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jotwell November 23, 2009

Posted by Bradley in : jotwell , comments closed

My first jotwell post is up.

uk financial services bill November 19, 2009

Posted by Bradley in : financial regulation , comments closed

The Bill, introduced today, contains provisions which would make the FSA responsible for ensuring financial stability, about remuneration, recovery and resolution, and short selling. The Bill includes new enforcement provisions including provisions for a collective proceedings. The Bill also provides:

6A Enhancing public understanding of financial matters etc
(1) The Authority must establish a body corporate (“the consumer financial education body”) whose function (“the consumer financial education function”) is to enhance—
(a) the understanding and knowledge of members of the public of financial matters (including the UK financial system); and
(b) the ability of members of the public to manage their own financial affairs.
(2) The consumer financial education function includes, in particular—
(a) promoting awareness of the benefits of financial planning;
(b) promoting awareness of the financial advantages and disadvantages in relation to the supply of particular kinds of goods or services;
(c) promoting awareness of the benefits and risks associated with different kinds of financial dealing (which includes informing the Authority and other bodies of those benefits and risks);
(d) the publication of educational materials or the carrying out of other educational activities; and
(e) the provision of information and advice to members of the public.

But a schedule to the Bill includes an odd requirement that the new consumer financial education body must have regard to “maintaining confidence in the UK financial system; and … maintaining the stability of the UK financial system”. How could a consumer body hobbled by such a requirement effectively educate consumers?

cra regulation in australia November 19, 2009

Posted by Bradley in : financial regulation , comments closed

It’s hard to be CRA these days. As ASIC acts to remove protection of CRAs from liability (by requiring consent of a CRA for ratings to be included in sales literature (note: the ASIC press release is headlined “ASIC gives credit ratings agencies improved control over ratings use”), the FT reports that S&P (like Moodys) is withdrawing from the Australian retail market. ASIC’s new rules require CRAs to be licensed and subject to requirements which broadly track those which are being applied in the EU and the US. But ASIC requires firms which are involved in the retail market to be involved in an approved external dispute resolution scheme and it is this requirement the S&P Press release describes as critical to its decision:

Standard & Poor’s managing director for Australia and New Zealand John Bailey said, “We are supportive of regulations that strengthen transparency and oversight and improve market confidence. There is, however, a need for international consistency in regulatory oversight because ratings are issued and used globally.
“In terms of the requirements for a retail licence, we are concerned that membership of a local EDR scheme would interfere with the analytical independence of our rating opinions and undermine the global consistency and comparability of ratings.
“This scheme could change the substance of a rating and result in the creation of dual credit ratings – an Australian “EDR” domestic credit rating and a “rest of the world” credit rating. Because the local ombudsman would effectively be second guessing S&P’s analysts, we believe this would ultimately create investor confusion and harm financial markets.

A reminder that it’s not just the substance of the rules that matters, but also how those rules are to be enforced. Meanwhile, the EU Commission announced that had issued a statement of objections with respect to S&P’s practice of charging for the use of ISINs by EEA firms, arguing that it was in breach of Art. 82 (abuse of a dominant position).

talking about credit cards November 16, 2009

Posted by Bradley in : consumers , comments closed

We just had an announcement that our faculty and staff assistance program is holding a seminar on credit cards where the speaker will apparently:

review ways to responsibly maximize the use of credit cards.

I think it is likely that those words don’t quite get across what they mean. If they meant show how to use credit cards responsibly, why didn’t they say so?

developments in the uk credit card consultation November 12, 2009

Posted by Bradley in : consultation , comments closed

In an unusual move, the UK Department of Business, Information and Skills has published a press release relating to the credit card consultation which states:

PricewaterhouseCoopers released a report today on the future of the credit card market.
Commenting on the report, a Department for Business spokesperson said:
“Two weeks ago the Government launched a consultation on new measures which we believe will give consumers who use credit cards a better deal. That consultation is receiving an extraordinarily positive response from the public.
“Consumers are clearly very concerned about the credit card market and we are determined to put the customer back in the driving seat.
“There is a need to proceed carefully but the PricewaterhouseCoopers report fails to reflect the many positive options credit card companies have to reform the current system.
“Consumers would not be impressed if credit card companies used this report to argue against change; they should not hide behind this report.”

