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Posts Tagged ‘FSA’

Banks join police to clamp down on share scammers

Monday, July 13th, 2009

Have you received cold calls about share information? Well, just hang up, is the advice from the police working on Operation Archway. Millions of pounds of investors’ money is lost every year to these share scams and now, according to BBC News Online, banks have begun to take action, like suspending transactions if they are being paid to known boiler-room firms.

The Financial Services Authority has recently published a list containing the names of hundreds of companies which they believe pose a high degree of risk to customers.

In particular, Barclays has blocked around 150 transactions so far since introducing a screening system in February, which they believe has saved their customers millions of pounds.

HSBC has followed suit, stating that if they receive requests for payments from any of the blacklisted companies, transactions are delayed until the activities can be fully scrutinised.

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Tags: FSA, Scam, Security
Posted in Government, ID theft | No Comments »

FSA admits impotence as building societies are scrutinised

Thursday, June 25th, 2009

The blame game is in full swing again today as accusations are being thrown about by top members of the Financial Services Authority (FSA), reports Times Online. High-ranking officials have pointed their fingers at some of the biggest building societies in Britain, who are being accused of ignoring numerous warnings and threats put forward by the FSA to stem borrowing.

Nick Lock, the manager of the FSA’s retail firms division, spearheaded the criticism. Hugh May, quoting Lock at the Building Societies Association (BSA) annual conference in Harrogate, stated that ‘we have seen unsustainable margins on prime-lending, over-ambitious growth targets and a risk appetite that was too great’. May also points out that there were ‘fundamental mispricing and inadequate investment in risk management’.

A number of building societies have been hitting the wall over the last 12 months. Scarborough Building Society has been rescued by Skipton and in March Nationwide bought the best bits of Dumfermline which had incurred losses amounting to £26 million.

Building societies had apparently ignored warnings from the FSA which had been repeated ‘over and over again’. But this only illustrates the argument that financial turmoil is not due simply to the building societies and financial institutions, but also to the lack of regulation.

Why did the FSA have no teeth to ratify their warnings? It is surely their job to prevent this situation occurring. It’s ot hard to see why building societies and all financial institutions have exploited the deregulated system for all it’ worth. A little reading into rational choice theory and Mancur Olson’s collective action problem can even describe how it has actually been rational for financial institutions to act greedily in a situation where regulation is sparse (Olson and his counterparts in game theory and collective action problems stipulate that irrespective of whether you choose to benefit or not from greedily exploiting a market, your rivals will, which will be to your detriment; firms are myopic especially as long-term goals require irrational collective action).

It is strange therefore that the FSA readily decides to stand up and show how impotent and pathetic it has been in reigning in their greedy subjects - perhaps in admitting their weak behaviour they will be allotted more powers in the upcoming regulation proposals.

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Tags: Building Societies, FSA, Mortgages
Posted in Government, Payday Loans, Recession | No Comments »

King targets banks ‘too big to fail’

Tuesday, June 23rd, 2009

An interesting opinion from the governor of the Bank of England, Mervyn King, is that the banks ‘too big to fail’ should be prevented from getting that big in the first place. According to the Times Online King stresses this is not a personal ploy for power nor is it instigating a battle with the Treasury, but is in the country’s and taxpayers’ best interests.

This comes at a time when the chancellor, Alistair Darling, will be announcing proposals for regulation of the financial sector for the next ten years. The proposals will at large be based on the findings of Lord Turner’s report on the Financial Services Authority (FSA).

King’s remarks not only question the general size of banks but whether the banks are mixing high-street retail banking with high risk investment banking, which had caused so much trouble in the last couple of years. The issue of size and relative failure is a contentious issue, and many analysts have argued that the bigger banks were more likely to fail, and fail in a more expensive way to the taxpayer.

However, others highlight that even the relatively smaller banks have an impact, for instance Dunfermline, Northern Rock and Bradford & Bingley, and still needed to be saved. Even the biggest banks did not fail simply because of their size, for instance RBS’s disastrous acquisition of ABN Amro, leading to their needing to be rescued by the taxpayer.

The Swiss government is even considering measures to physically curb their big banks, UBS and Credit Suisse. However, one analyst argues this may lead to banks moving their headquarters abroad, and the last thing the country wants is a revenue drain abroad.

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