Maximum Wage to end short term bonus culture

Today Plaid became the first political party to back calls for a maximum wage.

A motion put to the Plaid party Conference in Llandudno will seek to bring about an end to the short term target culture that has contributed heavily to the current economic crisis in Britain.

The maximum wage motion, put forward by Plaid’s Westminster MPs, would ensure a greater balance between the amount paid to high earners and that paid to ordinary staff.

The move also comes following a timely call from the chairman of Goldman Sachs, Lloyd Blankfein, to ban multi-year guaranteed bonuses throughout the banking industry.

Plaid MPs have worked with leading think tank Compass to launch a campaign calling for a High Pay Commission. The establishment of such a body would examine the issues which led to the crisis in the financial sector and relating to excessive pay of executives in public and private companies.

Plaid’s Adam Price MP said:

“The differentials in pay between staff in successful economies such as Sweden are significantly lower than those in the UK and other countries that adhere to the Anglo-American model. It is important in setting out a long term approach to dealing with the recession and stabilising the economy that this imbalance is addressed.

“Passing this motion through Conference today has really highlighted how forward thinking Plaid is. Establishing a High Pay Commission could mean a ground-breaking change in the banking culture and proves that Plaid is in tune with key industry figures and widespread public opinion who are feeling the real impact of the recession bought about by this reckless culture. Gordon Brown’s government is meanwhile playing catch-up and failing to take decisive action to address such unfair practises.

“The motion is designed to tackle the culture of reckless quick fix practices. Instead of bonuses being paid on short term results it will establish the principal of long term development and growth being rewarded.

“Those rewards should also be shared amongst all members of society and not just the privileged few.”

Gavin Hayes, General Secretary of Compass added:

“It is fantastic that Plaid Cymru have adopted a ‘maximum wage’ policy as part of their manifesto. The Compass YouGov polling on attitudes to high pay released earlier this week confirms the public also want tougher action to curb excessive pay - with 63% support for a High Pay Commission which would consider ideas such as a maximum wage.

“It’s also clear that the British people don't just want rhetoric from politicians they demand concrete action, it is therefore a positive step that Plaid Cymru have shown boldness in adopting this policy and it’s high time the other parties caught up.”

Darling blames the banks with his final breath

I want to make it perfectly clear that I am no fan of city bankers and their CEOs but I find myself in the strange position of having to stand up for them a little bit today.

Alistair Darling has said that he will not be changing the current tripartite regulatory system because there is nothing wrong with it. This I suppose means that the fault of the current economic crisis is entirely the fault of the banks. I suppose it could also be inferred that the public is also to blame.

But not the government!!! Not their regulatory system!!! What a load of twoddle Mr Darling!!!

This holds about as much credibility as the governments other recent claims that the local and European election results of late were all about the expenses scandal. In actual fact I think the vast majority of people will agree that things really go a lot deeper than that. They were a reflection of the fact that despite lots of media manipulation and hype, the Labour government under Tony Blair and now Gordon Brown has in reality achieved close to nothing after ten years.

However what the government does do consistently and unashamedly well is tell us...the people who voted for it that we are shallow twits that cannot see through the smoke and mirrors they use in almost everything they do including banking regulation.

The fact is they are not going to change the system for three simple reasons. Firstly, they would have to admit that they were wrong and that is something this government will never do because the system was the pet, the brain child of the current incumbent so they don't have the will. Secondly, they don't have any ideas and thirdly they just don't have the money, it would cost fortunes to undo what they have already done.

When the will, the ideas and the money has all gone as it has in this case there can be only one thing left to do....lay down and die!!!!!

We must be open about our banking problems

George Osborne has called for the EU to put transparency “at the heart” of its response to the banking crisis.

The Shadow Chancellor stressed Europe’s priority should be “a co-ordinated response to the danger poised by so-called ‘zombie’ banks”.

And he highlighted the success of the stress tests carried out on banks in America:

“By reducing uncertainty about the quality of banks’ balance sheets, the US stress tests have helped to bring some confidence back to the markets there, though risks remain. Crucially they have helped US banks to raise capital from private sources.”

Writing in the Financial Times, George said the EU-wide stress tests being conducted by the Committee of European Banking Supervisors should follow the US and make the relevant information public to rebuild confidence.

