40 MPs from the three main parties spoke in this debate and about twice that number attended it, both unusually high figures for such a narrow, specialist topic. There was very little disagreement among the MPs about the need to re-visit RDR. There was alot of focus on grandfathering rights, concern about the amount of time required to compete the new qualifications, the costs - put at £1.7bn, the rigid requirements on fees and the fear that many experienced IFAs would leave the market. This was estimated by Mr Garnier at as many as 10,000, a figure not disputed during the debate. It was a scenario that alarmed many MPs from rural constituencies who feared that IFAs could become as scarce as Post Offices.
These concerns did not get alot of house room from the government as Mark Hoban, the Financial Secretary to the Treasury, largely defended the FSA and the RDR, although he did try to offer some reassurances on where the costs would fall. He did, however, acknowledge that this issue is now firmly on the political agenda. The Treasury Select Committee has said that it will take evidence on the subject very soon which will ensure it remains very much a live political issue.
In the meantime, the All Party Parliamentary Group on Insurance & Financial Services will also be examining the issues raised by IFAs at its last meeting of the year next Wednesday when it will hear from the Association of Independent Financial Advisers, the Chartered Insurance Institute and the Financial Services Authority. The meeting takes place in Committee Room 18, House of Commons at 4.30pm on Wednesday 15 December and it is open to the public.
Two months ago I would have said there was no chance of re-opening this debate and even less of changing the FSA's mind on any of the issues. Now I am not so sure. I think if IFAs keep a tight focus on two or three key issues they could win some concessions. The trap I see looming is that some IFAs are in danger of getting abit gun-ho and seem to think that they now have a chance to force the whole RDR back to the drawing board. They don't. What they do have is an opportunity to limit the more draconian aspects of RDR and, crucially, reduce the financial and administrative burden on them and their business. They just need to keep focused on objectives that are achievable.
Independent Financial Advisers up and down the country have been lobbying hard to bring MPs' attention their many concerns about the progress and implementation of the Retail Distribution Review. A few months ago you would have said they were wasting their time as all the arguments had been heard before and had failed to shift the Financial Services Authority from its chosen course. A combination of IFA perseverance and alot of new MPs still keen to engage with businesses in their constituencies has produced a result that few, including the FSA, expected: RDR back on the political agenda with the resultant pressure on the regulator to re-think some of its proposals.
The big break though came a couple of weeks ago when the Conservative MP for Wyre Forest, Mark Garnier, secured a two hour debate on the floor of the House of Commons. Over 40 MPs from the three main parties spoke in this debate and about twice that number attended it, both unusually high figures for such a narrow, specialist topic. There was very little disagreement among the MPs about the need to re-visit RDR. There was alot of focus on grandfathering rights, concern about the amount of time required to compete the new qualifications, the costs - put at £1.7bn, the rigid requirements on fees and the fear that many experienced IFAs would leave the market. This was estimated by Mr Garnier at as many as 10,000, a figure not disputed during the debate. It was a scenario that alarmed many MPs from rural constituencies who feared that IFAs could become as scarce as Post Offices.
These concerns did not get alot of house room from the government as Mark Hoban, the Financial Secretary to the Treasury, largely defended the FSA and the RDR, although he did try to offer some reassurances on where the costs would fall. He did, however, acknowledge that this issue is now firmly on the political agenda. The Treasury Select Committee has said that it will take evidence on the subject very soon which will ensure it remains very much a live political issue.
In the meantime, the All Party Parliamentary Group on Insurance & Financial Services will also be examining the issues raised by IFAs at its last meeting of the year next Wednesday when it will hear from the Association of Independent Financial Advisers, the Chartered Insurance Institute and the Financial Services Authority. The meeting takes place in Committee Room 18, House of Commons at 4.30pm on Wednesday 15 December and it is open to the public.
Two months ago I would have said there was no chance of re-opening this debate and even less of changing the FSA's mind on any of the issues. Now I am not so sure. I think if IFAs keep a tight focus on two or three key issues they could win some concessions. The trap I see looming is that some IFAs are in danger of getting abit gun-ho and seem to think that they now have a chance to force the whole RDR back to the drawing board. They don't. What they do have is an opportunity to limit the more draconian aspects of RDR and, crucially, reduce the financial and administrative burden on them and their business. They just need to keep focused on objectives that are achievable.
It's time to take notice of Parliament
11 Nov 2010
I have often urged the wider insurance industry and financial services sector to do more to engage with Parliament and not leave all the lobbying to trade associations. This week is a sharp reminder of why that is necessary now as much as it has ever been.
Let's step back briefly and remind ourselves of what we are dealing with.
First, Parliament makes the laws that change the lives of people, the businesses they work in and depend on. It is no good trying to plead that what goes on in Westminster is not relevant to you or that you don't want anything to do with it because you don't like politicians. It is there, it is important and it isn't going to go away unless we lurch into dictatorship which we haven't done since the days of Oliver Cromwell.
Second, it is full of new people as around one third of MPs - the largest proportion since the end of the Second World War - were newly elected in May. This has both benefits and drawbacks. It brings fresh thinking into Parliament, new expertise and a renewed vigour. On the down side, it means that alot of knowledge and understanding of the insurance and financial services sectors (among others) has gone out of Parliament. This poses a challenge.
