Today’s post reacts to the news that the Universities Superannuation Scheme (USS) has the largest pensions deficit of any British pension fund, now measured at £17.5 billion. We have looked briefly at pension deficits before here in Financial Regulation Matters when we looked at the behaviour of Sir Philip Green throughout the BHS scandal , but in this post we will review some of the concerns connected to this large increase in the deficit of the largest pension fund in the U.K., whilst we will also look at some of the issues that branch out from this development. Ultimately, it is worth considering whether, as Peter Drucker once opined, pension funds are the saviour of capitalism , whether the function of pension fund investment powerhouses is beneficial but needs alteration , whether the current situation is a product of the financial crisis and something that does not need much attention , or whether the situation is representative of inherent systemic issues which are bound...

In today’s post, the focus will be on Lloyds Bank which, if we look back into the archives of Financial Regulation Matters , is proving to be a consistent source of newsworthy stories. Back in February 2017, when the largest U.K. banks were declaring their financial results for the previous year, we discussed how Lloyds’ results were somewhat of a ‘ silver lining ’ in amongst a whole host of poor results from their competitors. Then, on the basis of this positive rhetoric that was beginning to surround Lloyds, we looked at how the Bank’s return to private ownership caused neoliberals to rejoice at the process of the state providing support but the supported entity eventually returning to private ownership. Yet, staying in the archives, we can see that all is not what it seems. We discussed how Lloyds’ exposure to Payment Protection Insurance (PPI) claims was not over , and also how the bank has been handling the HBOS compensation situation particularly poorly . In this post, the f...

Today’s post is a guest post by Jan Weir, a Barrister from Canada who specialises in Banking and Fraud and who also teaches Business Law at the University of Toronto. On many occasions here in Financial Regulation Matters , and in fact in society in general, we discuss elements of society that have been directly affected by the Financial Crisis, but only mention the Crisis in passing. Whilst this is not done to reduce the understanding that the Crisis devastated society, the passing time has allowed for the actual causes of the Crisis to become so engrained that they are rarely discussed anymore. So, in this guest post, Jan Weir helpfully provides a reflective account to discuss some of the underlying causes to the Crisis so that we can bring them back to the forefront of our thinking when assessing current events – the underlying sentiments and motivations have not changed. Trying to Help the Poor Caused the Financial Crisis As absurd as that sounds when put in a simple sen...

Today’s post reacts to the latest warning from the Bank of England regarding the ever-growing credit bubble, something which we have reviewed on a number of occasions here in Financial Regulation Matters . In addition to the previous warnings regarding the expansion of markets like the ‘Personal Contract Purchasing’ (PCP) market for cars, the Bank of England is now threatening even more regulatory supervision for credit lenders, which has been met with clear opposition from the marketplace. So, this post will look at these developments and continue to assess the likely causes and outcomes of this pressing issue. On this occasion it was the turn of the Bank’s Director for Financial Stability, Alex Brazier, to address the issue of the growing credit bubble. In a speech to the University of Liverpool’s Institute for Risk and Uncertainty, Brazier commented that household debt is a truly systemic threat and that ‘ the spiral continues, and borrowers rack up more and more debt. Lend...

Today’s post previews a forthcoming article by this author entitled ‘Sustainable Finance: Why the Formal Introduction of Credit Rating Agencies Should Serve as a Warning’, to be published in Financial Regulation International. A pre-published version can be found here and the purpose of this post is to introduce the article and some of the key concepts flagged within it. With the issue of sustainable finance coming to the fore in the public and investing consciousness, the increase in information asymmetry is sure to follow and, when it does, the door opens for the rating agencies to position themselves within the process. We have already discussed the agencies’ entrance into this arena before here in Financial Regulation Matters , however this need for the agencies has traditionally resulted in exploitation so, in that regard, the article looks at the possibility of this phenomenon repeating itself in this specific arena. The article begins by discussing how ‘sustainable fina...

