everyone knows that…. January 27, 2011
Posted by Bradley in : games , add a commentmixed up world January 22, 2011
Posted by Bradley in : lies , add a commentIn the UK, a driver who (truthfully) flashes their lights to warn other drivers of a speed trap can be found guilty of wilful obstruction of a police officer in the course of her duties. But the police seem to think it is OK for police officers to pretend to be demonstrators, and for their superiors to lie about this after the event. It is OK for undercover policemen to have affairs with the people they are investigating, but not OK for a policeman to have an affair with the wife of a politician he is charged to protect.
protecting consumers of financial services – or not January 17, 2011
Posted by Bradley in : consumers , add a commentReading the UK consultation on reforming the consumer credit regime which was issued on 21 December (clearly not designed to be published in prime time for attracting consumers’ attention and probably noticed even less than it might have been because of the disruptive snow falls which pushed Heathrow airport to the top of the news for days (although the closing date is 22 March)) I am not at all sure what is being proposed, except that there seems to be a sort of doublespeak going on. The UK is going to have more effective protection for consumers of financial services, but it will also be “appropriate”, and “proportionate and cost effective” and there will be opportunities for “simplification and deregulation”. Shifting functions away from the OFT doesn’t seem to me necessarily to be a pro-consumer move, and there’s a suggestion (in para 2.11) that the Treasury plans to gut consumer remedies:
The Government does not expect there to be any overall dilution of current levels of consumer protection under option 1. However, it is unlikely that there would be a direct replication of the existing formulation of all CCA consumer protections in the rulebook. The regulator would need to conduct analysis of the consumer protections provided for under the CCA and would consider how best to ensure that a FSMA-style regime for consumer credit delivers at least equivalent levels of consumer protection (including whether this might require any changes to legislation). This would also include consideration of the important differences between the CCA and FSMA enforcement regimes. For example, under the current FSMA regime, breach of a rule does not make a transaction void or unenforceable or constitute a criminal offence (although it may give customers a right of court action for any loss suffered, and firms and individuals can be prosecuted for carrying out regulated activities without authorisation). However, the broader range of sanctions under FSMA may provide an equivalent level of consumer protection. It is also important to note that, to the extent that many consumer protections are enshrined in EU law through the CCD, there would in any case be limited scope for amending requirements relating to many types of credit agreements.
This suggestion that the remedies under the two regimes are broadly equivalent seems to me to be misleading in the extreme. A regime which treats certain types of agreement as being void or unenforceable is quite different from one which might give rise to a claim for losses suffered.
guidance through metaphor? January 15, 2011
Posted by Bradley in : disclosure , add a commentThe FSA is consulting on guidance on financial promotions. Specifically, the FSA is concerned with advertising by financial services firms. The FSA describes such advertising as the firm’s “shop window”:
In the financial services sector, financial promotions (we shall use the term here interchangeably with advertising or adverts) are a firm’s shop window. And, just as consumers go ‘window shopping’, they use financial advertising to shop around. This is particularly true of the internet.
If shop windows were vigorously regulated this might make some sense. Later the document talks about the consumer’s “journey” through a firm’s website:
When you comply with advertising rules, you are enabling consumers to make informed decisions. No one wants to trick consumers into buying something that is not right for them! In seeking to give consumers a clear and fair impression of your product, consider their ‘journey’ through your website, or how their eye might run over a press advert. To explain what you have to offer to them, this journey must be clear, while giving them fair and not misleading information along the way.
And then firms are cautioned not to serve “risk sandwiches” to their customers:
Usually unhelpful, the ‘risk sandwich’ comprises a section on benefits, followed by a section on risk warnings, followed by another section on benefits.
If your fund invests overseas, for example, you could talk about the currency risk at the same time as introducing the overseas feature of the fund. Be careful not to diminish or obscure important statements or warnings: that’s a creative challenge. But how you structure your communication — again within the framework of the rules — is up to you. And how much detail you go into depends on the advert – from a website, where you have almost limitless space, to a ‘teaser’-type ad. But remember that all promotions must be balanced and therefore stand-alone compliant at each stage.
I’m not sure what any of these metaphors adds to the message the FSA wants to convey, or why the FSA thinks they improve the “guidance”. The term risk sandwich seems to be used by the FSA more than anyone else or at least more than anyone else with a similar google ranking. And surely the issues about allowing consumers to assess risks are about more than avoiding “risk sandwiches” – there’s some danger that the requirement to “explain products and services clearly and give consumers fair and clear information, which is not misleading” is seen as being reduced to slogans, despite the FSA’s warnings that consumers avoid what they do not understand and that the FSA will be focusing attention on firms which don’t take their financial promotion obligations seriously.