He criticised the decision to turn down a Freedom of Information request for the results of stress tests carried out on UK banks, arguing that publicising the information would reduce uncertainty in the financial markets.

And he stressed that transparency should also apply to taxpayer support for the banks, as the public “have a right to know what assets we are insuring”:

“This is the right European response to the financial crisis. The alternative is a European economy burdened with zombie banks and ill-considered regulation that could act as a drag on growth for years to come.”

ombudsman service publishes annual review of personal finance disputes

The Financial Ombudsman Service – the independent organisation that settles disputes between consumers and financial companies – today publishes its annual review for the 2008/09 financial year. The review shows that during the year, the ombudsman:

• Handled 789,877 consumer enquiries and a record 127,471 new complaints.
• Resolved 113,949 disputes – a 14% annual increase – with our involvement resulting in compensation for consumers in 57% of cases.
• Saw the number of complaints about mortgages, credit cards and consumer credit rise by 34%, and insurance disputes increase by 84% – while complaints about mortgage endowments fell by more than half.

While half of the total number of disputes related to six of the UK's largest financial services groups – broadly in proportion to the amount of business they carry out with consumers – more than 95% of businesses covered by the ombudsman service had no complaint referred to the service during the year.

Sir Christopher Kelly, chairman of the ombudsman service, said:

The financial world is a very different place now from a year ago – and the ombudsman, like everyone else, has been affected by the economic turmoil. For us it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate.

As businesses tighten their belts – and the credit crunch leads to increased financial difficulty for many consumers – we are gearing up to deal with further volatility in complaint volumes.

Statistics from the annual review show:

• A three-fold increase in complaints about payment protection insurance (PPI) – following a five-fold increase in the previous year.
• Complaints about motor, household and travel insurance rising – but complaints about health insurance levelling off.
• Complaints about investment bonds more than doubling – but pension complaints falling by 9%.
• 26% of cases referred on behalf of consumers by commercial claims-management companies (a 40% increase on the previous year).
• The proportion of complaints from "blue-collar" workers ("C1/C2") increasing by 17% – with complaints from people from professional backgrounds ("white-collar") falling by 18% in the last two years.
• 74% of adults said they had heard of the Financial Ombudsman Service – with awareness of the ombudsman highest in the North and South East and lowest in Northern Ireland.
• The average cost of resolving a dispute at the ombudsman service has fallen 4% year-on-year to £508.

annual review 2008/09 [PDF opens in new window]

OFT sets out responsive approach for uncertain times

The OFT has today published its Annual Plan, setting out its priorities for the year ahead.

The plan promises a responsive approach in a fast-changing economic climate - with the OFT geared up to anticipate and rapidly address developments that could jeopardise consumer welfare or threaten competitive markets. Consumer credit and the financial services are highlighted as areas likely to require particularly close attention.

The OFT's approach for the next 12 months follows four main themes:

* Maintaining constant standards through high-impact work
In 2008, competition investigations carried out by the OFT resulted in the first ever criminal convictions against individuals for price-fixing offences, and in the consumer field the OFT continues to pursue the court case to test the fairness of unauthorised bank overdraft charges. The OFT will continue to promote competition and protect consumers - businesses and individuals will not able to use the economic circumstances as an excuse to disregard their legal obligations.

* Responding to changing circumstances and events
The OFT is working to address the risks to consumers and businesses that the economic downturn may present. Regulation of consumer credit and financial services is increasingly important, for example, and the types of intervention the OFT uses may also change as a result of the recession. The OFT will be agile in deploying its resources to deal with shifting economic and social priorities.

* Influencing the debate around competition and consumer issues
The OFT will seek to influence debate to ensure strong competition is recognised as a key driver in supporting economic recovery, and that effective consumer protection builds public confidence in markets. The OFT will continue to provide positive input into government policy in this context, and will actively engage with business and trade associations on issues such as self-regulation and compliance.

* Working with partners
The OFT will further develop links with partners such as local authority Trading Standards Services and other government departments, as well as working closely with central government on issues relevant to the economic climate, such as consumer credit and priority sectors for future economic growth.

Philip Collins, OFT Chairman, said:
'These uncertain economic times require the OFT to be active, responsive and flexible in continuing to promote competition and protect consumers.

'The OFT will continue to take strong and decisive action where necessary to intervene in markets which are not working well for consumers, and will work closely with government, business and consumer groups to enhance public confidence in markets.'