The report in question is the latest Precious Plastic Report (the BIS doesn’t make it easy to find – not even citing the report by its title), so it’s not exactly directed at the current consultation, although it is clearly written in a context where the regulation of credit cards is an issue. The report does suggest that regulation (in the US as well as the UK) may have negative impacts on the credit card market. But I think that credit card companies have taken advantage of their customers and of their customers’ vulnerabilities on both sides of the Atlantic in ways that are unethical and some of which ought to be illegal. And if I were writing the latest in a series of reports on the credit card market I’d feel obliged to notice that the political calculus with respect to financial regulation generally and with respect to consumer issues particularly has changed recently. So, isn’t the BIS over-reacting? And will the over-reaction be counter-productive?

um international law lecture series November 9, 2009

Posted by Bradley in : events , comments closed

On Tuesday November 10 from 12.30pm to 1.50 pm, University of Miami School of Law Professors Stephen J. Schnably and Bernard Perlmutter will present “International Law and the Treatment of Juvenile Offenders: Graham v. Florida and Sullivan v. Florida and Beyond” in the Law Library’s Reading Room, D201. Lunch will be provided.

uk oecd mnes consultation November 2, 2009

Posted by Bradley in : consultation , comments closed

Published on the same day as the credit card consultation (which generated an immediate response from the UK Cards Association) and by the same government department, the consultation on the terms of reference for an update of the OECD Guidelines for Multinational Enterprises doesn’t seem to merit the same sort of full court press and multi-format consultation documents. There doesn’t seem to be an mp3 version, or a plain English version, even though the document states that the:

consultation is relevant to a cross section of stakeholders, including.. businesses.. business organisations.. trade unions.. non-government organisations.. UK human rights institutions.. trade bodies.. international bodies.. consumer bodies.. law firms and legal bodies .. Parliament, and.. Government organisations

And the document also suggests that really early responses are more likely to be taken into account than later responses:

In line with Government’s code of practice on consultation views are invited within 12 weeks (i.e. by 25 January 2010). However, views received by 30 November 2009 would be particularly valuable in view of the next OECD meeting in early December. This meeting represents a major opportunity for the UK to influence the terms of reference of the update. Comments received after 30 November will still be considered and, where appropriate, put forward in writing. They will still have a chance of influencing the terms of reference but it may be more difficult at this stage to obtain the necessary consensus between adhering countries. To ensure consultation is as effective as possible, a UK NCP’s stakeholder event (9 November 2009) has been arranged, where we will also gather stakeholder views.

The document suggests responses may be submitted by email or by mail (even though there’s an ongoing postal strike). I guess that making it clear that you care about peoples’ responses to this consultation isn’t thought to be very important for the forthcoming election.

the truth problem November 2, 2009

Posted by Bradley in : truth , comments closed

Reading about writing about the trust problem I am struck by the regularity of news stories about lying. The UK’s Office of the Schools Adjudicator has published a report on fraudulent or misleading applications for admission to schools (parents lying about their address to obtain places for their children in desirable schools). The report concludes that this is a real problem which does cause harm:

fraudulent or misleading applications only arise when there is competition for school places. It is therefore also obvious that every school place obtained by deception is unfair as it deprives another child with possibly a higher legitimate call on the place to be deprived of it

The deceptive parents and their children may not suffer any real sanction (although younger siblings may not be given access to the same school), even when they are found out, as some local authorities

reported that their authorities were reluctant to apply the sanctions in the Code and withdraw places after the beginning of the school year … after the child had started at the school, as it would not be in the best interests of the child. In one instance an LA reported that they would not want the ensuing negative publicity! LAs and appeal panels were reluctant to ‘punish’ a child for the actions of the parent.

It’s harder to understand why people would cheat in a marathon race. I’d have thought the thing to celebrate there would be having managed to complete the race in a certain time frame, rather than that others might erroneously believe that you had done so. But I’d apparently be wrong. And it’s not like people can really get away with this, as there are electronic timing records. People are sometimes caught and they seem to use the language of fraudsters when they are caught:

two California women [had] suspicious times in last year’s race. There was no electronic timing record of them from Miles 17 to 25. Discussing in a telephone interview whether she had run the whole race, Ms. Savinar said, “I technically hadn’t.”

There’s nothing technical about this. Either you run the whole 26 miles or you don’t. If you don’t, you haven’t run a marathon.