timothy burton

You make good points.
Re: excessive bonuses: these are almost bound to lead to disaster whether through fraud or greed and over confidence. Since the institutional shareholders will do nothing about it, there is a strong case for making these organisations hold enough prudential capital to be loss proof. That would either curb the recklessness, see the banks go bust with limited harm to anyone else, or see them drop the excessively risky business as unprofitable.

I would also like to see more progressive taxation on very high incomes. This purely so it could be used to help the poor. Charity is never enough despite the examples of Bill Gates and Warren Buffet.

Re: not disclosing commission payments: I certainly knew that "free" financial advice came at a cost. I cannot remember not knowing. I cannot remember a time without regular warnings in the press and on television. There are no free lunches. The courts probably took the view: caveat emptor.

I was not aware of Lister v Stubbs 1890. Latterly it was illegal under FSA regulations for tied advisers to even mention the names of competitors to a customer. Before computers it was nearly impossible for a broker or financial adviser to know every product on the market. It still is because of all the fine print. There are too many products because selling them has been money for old rope.

I semi-sympathise with the Lloyds Bank manager. I think I have already said that only sociopaths, psychopaths or the truly desperate work for banks and other financial institutions. Anyone with imagination, intelligence and a conscience hates it. But then you could say the same about people involved with cigarettes or junk food. Some would add alcohol and gambling. "Strait is the gate, and narrow is the way," Mathew, 7:14. The reference is for ICD who likes to know these things :-)

timothy burton

I concede. You are right about the legal position.

I am genuinely surprised that an obviously well informed person such as yourself was not aware of the way banks and brokers have worked for generations. I really thought it was general knowledge to the man on the Clapham omnibus. I do not usually credit the Great British public with over much knowledge or common sense.

My financial expertise has been acquired through taking an interest when such topics come up and some reading of the FT and Investors Chronicle plus a very long ago A-level in Economics. My main formal education is in Computing. In the country of the blind, the one eyed man is king. I hope I have better luck than the unfortunate traveller in HG Wells' short story.

You do not have to be an obsessive on finance or economics to be aware. Keynes managed the finances of King's College Cambridge in half an hour a day, sitting in bed reading the papers and company reports and occasionally phoning his broker.
http://www.maynardkeynes...eynes-the-investor.html

Of course Keynes was far brighter than most of us and I am retired which is why I can spend so much time in these fora. I benefit from having to clarify my thoughts. Actual investment research takes a couple of hours a day but I pick up a lot of ideas from reading the business press and general news online and off.

Where do we go from here to improve financial services?

Anonymous 1 needed this 'Off the Record'

Timothy burton
Thank you so much fro joining us. your insights on some issues of concern are really informative.
I think most of us including myself were not aware of Lister v Stubbs 1890. It does shed more light on financial ongoings.
Also the example of your friend who made such as mess of his car was very illuminating.
Similarly I would like to suggest that people caught up in a court Case could similarly and often do make a mess if they try to represent themselves, and the consequences could be dire.
Alternatively there could be huge costs, which can ruin a person/business/body.
Governments do not appear to be interested in regulating legal matters/processes as it derives income from it e.g. VAT and it gives them GDP, and employs people. The only thing they are interested in controlling is keeping their own costs down, and thus forever more tinkering with legal aid and similar.
It seems to me that the Legal Services side could do with more regulation and a reform of legal processes to say the least.
In a parallel discussion Economics/Inflation/UK, some of these issues have been already raised. As such I would welcome your expert opinion on
Proportionality
Creative diligence
Solicitors in Hell website.
under this discussion or the other.
Thank you for your participation to-date.

Prof Eman

Prof Eman @246.

Thought about this for a day or two.
Long term planning is pointless as our industries have been annihilated. We are too far down the path of destruction and there is little point trying to pick winners in the way that the Franco/German alliance have done with the likes of Siemens, Alcatel, Renault, Thales etc. These are not necessarily good sound businesses - but they have the backing of the state as being strategic - it's only the same as our banks getting bailed out - but more chronic. Just that the europeans don't buy so easily into the whole "creative destruction" thing. At the government level politicians are expected to work cooperatively with these strategic industries (including the unions). But I don't think that it is culturally acceptable in this country to have strategic industries - it is certainly not a liberal place to work. The unions here take a very antagonistic approach. The european union style is more cooperative, less militant. The issues quickly become complex based around meritocracy and the entitlement to work in those industries and it soon becomes a total chore to work in them. It certainly is not dynamic and easy to argue it is not competitive. But a debate should be had about what competitive really means - look at the case of Bombardier. The Europeans are far more ready to assess the impact and cost to society and the taxpayer - whereas in Britain big contracts just go on the bottom line - they don't take in to account the cost of redundancy and projected unemployment/reduced income tax intake.

This really only leaves one alternative. To have a low interest currency and a low taxation environment ( of the order of 10%). It's the only way the UK can be competitive.
If you doubt this conclusion then just take a look at the Republic of Ireland - it's why it is fighting like hell against the EU to keep the right to maintain taxes at a low level. Our main advantage over Ireland is that the exchange rate of sterling can be lowered - however, everybody knows this is what makes the UK so risky - currency exchange rate fluctuations and speculation thereof.
Perhaps we could learn a thing or two by looking at how Switzerland plays the game.
Although this thread started off about the golden egg of banking (metaphor for services, trade deficit, consumerism and living in debt) vs making stuff (metaphor for trade surplus - spending within our means) I just don't see the UK changing that much. My prediction is as follows.

All that will happen is sterling will continue to be devalued as long as inflation stays below 6% and growth remains low. Income tax will not be lowered across the board (the silly argument about the 50% tax rate is a red herring). The treasury is hoping growth will pick up and when it does the BOE will begin to raise rates.

What we don't know is what growth rate they are hoping to maintain or if the policy will be to maintain inflation and growth at the same rate. I guess the BOE would be targeting growth at above 2% per year, inflation at 2% a year, with interest rates low enough to keep sterling competitive. At this point all the other stuff mentioned above is just philosophy. What is not clear if where we are now is the new normal. AKA, devaluation, inflation, low rates - effectively daylight robbery if you are unlucky enough to hold sterling and live in the UK. However, this policy has arguably kept many people in employment and protected the country from further economic shocks - which is preferable to the grotesque neo-liberalism of the early '80s.

MrFiat

An interesting contribution and one with which I mainly agree.

I wonder why there is such an antagonistic relationship between management and unions in this country? Also, how important are industrial unions these days? Surely Thatcher broke their power and all successive governments - including Blair and Brown - have kept them weak?

I particularly like your thoughts on joined up thinking, seeing the bigger picture. I can see why there is hostility to awarding contracts with an eye to the wider economic and social consequences, it used to be excessive an called backing lame ducks. Uneconomic steel making, car making and deep coal mining were prime examples.

How do we pick a way between the extremes?

Timothy Burton

Good luck with the move. I hope to see your valued contributions again in a few weeks.