I have feared right from the start of the current financial crisis that we would face calls for the press to be regulated and gagged. Those fears have been realised with the publication of the Treasury Select Committee’s terms of reference for its inquiry into the banking crisis.
One huge irony of this is that the extension of the inquiry to cover the role of the media was demanded by former Tory leader Michael Howard and the terms of reference were published the day before frontbench Tory spokesman Damian Green was arrested for putting information into the public domain that the authorities would rather have kept to themselves. Presumably, Michael Howard will not be lining up with his successor as leader of the Conservative Party to condemn the arrest of Mr Green as “Stalinist” as he clearly believes government and regulators have the right to resort to draconian measures to restrict the flow of important information to the public.
The Treasury Select Committee says that it will look at “The role of the media in financial stability and whether financial journalists should operate under any form of reporting restrictions during banking crises”. The ludicrous suggestion behind the extension of the inquiry to cover this is that the BBC’s Robert Peston somehow caused or contributed to the crisis through his excellent reporting, initially, about the problems facing Bradford & Bingley, and subsequently about the wider behind-the-scenes discussions between the banks and the Treasury. It is, in essence, about blaming the messenger.
Regulators and the financial institutions they are meant to regulate will be very supportive of any proposal to regulate the press. They have a vested interest in covering up their collective and individual incompetence which is the real reason why western economies are facing the worst crisis since the Great Crash of 1929. It is hard to understand the lack of comprehension of communication and public expectations in the 21st century that this threat to gag the media represents.
You first of all have to consider who would be exposed to such regulation and control. It would, inevitably, be mainstream broadcasters and publishers that, on the whole, tend to act responsibly and have an well developed sense of public duty, a duty that cuts both ways: when to publish and when not to publish. Beyond the reach of any regulator will be the sprawling, global network of bloggers and their message boards and forums where all manner of irresponsible rumours and misinformation can gain wide coverage very quickly. Who would they rather became the trusted source of information on a crisis Robert Peston or whizzyboy36 writing on a blog hosted on a web server in Uzbekistan?
The second key issue is what right do regulators and financial institutions have to withhold information about people’s savings, mortgages, pensions and so on? Throughout this crisis there has been an almost callous lack of awareness among senior figures in the financial world of the damage they have done to ordinary people, people who trusted them with their financial well being. More than ever, ordinary people will not countenance any move that appears to deny them information about what is happening to their money. For them the BBC has been a far more reliable source than any government minister, regulator or institution.
My firm, Incisive Media, already has first hand experience of how regulators will use any new powers they are given to gag the media and prevent it from publishing information that should clearly be in the public domain and it is an example that serves as a stark warning to anyone who believes financial regulators should have any say over the media.
During the summer one of our specialist weekly magazines, Professional Pensions, published a story about The Pensions Regulator and the action it was about to take against a firm of pensions trustees. The story was checked and double-checked and was 100% accurate – the facts have never been disputed. It was a model of responsible journalism.
The reaction of The Pensions Regulator was to threaten our reporter with prison, demand to know our sources and require every document we had in relation to the story. It believed that it had the absolute right to control information about such matters and that it had the powers in the Pensions Act 2004 to enforce that right. Indeed, the Act does give it extensive powers and contains no reference at all to the public interest.
Who would benefit from allowing this regulator to wield such power?
Not the market. Rumours had been flying around that the regulator was concerned about a firm of trustees and that it was going to take some drastic enforcement action against them but no-one knew which firm was in its sights. Consequently, the whole market had a dark shadow cast across it with reputable firms being asked if they were in trouble. Our story cleared that up by naming the firm concerned.
Not people in pension schemes over which this firm wielded influence. In the 21st century it is just absurd to think that people do not have a right to know that a firm that has been appointed in guardianship over their pensions has fallen considerably short of what is expected of them, as it turned out to the extent of now being investigated by the Serious Fraud Office.
It would have been the case, as it nearly always is, that the only people who benefit from greater secrecy are the incompetent and the criminal. We resisted every demand made by the regulator and are now actively promoting an amendment to the legislation to ensure that the public interest has to be considered before it can invoke the draconian powers it has been given.
The Treasury select Committee would be very unwise to listen to the likes of Michael Howard. It should concentrate on looking for the real causes of the crisis and two targets at the top of its list, auditors and ratings agencies, seem a pretty good starting point to me, not to mention the banks themselves.
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