Today’s post takes a look at the forthcoming trip of Britain’s International Trade Secretary, Liam Fox, to the United States to begin talks about a possible trade deal between the two countries. In the media on both sides of the Atlantic, but particularly in the U.K., there is a real concern about the effects that such a trade deal could generate, with an imbalance between British and American corporations being top of that agenda. So, in this post, we will assess these claims and examine whether a trade deal is being pursued for the right reasons, or whether the pre-Brexit environment is already becoming illustrative of life outside of the European Union for the British. Speaking in July, President Trump said he expects a ‘powerful’ trade deal to be conducted with the U.K. ‘ very quickly ’, and it is on the back of these statements that Liam Fox has travelled to Washington, D.C. The talks themselves, which the head of the TUC – Frances O’Grady - suggests is a ‘ PR stunt ’ for F...

Today’s post assesses the news that the European Securities and Markets Authority (ESMA) has had its decision to reject Polish rating agency FinancialCraft’s application to be registered under EU regulation upheld, after an appeal was lodged to the Joint Board of Appeal of the European Supervisory Authorities. In this post we will look at some of the reasons for the rejection and assess whether the grounds for rejection were fair, especially in relation to recent instances of the larger rating agencies flouting the European regulations. FinancialCraft , a small Polish rating firm, had applied in 2016 to be registered as a recognised Credit Rating Agency under the EU Regulations on Credit Rating Agencies; on the 8 th of December 2016 that application was rejected by ESMA , the supervisory body tasked with supervising the CRA sector. In accordance with the regulations, which allow for a second application, FinancialCraft swiftly reapplied, with the same rejection following. As a ...

Today’s post is concerned with the news that the HMRC (Her Majesty’s Revenue & Customs) are coming under increased pressure for their investigation, or lack thereof, of an aggressive tax avoidance scheme in the Recruitment sector which, according to The Guardian , is likely to cost the British taxpayer millions of pounds in lost tax revenues. The Guardian , which is leading the way in investigating this issue and reporting on it, suggest that the HMRC is underperforming in its role of investigating such tax-avoidance schemes and, as a result, it is likely that HMRC will not be able to get to the bottom of the scheme and its culprits, with the suggestion being that a criminal investigation could possibly ensue. In line with this passing suggestion, this post will first analyse the issue at hand, but will then build upon this to call for an agency which we have covered on a number of occasions here in Financial Regulation Matters – the Serious Fraud Office (SFO) – to take the le...

Although Australia has weathered the supposedly global storm after the Financial Crisis (a number of countries, of course, were simply not as affected by the Crisis like their Western colleagues), with consistently positive results being reported by their largest banks (until recently), and solid economic fundamentals in place to protect them from external shocks, the Australian Government is pressing ahead with plans to reform the banking system in the Country and, in today’s post, these reforms will be the focus. We discussed the situation in Australia only recently here in Financial Regulation Matters in relation to the Credit Rating Agencies taking aim at Australian banks, so it is clear that the Australian banking system is currently experiencing a very challenging time. In that sense, the proposed reforms, which are currently at the consultative stage, are the epitome of that changing environment, but the question for us today is whether the reforms can make a difference, ...

Here in  Financial Regulation Matters we have looked at the potential landscape for British finance post-Brexit on a number of occasions. Firstly, we looked at the battle for the marquee names in the wake of the U.K.’s secession from the Union between France and Germany. Then, in a later post, we discussed the strength of one of the frontrunners in the battle for post-Brexit business – Dublin. So, in today’s post, we will look at how this issue is developing – as it will no doubt continue to – and how the City of London is being put under increased pressure. Yet, in keeping with the underlying sentiment of Financial Regulation Matters , we will conclude by looking at what effect these pressures may have upon the wider society, particularly in Britain but in Europe also. Earlier this week, it was announced that Barclays are in talks with Irish regulators about substantially increasing its presence in the Country after Brexit, with the company noting that Ireland represents...

There are two issues which are the focus for today’s post, and both have been covered on separate occasions before here in Financial Regulation Matters . In February we discussed how the stated aims of President Trump, namely to ‘ drain the swamp ’ with regards to lobbying influence in Washington, D.C., were immediately proven to be nothing more than lip-service with the introduction of an Executive Order that preserved the ability of Congressional and White-House Officials to lobby after their term has expired. Then, in June, we discussed how large investors and other financial organisations were beginning to develop a societally-focused approach to their business, which translated into a reduction in investment in companies that profit from providing social ills, like tobacco companies. In today’s post we will look at an article that was published in The Guardian that discusses the actualities of the lobbying environment since Trump took office, with particular attention paid t...