Governments come and go, but Investment Fund Managers remain unaffected by any party in power, and continue to greedily take what only they would deem as acceptable.
Gambling with other peoples’ money while free of retribution seems to dominate the lifestyle found in financial institutions.
However, recent evidence now highlight that charges designed to significantly cut into the profits of investors, have been put in place by Investment Fund Managers for selfish reasons.
As reported by the Daily Mail:
‘Dr Paul Woolley, from the London School of Economics, is lobbying giant funds to reduce charges. He says: 'The industry is sucking the blood out of the man in the street and has been allowed to get way with it for years. It can't believe it's luck.'
Independent Bodies Policing the Financial Institutions
The Financial Services Authority (FSA) like the Financial Ombudsman Service (FOS) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. Like the FOS it too is funded by the financial services industry.
It may be argued that any institution funded by a group that it polices will likely have a conflict of interest. The fact that this country is in recession as a direct result of poor banking judgments would appear to endorse this. Yet the FSA continues to grow and pay large salaries to its staff of experts.
The City Wire reported that the number of Financial Services Authority (FSA) staff earning more than £100,000 had trebled in the last four years, according to a Freedom of Information Request submitted by the Financial Times.
The FSA employed 241 members of staff on salaries of more than £100,000 in March, compared to 81 in March 2006. During the same period FSA staff numbers rose by 562, or 20%, to 3307
The justification offered by the FSA regarding salaried staff paid in excess of £100,000 relates to a need to attract highly-qualified individuals.
The FSA was set up in 2001 and regulates most financial services markets, exchanges and firms. They set the standards to which these businesses must adhere and are empowered to take action against firms that fail to meet the required standards.
However, even with highly-qualified staff the FSA did fail to prevent the recent banking crisis. An intention, as reported by the Business Scotsman, of the FSA to recruit additional staff to help cut market abuse is now in progress.
Funding on the scale required by the FSA for additional staff is arguably a demonstration that the financial sector is content with the FSA’s work to date, as opposed to the possible concerns of the public.
While public services and others are being asked to adhere to pay restraints, the same does not appear to happen with senior figures in financial institutions. Bank bonuses of up to £20 million continue, allegedly paid from public funding used as a prop against the crisis.
The Coalition Government’s intention for a Fair Society
The Coalition Government has consistently stated that it wants a fair and equal society for all. Yet the financial institutions have been reported as continuing to behave as they did before the financial crisis.
A government genuinely intent on creating a nation that offers fairness and equality for all, should arguably begin by resolving issues at the heart of the banking crisis, perhaps starting with banker bonuses? Additionally for the public to trust an impartial arbitrator the creation of a new, free government complaints service, not funded by financial institutions, should be a priority. This new department would arguably prove more trustworthy in the eyes of the public and, possibly increase the credibility of the government and its intentions.
The Financial Ombudsman Service reports that complaints against financial institutions are the highest they have ever been. In 2009 they reached just below one million. Of those 150,000 were actually reviewed by an Ombudsman, while approximately 75,000 disagreed with the Ombudsman’s final decision and took their complaint to court.
The scale of disagreement with final decisions made by the FOS possibly indicates a public hardening of attitude against financial institutions. Additionally, the fact that the FOS and FSA are both funded by the financial institutions might be considered as a conflict of interest likely to work against the public interest.
Investment Fund Managers Regaining Public Credibility
For Investment Fund Managers to regain public credibility may require a comprehensive review that dramatically alters their working practices. No repetition of the disadvantages inflicted on investors should be included in any changes, and a mutually agreed (with government), fixed maximum regarding charges should be clearly stated. Arguably this would offer an improved sense of policing to the public with government acting as overseer, rather than an organization funded by the financial institutions themselves.