european union bill January 12, 2011
Posted by Bradley in : eu, Uncategorized , 1 comment so farMPs were arguing (and arguing… they carried on for hours) about parliamentary sovereignty yesterday. Proponents of amendments to the European Union Bill to strengthen and emphasise parliamentary sovereignty (they lost) are most bothered by the EU itself (characterised by one speaker as having “tentacles”) and by judges who don’t seem to know their place (and who should see themselves as subject to removal by MPs if they don’t behave themselves). Here’s Bill Cash:
The threat comes not only from the common law radicalism of such judges but from the EU law itself, which claims constitutional supremacy over member states’ constitutions. We have also seen cases of terrorists appearing to get away with things and people not being deported when they should have been, as well as a whole range of other matters occurring under the European Human Rights Act, which, as I have said, is mirrored by the new charter of fundamental rights in the Lisbon treaty. We are witnessing a vast increase in the volume and impact of such legislation on the British people, and this is resulting in the anxieties I have described. Those anxieties could be allayed by my amendments, however, and it is time for us to turn the tide and make it clear exactly where we stand.
But Malcolm Rifkind made a pretty good point when he said:
The sovereignty of Parliament was not created by an Act of Parliament, and it has never depended on an Act of Parliament. How can its restatement in an Act of Parliament given any real added value to its legitimacy?
And others noted press reports suggesting the whole thing is a matter of shadow-boxing or smoke and mirrors. And, although Dennis MacShane tried to inject some truth about what the UK’s membership really involves:
I put it gently to hon. Members that they should be careful before getting what they wish-the disaggregation of the European Union, with every country rejecting European Court of Justice decisions that they do not like. France believed that it was sovereign when it refused to accept a pound, or a kilo, of British beef, at the time when the whole world thought that the beef was contaminated. We could not export it to Australia, and Canada would not accept it. The Commonwealth would not have it. Hong Kong, our Crown colony, would not have it. But the European Union had to accept British beef because the European Court of Justice accepted our scientific arguments that the beef was fit for sale in the common European market
the debate involved a lot of rhetorical flourishes and veered between competition to see who could quote more Latin to discussions of dead parrots. Not an inspiring read. And not a great legitimation of the concept of parliamentary sovereignty either.
gordon smith recommends john armour January 7, 2011
Posted by Bradley in : jotwell , add a commentIn the latest Jotwell Corporate Law post.
commission consultation on technical details of a possible eu crisis management framework January 6, 2011
Posted by Bradley in : consultation , add a commentFollowing its October Communication on financial sector crisis management, the Commission is consulting on technical details of the framework before publication of a formal legislative proposal. The closing date is March 3rd.
mps’ expenses January 5, 2011
Posted by Bradley in : regulation , add a commentThe UK’s Independent Parliamentary Standards Authority has published a consultation document seeking input on the new MPs expenses scheme and on how it “does business”:
We recognise that initially we needed to operate as if we were providing services to a customer. This has had certain consequences, not least the ever-increasing demand for detailed advice and interpretation of detailed rules and guidance. The cost to the tax-payer is considerable. We are clear that the model of how we do business must evolve. Yes, we must address the Scheme’s rules. But yes, we must also address IPSA’s role. IPSA is above all a regulatory body. As such, we will be exploring ways of doing business which reflect this role.
Why does IPSA feel it is doing business, and providing services to customers (which seem to be the MPs and not the taxpayers)? After all, it was introduced to deal with massive manipulations of the earlier expenses scheme. And the document notes that “contributing to the restoration of public confidence in our democratic institutions” was one of IPSA’s important aims, and that IPSA tends to hear more from MPs than it does from the public. There are some suggestions of moving towards a more principles-based system, for example with respect to claims for taxi fares, which are only allowed when absolutely necessary but could be left to MPs’ discretion on the basis that the claims would be published and visible.
Meanwhile, the customers are complaining. MPs argue that the current rules interfere with their family life – for example, if they have chosen to live in London (where their job requires them to spend a bit less than half the year) but have constituencies outside London where they must spend weekends doing constituency business, they will not see their children at the weekend. This problem might be solved were they to live in the constituency (and this would have the added benefit that they might develop a better understanding of their constituents’ lives). Why should the UK have a system which encourages Londoners to represent people in other parts of the country rather than a system which might encourage people to stand for Parliament from the places where they belong?
Travel expenses for family members are also an issue. The document asks:
Should the rules on claiming travel costs for family members be changed? In particular, should MPs be able to claim for spouses’ or partners’ travel costs when they are travelling between the MP’s London Area residence and constituency residence: (a) with dependent children aged between five and 16 years; (b) with the MP only; or (c) on their own when visiting the MP?
MPs are currently developing rules which threaten the family lives of the rest of the population, for example by the regressive step of increasing VAT, by ill-conceived changes to the health service, and increasing the cost of attending university. Perhaps MPs might consider these other issues more carefully if they had to experience the sort of belt-tightening they want to impose on everyone else.