Third, there is one hell of alot going on at the moment that directly affects the industry and its customers. Take just the last few days for instance.
As I said, that is just in the last few days. In the background the Finance Bill, which enacts the radical Budget proposals put forward by Chancellor George Osborne last month, has been rumbling along. There is lots more too.
The industry is quite well served at the moment by its various trade associations. The Association of British Insurers is at its most effective for some years, the British Insurance Brokers' Association has stepped up to the plate, Lloyd's is a polished performer in Parliament, the various IFA trade bodies are doing a good job and there are others contributing too. However, the national trade bodies can only do so much. MPs, especially those with slim majorities, have to pay attention to their constituencies and are usually keen to accept invitations from businesses to meet them and their staff. This is where everyone in the industry has a role to play, especially in hammering home the message that UK financial services is about alot more than just the City of London.
Don't forget too that MPs face an uncertain future. If the Bill to reduce the number of MPs to 600 goes through alot of them are going to face the next election with new boundaries and thousands of voters that they don't know and who don't know them. We will even see MP fighting MP in some areas. This means they are especially keen to make as many contacts as possible and listen to the concerns of businesses in their constituencies. Believe me, this sort of local lobbying makes a difference.
So, make it a priority to contact your MP, especially if they are new (and regardless of party), introduce them to your business and start to inform them about what the laws they are debating in Parliament right now will mean for your business, your staff and your customers.
Let's step back briefly and remind ourselves of what we are dealing with.
First, Parliament makes the laws that change the lives of people, the businesses they work in and depend on. It is no good trying to plead that what goes on in Westminster is not relevant to you or that you don't want anything to do with it because you don't like politicians. It is there, it is important and it isn't going to go away unless we lurch into dictatorship which we haven't done since the days of Oliver Cromwell.
Second, it is full of new people as around one third of MPs - the largest proportion since the end of the Second World War - were newly elected in May. This has both benefits and drawbacks. It brings fresh thinking into Parliament, new expertise and a renewed vigour. On the down side, it means that alot of knowledge and understanding of the insurance and financial services sectors (among others) has gone out of Parliament. This poses a challenge.
Third, there is one hell of alot going on at the moment that directly affects the industry and its customers. Take just the last few days for instance.
- The Transport Select Committee is enquiring into the rise in motor insurance premiums
- The Treasury Select Committee is looking at the proposed regulatory changes with Lloyd's appearing today
- Yesterday there was a debate and vote on compensation for Equitable Life policyholders
- Yesterday there was a meeting of the All Party Parliamentary Group on Insurance & Financial Services to discuss flood defence spending
- On Monday the Government announced that there will be a three hour debate on the Retail Distribution Review
As I said, that is just in the last few days. In the background the Finance Bill, which enacts the radical Budget proposals put forward by Chancellor George Osborne last month, has been rumbling along. There is lots more too.
The industry is quite well served at the moment by its various trade associations. The Association of British Insurers is at its most effective for some years, the British Insurance Brokers' Association has stepped up to the plate, Lloyd's is a polished performer in Parliament, the various IFA trade bodies are doing a good job and there are others contributing too. However, the national trade bodies can only do so much. MPs, especially those with slim majorities, have to pay attention to their constituencies and are usually keen to accept invitations from businesses to meet them and their staff. This is where everyone in the industry has a role to play, especially in hammering home the message that UK financial services is about alot more than just the City of London.
Don't forget too that MPs face an uncertain future. If the Bill to reduce the number of MPs to 600 goes through alot of them are going to face the next election with new boundaries and thousands of voters that they don't know and who don't know them. We will even see MP fighting MP in some areas. This means they are especially keen to make as many contacts as possible and listen to the concerns of businesses in their constituencies. Believe me, this sort of local lobbying makes a difference.
So, make it a priority to contact your MP, especially if they are new (and regardless of party), introduce them to your business and start to inform them about what the laws they are debating in Parliament right now will mean for your business, your staff and your customers.
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He has the rather strange job of 'shadowing' his Lib Dem colleague Vince Cable from the government benches where the Liberal Democrats now sit. At a meeting in the National Liberal Club last night, he made it clear that he sees his role as supporting Mr Cable while making sure that some of his party's key pledges on on better support for smaller businesses are still on the Coalition's agenda. In particular, he stressed the need for regional enterprise funds that are not dependent on the current banking sector for making judgements on the viability of business plans as at present. Mr Thurso also explained his enthusiasm for the creation of regional stock exchanges which he beleives could help small to medium sized firms expand by raising equity rather than become reliant on debt.
He also set out his view that part of the problem in the banking sector is the clash of cultures between investment banking and retail banking which is why he is a keen supporter of the separation of the two. His concern wasn't so much about so-called casino banking, a view he dismissed as rather superficial, but more the simple fact that the dominance of investment banking (especially in terms of profits) in some of the large banking groups has sidelined the retail side and diluted their expertise in the small business sector.
John Thurso is one of the more colourful members of the House of Commons - the first hereditary peer to sit as an MP, a successful businessman and probably the only MP to have appeared naked on television. The Wikipedia entry fills in some of the gaps.
The current list of members of the All Party Group is here: APPGmembers 07:10.pdf
About the Author
David has been a financial journalist for 30 years and is currently Group Editorial Services Director at Incisive Media.
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