The Adam Smith Institute has slammed the FSA’s response to the financial crisis, saying its failure to recognise the extent of its own failings compromises its ability to improve regulation.
Authors of the report Tim Ambler and Keith Boyfield say the central problem is the FSA's "self-obsession and self-justification". Their report, Regulatory Myopia, says the FSA should be streamlined, rather than expanded, and core responsibilities should be given to other bodies. Adam Smith Institute director Eamonn Butler says: “Instead of being expanded, the FSA should be scaled back to what it can actually achieve, and more weight given to existing market-restraint structures, such as the Financial Reporting Council, the Accounting Standards Board and non-executive directors."
The report claims that the FSA has introduced “red herrings" such as international responsibilities, hedge funds and offshore funds to distract readers from its own responsibility in the crisis.
Should the FSA be scaled back and supervision of the banking system be given to the Bank of England? How can the performance of the FSA be judged moving forward to minimize further regulatory failings? And who should the FSA ultimately answer to on a formal basis?
Published in MoneyMarketing here.Read more...
By his own admission, Eamonn Butler spent several fruitless years trying to generate enthusiasm from publishers for his book chronicling what he perceives as our nation's decline from sceptr'd isle to septic embarrassment.
But even he could scarcely have imagined how, when it did eventually see the light of day, T he Rotten State of Britain would end up chiming so perfectly with the funereal mood of the times.
In the book, Butler takes a forensic scalpel to all aspects of modern British society, from the broken economy to abuses of political privilege via the rise of spin, surveillance culture and the nanny state...
Published in Cambrideg News here.Read more...
Vincent de Rivaz, CEO of France's EDF Energy, spoke at the Adam Smith Institute's Nuclear Industry Forum. “When I arrived, they told me you were on strike," he declared. “So I thought Well, at least we have something in common!'." Adam Smith director Eamonn Butler replied by telling him about the new French version of The Apprentice — it's the same, except you can't fire anyone.
Published in the Ebening Standard hereRead more...
A paper co-written by Tim Ambler, a senior fellow at London Business School and Keith Boyfield of Adam Smith Institute, today argues that it is 'scandalous' that directors whose banks have been rescued by the taxpayer are being permitted to carry on paying themselves generous salaries.
Bankers whose institutions have effectively failed should be permanently expelled from the industry, they say.
Published in the Daily Mail here.Read more...
An influential think tank has slammed the UK’s financial regulator and called for more powers to be handed to the Bank of England, piling further pressure on the Chancellor of the Exchequer ahead of a speech tomorrow night, in which he is expected to outline his plans for the oversight of domestic markets...
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And now Boris has been bollocked at the Adam Smith Institute blog for supporting the London Living Wage. Dissident Lib Dem (and Bromley Councillor) Tom Papworth:
Before he was elected he wrote how minimum wage laws drove "up your costs and greatly [reduced] your ability to reinvest". Yet...in July 2008 [after he was elected] he described how "the living wage...is not only morally right but also makes good business sense, contributing to better recruitment and retention of staff, higher productivity and a more loyal workforce with high morale." How times have changed!
For an economic liberal's critique of the best known advocate of free markets in British politics, read on here. Recommended for all Boris-bashers on the left who've yet to detect that he's not turning out to be quite the political animal they warned us about.
Published on guardian.co.uk hereRead more...
Tomorrow the Adam Smith Institute — one of the leading think-tanks — publishes is contribution to the debate, and could scarcely be more damning of the FSA's position and proposals.
Far from expanding the role of the Financial Services Authority, these authors recommend shrinking it back to its level of competence. The FSA, they say, is part of the problem not part of the solution, and the thrust of Turner's proposals, which it characterises as more form-filling and box-ticking, will perpetuate the problem whereby the FSA looks all too closely at details but misses the big picture.
Instead of creating more panels of regulators, the Adam Smith Institute suggests making much better use of the structures we already have, such as the Financial Reporting Council and the audit profession.
Instead of an international regulator, it recommends better liaison between national regulators.
Most of all, instead of more regulation, it recommends better supervision and that surely is the key.
Published in the Evening Standard hereRead more...
The financial crisis was caused by lack of supervision of the financial sector, rather than bankers breaking the rules, according to the influential Adam Smith Institute.
Director of the free-market think-tank Eamonn Butler likens recent financial troubles to the parliamentary expenses scandal – with everyone sticking to the rules, but without proper supervision of the consequences.
In a paper entitled Failure of Supervision, Butler calls for “ better supervision of the risks being run by financial institutions and the systemic risk in the sector as a whole".
He adds that the Financial Services Authority (FSA) should be scaled back rather than expanded, with more responsibility given to the Financial Reporting Council, the Accounting Standards Board, and non-executive directors.
The response to the Turner Report also calls for the FSA to be answerable to Parliament, with proper performance indicators.
“Adding more checklists or employing more regulators would not have prevented the crisis," says Butler.
The institute urges the Bank of England to have a formal supervisory role, with continued stress testing of the financial system.
It also calls for investment banking to be separated from retail banking, stricter capital ratios for banks and the disqualification of directors from banks that have required a government bailout. Butler argues against the proposed new international bank regulator, calling instead for better liaison between national regulators.
Adam Smith Institute (ASI) is a free-market think-tank based in London.
Influential ASI proposals have included outsourcing local government services and reducing the number of quangos.
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Britons had to work until today to earn enough money to cover all the tax they must pay during 2009, new research has found.
The Adam Smith Institute said it would take the average worker 134 days to earn the money they would hand over for income tax, National Insurance, VAT and other taxes.Read more...