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by Introducer Today, November 26, 2009.

The Financial Services Authority (FSA) has announced the appointment of five new senior advisors who will assist the FSA in its work on governance issues from 10 January 2010.

These advisors will provide input into developing the FSA’s regulatory framework for ensuring effective governance in financial institutions, and will also contribute to the panel interview process for individuals wishing to take up major board positions in the UK’s largest financial institutions.

The new advisors are: Sir Dominic Cadbury, Baroness Hogg, Lord Marshall, Sir Brian Pitman and Sir David Scholey.

In a bid to intensify its more hands-on approach to supervision the FSA has made clear that it is now seeking to judge competence as well as probity with regard to individuals holding significant influence functions (SIFs).

In October the FSA wrote to firms to reinforce how its intensive regulatory approach applied to the FSA’s vetting of individuals applying for roles classed as SIFs.  This included details about the SIF interview process conducted by a senior panel drawn from the FSA executive and its existing advisory group…(continue reading)

by HM Treasury, November 26, 2009.

The Government announced on 26 November 2009 that it will move quickly to implement the reforms of bank pay and governance proposed by Sir David Walker. Sir David’s review was commissioned by the Government earlier this year to explore failures of corporate governance and management of banks.  His final report suggests a series of reforms to strengthen the role of shareholders, improve the quality of bank boards, and to increase transparency of pay and bonus policies.

Background

The Walker Review of Corporate Governance of UK Banking Industry was announced on 9 February 2009 by the Prime Minister, the Chancellor of the Exchequer, and the Secretary of State for Business, Innovation, Universities and Skills. Sir David Walker was asked to conduct a review of the corporate governance of banks and other financial firms, to recommend how financial institutions can better equip themselves to respond to lessons learnt from the crisis. An interim report was produced on 16 July and the consultation ran until 1 October 2009.

In responding to the Review, the Government has endorsed the call for major changes to the way that bank boards function, including improved risk management, more effective control and enhanced disclosure of remuneration, more effective and better informed directors, and enhanced engagement between boards and shareholders…(continue reading)

Banks win in overdraft charges case

With the recent ruling on excessive bank charges on overdraft fees by the Supreme Court in favour of the banks there has been increased speculation that the law has been wilfully misinterpreted so that further financial issues for the banks can be avoided. It has been widely acknowledged that should the Office of Fair Trading (OFT) have won the case against the banks this would have resulted in a loss of £2.6 billion annual income to the banks. It seems to me that both the Supreme Court and the banks in the UK forget we, the taxpaying public, now part own the banks.

I suppose in the current economic crisis that is still gripping the UK, the ruling probably should not come as that much of a surprise to us. Unfortunately it is relatively easy to understand why they ruled in favour of the banks. However, this does not mean that they were right.

Consumers and small businesses alike have every right to be appalled by the outcome of this case, made worse by the pompous arrogance displayed in the British Bankers’ Association (I can think of a better name for them!) comments that the charges were an important part of current account services and the amounts were “not assessable for fairness”. They went on to say:

“We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties.”

However, considering the banks make a third of their retail revenues from unarranged overdraft fees that are not only difficult to understand, are not transparent in any way and are not subject to consumer control how much clarity this case has actually brought is debatable really! All it’s really done is highlighted that these were all issues to begin with.

It is also worth considering that the cost to the bank of unauthorised overdraft fees is as little as £2.50 and yet they feel the need to charge a flat rate of anything up to £35.00 a time! In reaction to the outcome of this case the Liberal Democrat Leader, Nick Clegg, stated:

“Regardless of the legal position, it simply isn’t right that someone on a low income should pay £25 or more to their bank just because they’re overdrawn by a pound or two.”

Unfortunately, as well as consumers, it is also apparent that many Small businesses are likely to continue to be affected by the unfair, excessive charges made by the banks when an account goes over the agreed overdraft limit.

