1. Noticeboard

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    • Date 2014-10-20 00:00:00 +0100
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      Roger McCormick, Managing Director of CCP Research Foundation, has been appointed Visiting Lecturer in the Department of Finance at London School of Economics and Political Science (LSE).

    • Date 2014-10-27 00:00:00 +0000
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      The Fair and Effective Markets Review (FEMR) has published on 27th October a consultation document on "How fair and effective are the fixed income, foreign exchange and commodities markets?".

      Our Conduct Costs Project's data are used by the Fair and Effective Markets Review in their Consultation Document (see Chart 4 on page 9 of the Document). There is also a suggestion that our approach could provide a framework in connection with industry -wide performance measures for conduct:

      "The work of the London School of Economics Conduct Costs Project and the CCP Research Foundation (www.ccpresearchfoundation.com) could provide a framework for further development in relation to industry-wide performance measures relating to conduct."

      The Consultation Document is available at http://www.bankofengland.co.uk/publications/Pages/news/2014/140.aspx.

      Commenting on this reference in the FEMR Consultation Document , Roger McCormick observed, "It is very encouraging that the scope for using the Conduct Costs Project's work to help with industry-wide conduct metrics has been recognised in a document emanating from the Bank of England, HM Treasury and the FCA. We have always been at pains to stress that our work is not a bank- bashing exercise but an attempt to develop a way of testing banks' success in putting their houses in order and provide accessible data that indicate the progress being achieved. The ability to compare banks, jurisdictions, heads of loss as well as year - on-year figures is absolutely crucial for this."

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      Roger McCormick gave an interview to SNL Financial at last week's BBA Annual Banking Conference. To read the interview, please see here.                                   

       

    • Date 2014-10-10 00:00:00 +0100
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      As followers of the Conduct Costs Project will know, that project publishes a regular table that shows the conduct costs track record of 10 major international banks (soon to be expanded). The most recent table is set out below.

      The Financial Conduct Authority does not publish a comparable table in relation to the fines it has levied on banks. Instead, it publishes a regularly updated list of the fines, listed one by one, shown in calendar order, with no aggregation where the same institution is fined more than once. No comparison with previous years, or amongst banks is offered. The Financial Ombudsman Service publishes comparable information about consumer complaints ("complaints data"), but showing the institutions in question in alphabetical order. In response to the "FAQ" "which financial businesses are top and bottom of the complaints table?" The FOS states, in effect, "work it out for yourself" (or, to be precise, "You can look for yourself on our website to see which businesses had most or least complaints.....Don't forget that larger businesses may get more complaints because of their size"). Fortunately for the public, the mass media invariably converts the information offered by the FOS into a league table. It would be ludicrous for any reporter covering the latest data not to do this. (Can you imagine the conversation with his editor if he offered a piece that just showed the banks in alphabetical order?).

      The Banking Standards Review, which says it is keen on metrics and benchmarking for measuring bank behaviour and related matters, does not like league tables either. It says (without any further explanation) that they can be "gamed". An example or two would have been helpful. We don't think our table is, or could be "gamed" ....unless, for some reason the public sources from which the data are derived are themselves gamed. If we did a simple "mini-table" based on the FCA fines of the major UK banks in the last two years it would look like the table set out below.

       

       

       

       

       

       

      This is no more than a direct "crib" from the FCA's own website. But it shows the information in a more graphic and helpful way, enabling banks to be compared with each other and years to be compared with each other at a glance. Track records of banks' disciplinary and conduct costs matters are important, not just for the banks and regulators, but for the public in general.  Remember, the banks say, at regular intervals, that they want to get back our trust. If the FCA thinks it appropriate to slap a heavy fine on Barclays because it finds the fact of five "previous convictions" a matter that "aggravates" its latest offence (see Final Notice of 23rd September 2014 at para. 6.38) then the track record is of equal interest to those whose trust Barclays says it is seeking. For the public, it is not good enough for the details to be buried in a Final Notice. Most of them will not read it and will only be alerted to this aspect of the case if the mass media report it. And, given that even the Financial Times skipped over the "previous" point pretty lightly, the chances of the tabloids or the TV channels saying much about it are negligible. (It is perhaps unfair to single out Barclays. They are not the only repeat offender but they offer the most recent example of the problem caused by unnecessary obscurity).

