8 August 2019 / by Regulatory/ in
More Intelligible Anti-Corruption Laws
Tacitus said, “In a state where corruption abounds, laws must be very numerous.” John McDonnell, the Labour Party’s Shadow Chancellor, has said if Labour gets elected they will launch a public enquiry into the UK’s financial services industry to “reveal and root out corruption”.
Mr McDonnell thinks banks, insurers, financial advisers, building societies and hedge funds, as well as regulators, lawyers and accountants, need to be investigated to halt the never-ending stream of scandals.
The Australian Royal Commission conducted a similar investigation, reported in February 2019, into Banking and Financial Services. Abuses that were identified included banks charging for no services, giving poor advice and lying to regulators.
Although the findings were damning they were also fairly predictable, in that it is easy to recognise in the Australian report abuses that remain prevalent in the UK.
The charge sheet included:
- Turning a blind eye to terrorist financing.
- Money laundering for drugs syndicates.
- Ignoring statutory reporting responsibilities.
- Improper foreign exchange trading.
- Sales driven culture of profit at all costs.
- Short-term profits pursued at expense of basic standards of honesty.
- Inappropriate financial planning advice.
It was also discovered that when scandals were exposed, junior staff were dismissed, whilst those in more senior positions supervising them remained in place.
The Australian report also found that the law required entities to do all things necessary to ensure financial services are provided “efficiently, honestly and fairly”. It was considered new laws would only add an extra layer of complexity to an already complex regulatory regime. The proposed remedy being the simplification of the existing numerous laws to make matters more intelligible and capable of enforcement.
Perhaps Mr McDonnell, if elected, could look at this report and save a lot of time and money by simplifying and making more intelligible the current regulations.