The question has to remain – if the UK’s small businesses are seen as the “backbone” of our economy and require more money pumped into them why are banks consistently throwing up restrictions such as unfair overdraft charges, limited access to funding as well as the exorbitant annual percentage rates (APR) on commercial loans?!

The good news is that there are other legal avenues for the OFT to go down should they wish to pursue a case against the banks. We will just have to wait and see if they choose to or not. In the meantime the Government have stated that they will continue to work with the banks to work out charges that are fair to everyone. As a warning shot, Sarah McCarthy Fry, the Exchequer Secretary to the Treasury, stated they would take further action against the banks if necessary.

Video coverage:

Related links:

Shock overdraft charges ruling in favour of banks

Image by Chris Sharp

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Last month, Climate Chief Lord Stern declared that Britain should stop eating meat to limit climate change due to the water waste generated and greenhouse gases produced in meat production.

However, meat is known to be the richest source of iron, according to the Food Standards Agency (FSA). It is the aliment from which iron is absorbed easiest by the body and is also rich in protein and essential amino acids. Will not leaving it out of our diet damage our health?

According to Julia Alderman, an experienced nutritional therapist at The Nutrition Coach clinics in London, there would not be major implications our health if we were to eliminate meat. Alderman says that a vegetarian diet can be really healthy if well balanced and high in protein. The concern should be to make sure we obtain enough iron from other sources to still get the iron, protein and omega3 present in meat.

“The substitutes would be green vegetables, spinach, broccoli, pulses, dried fruits, nuts and seeds, and fortified breakfast cereal,” says Alderman. Although according to the FSA, unlike in meat, the iron in these foods is not so easily absorbed by the body. Nevertheless, the nutritionist reassures that it would not be necessary to take supplements as long as those food substitutes are taken.

For meat water who are willing to significantly reduce the amount they consume or leave it out completely, Alderman suggests a gradual change, if it’s to be sustainable. This way people can adjust and make sure that they are having the healthy vegetarian alternatives.

The best thing to do would be for all of us to start reducing the amount of meat we eat. Doing so would still have a substantial beneficial impact on the environment. The nutritionist suggests setting a definite amount of days a week in which not to have meat- for example four days without and three with it-and gradually reduce the quantity of meat or the number of meat-eating days. We can be confident that the exclusion of meat will not impact our health negatively if we balance our diet and make sure we intake the same amount of nutrients from other sources.

Find the Nutrition Coach clinic in London on the map where Julia Alderman works.

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Quick, as the Compliance Professional within your organization, which department or group of your company spends the most money annually? Did Supply Chain immediately come to mind? Probably not. Now just as quickly, how much of your compliance efforts are focused on the Supply Chain within your organization? Other than perhaps financial due diligence, such as through Dun & Bradstreet or quality control through your QHSE group, the Supply Chain probably does not command your Compliance Department attention as do other types of third party business partners such as agents, distributors and joint venture partners. This may be coming to an end as most Compliance Professionals recognize that third parties which supply goods or services to a company should be scrutinized similarly to other third party business partners.
There are several methods that could be used to assess risk in the area of supply chain and vendors. The approach suggested by the UK’s Financial Services Authority (FSA) in its settlement of the enforcement action against the insurance giant AON would refer “to an internationally accepted corruption perceptions index” such as is available through Transparency International or other recognized authority. The approach suggested by the Department of Justice, in Release Opinion 08-02 would provide categories of “High Risk, Medium Risk and Low Risk”. Finally, writing in the FCPABlog, Scott Moritz of Daylight Forensic & Advisory LLC has suggested an approach that incorporates a variety of risk-assessment tools, including, “the strategic use of information technology, tracking and sorting the critical elements”.
This commentary proposes an approach which would incorporate all three of the above cited analogous compliance areas into one risk-based assessment program for supply chain vendors. Based upon the assessed risk, an appropriate level of due diligence would then be required. The categories suggested are as follows:
1. High Risk Suppliers;
2. Low Risk Suppliers;
3. Nominal Risk Suppliers; and
4. Suppliers of General Goods and Products.
A. High-Risk Suppliers
A High-Risk Supplier is defined as a supplier which presents a higher level of compliance risk because of the presence of one or more of the following factors:
1. It is based in or supplies goods/services from a high risk country;
2. It has a reputation in the business community for questionable business practices or ethics; or
3. It has been convicted of, or is alleged to have been involved in, illegal conduct and has failed to undertake effective remedial actions.
B. Low-Risk Suppliers
A Low-Risk Supplier is defined as an individual or private entity located in a Low-Risk Country which:
1. Supplies goods or services in a Low-Risk Country;
2. Is based in a low risk country where the goods or services are delivered, it has no involvement with any foreign government, government entity, or Government Official; or
3. Is subject to the US FCPA and/or Sarbanes-Oxley compliance.
C. Minimal-Risk Suppliers
A Minimal-Risk Supplier is an individual or entity which provides goods or services that are non-specific to a particular job or assignment and the value of each transaction is USD $10,000 or less. These types of vendors include office and industrial suppliers, equipment leasing companies and such entities which supply such routinely used services.
D. Suppliers of General Goods and Products
A Supplier of General Goods and Products is an individual or entity which provides goods or services that are widely available to the general public and do not fall under the definition of Minimal-Risk Supplier. These types of vendors include transportation, food services and educational services providers.