      There is also an inconsistency in the regulators' approach. They insist on multiple, unbelievably explicit warnings about risks attached to investments, couched in language that even a child could understand. But when it comes to the disciplinary track records of those who have custody of our money, the attitude is: it's on the website if you care to look for it; work it out for yourself.

      I guess we can all understand why banks don't exactly welcome the provision of more accessible information to the public about their lamentable disciplinary records. (Although one hopes they have it to hand for their internal management and risk control). However, such attachment to secrecy hardly justifies the regulators not trying a bit harder to be more helpful. And, for the more enlightened banks, what first looks like a threat should perhaps be seen as a challenge that they are not afraid to take on. The price of seeking greater trust involves better disclosure of factors affecting the risks imposed on those whose trust you seek. We are familiar with the trust rhetoric. Time now to see some action that shows a genuine change of heart.

      Roger McCormick

      We invite contributions to the Soapbox from anyone interested in our projects. Please contact us at info@ccpresearchfoundation.com, if you would like to participate.

    • Date 2014-10-01 00:00:00 +0100
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      Gillian Tett published an Op-Ed piece in the FT on 29th August which centred on the Conduct Costs Project's work. It was a "sure bet" that we will have plenty to study, said Gillian (and she was right!). A few days later, the well-known profession investor, Neil Woodford, announced that he was selling his fund's holding in HSBC because of uncertainty caused by "fine inflation". A particular concern was that fines seem more and more to be geared to the ability to pay rather than the extent of the transgression. (Rule of law, anyone?)

      The FT article was followed by items featuring the Conduct Costs Project in the Guardian and the Evening Standard the following Monday (which also referred to Woodford's announcement).

      At around the same time, an article about the Project also appeared in Forbes magazine and a McKinsey publication. And, for our Italian readership, Chris Stears is quoted in an article by Matteo Cavallito in the September edition of the Italian magazine, Valori: available at http://www.valori.it/dal-mensile/banche-prezzo-colpa-7860.html.

      Various interviews about the Conduct Costs Project have been given to journalists in September and should result in articles being published in October.

      The justification for the scope of the Foundation's interest in conduct, culture and people and the issues raised by the "trust question" in a range of sectors was reinforced by the announcement, on 1st October, that Tesco is being investigated by the Financial Conduct Authority in relation to its admitted overstated profit forecast.

    • Date 2014-10-01 00:00:00 +0100
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      Roger McCormick was invited to the Bank of England in September to discuss the Conduct Costs Project with representatives of the Fair and Efficient Markets Review team. Roger will be speaking at the BBA conference on 16th October and at a CSFI roundtable on 2nd October (see invitation and minutes).

      Roger McCormick was a moderator of the 2nd panel session of “2nd Annual Business Forum on Children’s Rights” on last 8th October. See Press Release.

      In early September, Chris Stears joined colleagues and hundreds of delegates at Jesus College, Cambridge for the 32nd Annual Cambridge Symposium on Economic Crime and to debate this year's theme: "Information – Shield, Sword and Achilles Heel in the fight against economic crime?" Chris has been a member of the Symposium's secretariat for a number of years while also presenting papers (that have applied the research conducted by the Conduct Costs Project) at various workshops throughout the week-long conference. Next year's Symposium will run from 6th to 13th September 2015

      Various accountancy firms are trying to put together "conduct risk" events that may feature one or more of the Conduct Cost Project team. We are also making a presentation at a conference being organised by London School of Economics and Academy of Retail Banking on 28th November.

      We hope to organise a new Conduct Costs Workshop before the end of the year. Click here for material from the workshop held at LSE in May 2014.

    • Date 2014-09-30 00:00:00 +0100
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      The FT piece also prompted contacts from many sources to write or speak about conduct costs. An article by Chris Stears and Roger McCormick appeared in "The Conversation" following on from the same authors' (much longer) article in Law and Financial Markets Review in June (http://search.informit.com.au/documentSummary;dn=364135340933610;res=IELBUS).

      Roger also co-authored an article with Andrea Minto that appeared in Law and Economics Yearly Review in September (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2497321).

  1. The CCP Research Foundation is a new, independent social enterprise vehicle, set up to foster and support a new generation of research projects on the theme of "Conduct, Culture and People."  

     

    Contacts

    CCP Research Foundation C.I.C.
    info@ccpresearchfoundation.com

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    If you would be interested in being given an informal presentation at your offices about the work of the Foundation (and/or the Conduct Costs Project) and how its work relates to your business please contact: 

    roger.mccormick@ccpresearchfoundation.com

     

     

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