The SFO rise again. Less than 6 weeks ago the future of the Serious Fraud Office looked bleak. It was after years of speculation to be subsumed into a new a national crime fighting agency; however that was before anybody reckoned with its strong and dogged director Richard Alderman. Not only has he been fighting fires blowing in from Whitehall, with his budget being cut from £53 million in 2008 to £34 million this year, he has been involved in a rear guard action against the FSA who with their enhanced salaries, have been persuading SFO employees to jump ship.
The FSA’s enforcement budget alone is £68 million. Richard Alderman said "I am concerned about the comparability of salaries for people who cam move easily between enforcers and the regulators, and there are different salary arrangements that cause me concern". Perhaps he is right as it has been reported that even the SFO’s highest paid experts make only about half of what their counterparts at the FSA do. That said, on the 1st July the same day that the Bribery Act came in to force, Simon Duckworth, the chairman of the City London Police and chairman of a Barings fund and a non executive director of Fidelity investment trust became an SFO non executive director.
With one battle won and with the toughest anti-corruption legislation in the form of the Bribery Act now in force the erstwhile director has focusing on corporate governance. He said "I want companies to work towards zero tolerance over a reasonable period of time. I’m really interested in foreign companies in other jurisdictions" UK directors beware; you carry the Act with you in your briefcase as you do business across the globe...
Those making the leap to the FSA will have to be certain of which arm they are joining, primarily because the blueprint for the FSA split had recently been announced. The many cases of financial mis-selling in the wake of the banks collapse has led to plans to fast track masses of complaints. To do this the draft financial regulation bill has been published allowing amongst other things the regulator power to intervene and up speed up the process. This will split the Financial Services Authority into two new regulators, The Prudential Regulatory Authority focusing on the safety of the banks and insurers leaving the FSA to concentrate on the markets. The new structure is likely to come into effect in 2013 and has been described by the British Banker’s Association as "an enormously significant milestone".
While that bill make s its way through parliament there are many who would argue that the regulators as they currently stand, are doing just fine. Bank of Scotland now part of the Lloyds Banking group have recently been fined £3.5 million for its poor handling of customer complaints over the sale of retail investment products, that comes in addition to the £17 million in compensation...
The Financial Services Consumer Panel which advises the City regulator on how its proposals could affect customers has warned that early action in relation to the long awaited overhaul of mortgages is put on hold otherwise it could do more harm to existing borrowers. Last year the FSA had had proposed a much criticised package of measures aimed preventing a return to risky mortgage lending. Adam Phillips chair of the Consumer panel warned "borrowers could end up trapped with their lender if they fell outside the rules". Following further consultation the FSA is expected to publish revised guidelines later in July.
Recent reports suggest that business and regulators are at odds will not come as a great surprise. At centre of their dispute is the government’s plans to change the way fines are levied in price-fixing investigations. As matters stand the OFT can fine a company 10% of its global turnover if it finds it was part of a cartel. But, the Department of Business is proposing that they be stripped of this power leaving a court to decide on the size of the fine. The CBI is in support of the changes believing it to be a more transparent and consistent system.
Finally, a former criminal, Louis Ferrante once part of the New York Gambino family has been turning his crooked past into a new management bible entitled "Mob Rules: What the Mafia can teach the Legitimate Businessman" With chapters titled, "Don’t end up in the trunk of a car: avoiding office politics" and "How to hit your target without a gun" you could be forgiven in thinking you know somebody with those principles in your industry! However, should you wish to follow his teachings here are his top 3 tips; (1) never bad mouth your boss – it has a way of getting back to them, in the business world corporate survival is at stake. (2) Let Al Capone be a warning – only the taxmen will hunt you down with more persistence than the Mob. Pay your dues. (3) Contingency Planning – No one anticipates problems better than the Mob. Make sure you plan for every disaster!