George Osborne has repeatedly tried to link himself to Barack Obama since the financial crisis has unfolded.

Initially he claimed that Obama wasn’t backing a fiscal stimulus ala Gordon Brown but actually pursuing a monetary policy ala George Osborne, something Andrew Sparrow from the Guardian politely called ‘valiant’.

Now he claims that his plans to abolish the FSA and hand powers back to the Bank of England are matched by Obama in the USA calling on the Federal Reserve. Similarly Osborne plans to create a new quango, the ‘Consumer Protection Agency’, which will allegedly be similar to a new body Obama is setting up.

As ever with Osborne, his claims are two parts horse…erm…radish, and about a billion parts sheer bloody cheek.

Firstly we all know Obama has backed an absolutely huge fiscal stimulus, so much so that even some Democrats are nervous about it. We also know that the US believes it would still be in a recession were it not for the stimulus, something Osborne has tried to deny.

Secondly, Obama’s ‘Consumer Financial Protection Agency Act’ actually mirrors the FSA in many ways, as William Kay points out. Osborne is really just shuffling around responsibilities from one body to another, while Obama is imitating the UK government in creating an FSA-esque body to deal with consumer rights and protections.

Osborne’s commitment to scrap the FSA is born not out of a belief that it needs to be scrapped but out of a desire to scrap a keystone Labour policy. If he is handing some of it’s regulatory powers to the Bank of England that doesn’t mean he needs to create a new body for the remaining powers, there is no reason he couldn’t keep the FSA if he liked. Meanwhile we still don’t know what he plans to do with the oversight of regulated markets and companies, see Peston’s ‘Four Observations” section here.

But, as with most of Osborne’s approach to economics, it is borne out of political expediency and positioning rather than any deep and serious thinking, something recognised by business groups in the country, who are still not convinced about this policy (see 12:40pm here).

As Alastair Campbell has pointed out, Osborne’s relentless political positioning over sound economic policy means he’s still not trusted by business figures and the public at large, who can sense that Osborne is a weakness for Cameron rather than a strength as Shadow Chancellor.

Two weeks ago (probably too late, yes) I contacted Rep. John Dingell and Sens. Carl Levin and Debbie Stabenow about allowing people to rollover their Flexible Spending Accounts from year to year. I like the FSA and put money into it to buy contacts next year, but its actual use is really limited because I don’t make enough money to take advantage.

For example, I want to get Lasik surgery. This is a medical expense not covered by most insurance plans, including mine. That is exactly the type of expense for which we could ideally use FSAs, and I would love to do exactly that. The issue with this plan is that I don’t make enough money to commit upwards of $2,000 in a year to be able to use my FSA for Lasik. I would be able to contribute $700 per year for the next three years to pay for Lasik then, but the law doesn’t allow this. Instead, we lose all of our unused FSA contributions at the end of the year.

As you can tell, this puts me in a catch-22: I’m damned if I do use my FSA for its intended purpose because I won’t be able to afford food, but I’m damned if I don’t because I can’t get Lasik without using my post-tax income to pay for it. This is what I would like to have changed. I should be able to use my FSA like an actual savings account (albeit without interest) in order to enjoy the benefits of its pre-tax basis without having to go broke for something like Lasik surgery.

Since it’s the purple gorilla in the room for all of this, I figured that I might as well point out that this disproportionately affects people making lower wages. The rich who can afford to contribute a lot of money to an FSA get to skirt out on these taxes while the less well-off have to go without or pay taxes to receive elective medical procedures like Lasik (note that I’m not talking about, say, plastic surgery). This discrepancy means that it might just make sense to limit the rollover benefit to people making under some specified level, say the cost-of-living in their area plus 25% (someone making $45,000 in San Francisco clearly faces different circumstances in this regard than someone making $35,000 in Ann Arbor).

E.T.A.: this is different from an HSA because my FSA complements my insurance whereas an HSA would replace it.

Anyway, the irrelevant auto-reply from Dingell’s office is below. If nothing else, it’s a fleshed-out explanation of his stance on health care reform:

Dear Derek:

Thank you for contacting me regarding health care reform. I appreciate your comments.

Throughout my years as a Member of Congress, I have fought to ensure that all Americans, regardless of age, sex, gender, or any other factor, have access to quality, affordable, comprehensive health care and insurance. My father proposed the first national health care plan when he was a Member of the House of Representatives. At the start of each Congress in which I have served, I introduced legislation (H.R. 15) based on his original proposal to ensure all Americans have access to quality, affordable care. I again introduced this bill at the start of the 111th Session of Congress.

As Chairman Emeritus of the House Committee on Energy and Commerce, I introduced H.R. 3962, the Affordable Health Care for America Act, which passed in the House on November 7, 2009, with a vote of 220 to 215. This much anticipated, much-needed revamp of our crippled health care system will lower costs and increase choices and access to quality, affordable health care. The Act builds on what works in the current health care system by strengthening employer-provided care while fixing what is broken. If an individual likes their current plan, he or she will be able to keep it. For those who either are not currently covered, or wanted to enroll in a new health care plan, it establishes a health care exchange where consumers can select from a menu of affordable, quality health care options: either a new public health insurance option or a plan offered by private insurers. This new marketplace would reduce costs, create competition that leads to better care for every American, and keep private insurers honest. Importantly, patients and doctors would have control over decisions about their health care, instead of insurance companies.

All Americans deserve the peace of mind of knowing their health care plans are portable and secure. Under this plan, Americans of all ages, from young children to retirees, will have access to greater quality of care because of a new focus on prevention and wellness and strengthened programs that work. This Act provides transparency so that consumers have the clear, complete information needed to select the plan that best meets their needs. It would identify and eliminate waste, fraud and abuse by simplifying paperwork and other administrative burdens. Patients, doctors, nurses, insurance companies, providers and employers would all encounter a streamlined, less confusing, more consumer-friendly system.

Americans will immediately see benefits through health care reform. The bill will begin to close the Medicare Part D “donut hole” and institute a 50 percent discount on name-brand drugs through the program; create a temporary insurance program to provide immediate help for the uninsured until the Exchange is available; ban lifetime limits on coverage; end recessions, or rescinding a patient’s policy when the file a claim for benefits, except in the case of fraud; extend coverage for young people up to their 27th birthday through their parents’ coverage; discourage excessive price increases by insurance companies through the review and disclosure of increases; allow Americans to keep their COBRA coverage until the Exchange is in place; and increase funding for community health centers and training programs for primary care medical professionals.

There has been much misinformation about what the bill will accomplish. H.R. 3962 expressly states that no Federal funds will be used for affordability credits for illegal immigrants. Further, despite claims to the contrary, the bill will also not deny treatments or prescriptions for seniors. H.R. 3962 does not change the Hyde amendment, which bars Federal funds for abortion, or other Federal or state laws that ban the use of Federal dollars to pay for abortion care, or amend current-law “conscience” protections. The bill does not change State restrictions on abortion, such as those mandating parental consent or notice. Under the bill private insurance plans can only use private funds to pay for abortion services. Further, the House passed an amendment introduced by Representative Bart Stupak (D-MI) that prohibits abortion coverage in the public insurance option and prevents private plans from offering coverage for abortion services if they accept people who are receiving government subsidies. I did not support this amendment. Finally, Members of Congress’ health care plan will be subject to the same rules as all other employer-sponsored plans. Nothing in the legislation exempts the Federal Employee Health Benefits (FEHB) plan, in which Members of Congress and their staffs enroll, from the reforms.

Our Nation has a long history of protecting our elders, our newborns, and our sick. We created Social Security during a period of economic calamity. We passed Medicare legislation during a period of civil unrest and divisive war. Some of our greatest acts of compassion have come in moments when they seemed most difficult to do. Not only do we have a chance to do the right thing for our people, but also for our economy. The high cost of health care is not only part of today’s economic woes, but it stands to cause an even greater problem in the years to come. We are at a crossroads, and we have the opportunity to prevent the next great economic catastrophe, but we must learn from the current economic crisis we’ve inherited. To protect the health and well-being of our citizens and our country, we must be bold, we must be strong, and we must do it now. We have come a long way, but work remains to be done. You may rest assured I will keep your comments in mind as I continue to work to ensure all Americans have access to quality, affordable health care.

Again, thank you for being in touch. For news on current federal legislative issues, please visit my website at www.house.gov/dingell; you can also sign up there to receive my e-newsletter. In the meantime, please do not hesitate to contact me again if I may be of assistance with this or any other matter of concern.

With every good wish,

Sincerely yours,
John D. Dingell
Member of Congress

If you’ve had a mortgage with GMAC-RFC, you need to know that the FSA has ruled against them recently, stating that some of their charges were unfair and unjust and must be refunded. Certain mortgage arrears fees and charges will be refunded in full and others in part.

GMAC refunds are also being paid out at a premium rate of 8% interest.

The charges being refunded include:

All charges for the non payment of the monthly mortgage charge by direct debit, when the account was in arrears and no monthly payment was being made;
Early repayment charges applied to arears and fees
Part of the Solicitors fee.

GMAC-RFC are a noteable mortgage company specialising in non status mortgages, where the account holder has several defaults and a bad credit rating, mortgaging properties at an enhanced interest rate to cover their risk.

If you have, or have had, a mortgage with GMAC-RFC, you can read the FSA ruling in full in this PDF here: http://www.fsa.gov.uk/pubs/final/GMAC_RFC.pdf

GMAC-RFC have also set up a direct customer line for this ruling which is 0800 030 4662 (9am-5pm, Monday to Friday)

Good Luck With Your Refunds!

Not from my wallet

Here’s the deal, I am now offering dining out insurance.  That’s right, you buy my insurance and you will be reimbursed for eating in a restaurant.  Here is how it works.  You can go to any restaurant you like, no one will interfere with your choice or what you and the chef decide to have for dinner.  Appetizers are covered 100%,  no deductible so chow down.  Pick what you like for an entree and we reimburse 80% of the cost.  Desserts cost a bit more, because they are really quite elective there is a 5% surcharge if you have dessert.  But hey this is a pretty good deal, you pay your premium each month and after that there are no questions asked, not even any guidelines to worry about, it is entirely up to you and your waiter and chef what you eat and how much.  Are you interested in a policy?

I want a free piece of pumpkin pie

I’m mad as hell and I can’t take it any more.

Medical guidelines are an interesting thing, we soon forget they are guidelines and we quickly assume that they are only valid when covered by insurance.  We also assume that insurance companies following guidelines  means that we may be denied the test “we need.”  Today it is PAP tests, yesterday mammograms, the week before PSAs and prostate exams.

Republicans see this as an example of bureaucratic interference in our health care, people affected see it as a slap at their quality health care, I say hooray!

Make a list of all the things you cannot afford. Let’s see on that list will be:

1. Annual flu shot
2. Mammography
3. Routine office visit
4. PSA test
5. PAP test

What is not likely to be on the list is:

1. Dinner at Olive Garden
2. A trip to the nearest casino
3. A carton of cigarettes
4. Premium cable TV
5. Coffee at Starbucks
6. An oil change for the car or new tires

All that medical stuff is sooooo expensive, well perhaps it would not be if we paid for the basic stuff ourselves and we complained about the cost of the $200 mammogram.  Did you ever stop to think that the medical stuff costs what is does in part because nobody cares what it costs or asks about it?  Have you considered that health insurance premiums are so high because the plans cover so much stuff that should not be insurable?  Well, think about it, we surely cannot count on Congress to do the thinking.

I have been perusing a number of blogs where the debate rages on about the mammogram controversy and in many cases the tone of the comments is that now insurance companies will deny the mammogram and people will have to go without.

Flash, insurance companies do not deny coverage they deny paying for it.  You can spend your own $200 each year for a screening, go to it if it is important to you. Why wouldn’t you spend the $200 and skip a night or two out if you have to?  Why, because we don’t want to spend $200 of our hard earned money on something that does not give us pleasure and a prostate exam or mammogram sure come under that heading, but it is still the same $200 no matter how we spend it.

We have this discussion of health care costs backwards and we keep reinforcing the wrong attitudes.  Pending legislation makes it even worse by mandating that more and more services be reimbursed at 100% and by diluting the value of flexible spending accounts and health savings accounts that help people manage health care spending with their own money.  For Pete’s sake how dumb can we be (I suspect we have a ways to go)?

A few years ago, the wife of an employee called me and wanted to know why Lyme disease vaccinations were not a covered benefit.  I explained they were routine preventative and not covered thus the employee’s responsibility.  She then told me flat out that if one of her children died from the disease she was going to hold me responsible.  I said she was free to have the shots on her own.  “You expect me to pay for the shots, they cost $60.”   I have never forgotten those words because they sum up the general American attitude about health care costs.

PS  Her children were under age 13 and not eligible for the vaccination in any case, but that didn’t seem to matter…damn those guidelines.

You have heard NIMBY, now you have heard of NFMW (not from my wallet).

Not only do each of us approach the purchase of health care wrong, now our government is making one of the biggest mistakes in history and all we seem to do is couch the debate in political terms.  Federal, state and local government spend more on health care for the older population than on education for children and that is today before the baby boomers are well into Medicare.  Shifting some of those costs to the private sector and raising taxes as proposed legislation is doing does not solve the problem, but most of our politicians are more worried about the 2010 elections than truly addressing the issues.

By the way, after a year or so, I suspect my new insurnace company will need some TARP money to get us by.

blogsurfer.us

Last night on my local PBS station, WQED, I stumbled upon the documentary “Documenting the Face of America: Roy Stryker and the FSA/OWI Photographers” (written & directed by Jeanine Isabel Butler). What drew me in immediately was the number of photographs being shown in this program. In the words of the Library of Congress, these photographs are “a landmark in the history of documentary photography”, and it was great to see so many of them presented on-screen while learning about the political and social environment in which they were created.

I took a photographic archives course over the summer, and was impressed by how all the archives students seemed very familiar with the FSA/OWI story, right down to details about how certain photographs had been modified, damaged, preserved etc. I guess it’s understandable that archives students would know more about this than library students, since this collection is probably the type of thing aspiring photo archivists dream about. This documentary was especially nice to watch as a librarian, because it left the viewer with a strong impression of the importance of visual history, and libraries’ & archives’ role in preserving/providing access to that history. It also highlighted Stryker’s insistence that “the file” be kept together when the project was ending; scattering it would greatly reduce its value as documentary evidence of the period, and the strength of its social & political statement. The point was made, on multiple occasions, that many politicians and members of the general public disapproved of the FSA/OWI photography project, and thought the photographs were “stupid”. How fortunate that the Library of Congress was (and has been) able to provide such a good home for these far from “stupid” materials. It’s nice to see such a thoughtful documentary film emphasize the contributions of libraries/archives and the people who care for them.

A review is available here.

by Brian Risman, for The Law Journal UK.

What does corporate governance mean after the financial meltdown? In the article below, we explore the expansion of corporate governance as the Obama-led public intervention in the corporate world grows. What does this transformation mean for company and securities law?

Corporate Governance is a concept whose boundaries are not fixed. It is fluid, and in fact keeps expanding and changing as the environment around it similarly changes.

For example, up until the mid-19^th century, companies held little distinction between the members/owners and the managers. In fact, in most companies they were the same group of people. Moreover, most companies, other than those create by Royal Charter, had little if any impact on the welfare of the nation as a whole. In the case of companies created by Royal Charter, these companies operated for the most part outside of England. In fact, these companies, in their areas of operation, acted as the government of those areas. An example is the Hudson’s Bay Company in large areas of British North America.

Hence, there were really two types of companies. First, those within England, where governance was irrelevant, since the ownership and the management were the same. Second, those operating outside of England, which operated as a de-facto government, facing no real authority – and in fact acting as the governmental authority in many cases.

A similar situation existed in the United States. Companies such as the United Fruit Company ruled much of Central and South America. And, in the event their pseudo-governmental authority was challenged, they could rely on US government military support to enforce their wishes…(continue reading)

This week we’ve seen plenty of hullabaloo around banker’s bonuses and in Britain the Queen’s speech later this week will outline proposed legislation which will provide the UK Financial Services Authority (FSA) with additional powers to strip bonuses from bankers where they have taken unacceptable risks.

Here at Zeitgeist we get the principle – the current economic crisis was fuelled by reckless profit chasing on the back of the now widely termed ‘toxic loan’ portfolio – but we’re struggling to see how this can be properly enforced.

Interfering with contracts made between two willing participants can become a legal minefield but even more confusing is how the term ‘risk’ is viewed.  Ultimately there are significant rewards for the banks to make deals based on future positions, to anticipate what the future holds by using business savvy, trended past data and good old intuition.

At what point can a regulatory body prove that the risk was unacceptable?  Will they be able to use hindsight or will they need to take into account what data the banker had in front of them when the deal was struck?

This seems one of those ‘fine in theory’ pieces of legislation which will be difficult to enforce we think but no doubt the first test case will not be too far away.  Expect appeals and counter claims to follow immediately afterwards!

What then for Britain’s status as a financial centre of the world?  Will it any longer be able to attract top talent and provide the returns for shareholders which for so long have been taken for granted?  Or will we see banks move their investment and brokerage arms to countries where such regulation is more ‘manageable’.

In all this there seems to be much closing of doors when the horses are already way off on the horizon….

Il governo inglese darà poteri alla Fsa, la Consob britannica, di modificare e in taluni casi annullare i contratti eccessivamente generosi verso i banchieri.

Dipenderà dall’autorità che controlla i mercati finanziari del Regno stabilire se i bonus siano eccessivi, non meritati e soprattutto sintomo di una politica retributiva insostenibile.

La misura, che sarà applicata a tutte le istituzioni che operano sul suolo britannico, non riguarderà i bonus di quest’ anno, ma varrà solo per i nuovi contratti. Se non passeranno l’esame dell’Fsa dovranno essere, quindi, rivisti e rinegoziati.

I consumatori avranno quindi una corsia agevolata per chiedere i danni a quelle banche che caricano costi eccessivi.

Per diventare legge entrambe le proposte dovranno essere approvate dal Parlamento inglese entro il 3 giugno data ultima prevista per lo scioglimento dei Comuni in vista delle elezioni generali.