A coalition of 11 civil society groups have published a statement today urging the next government to create a financial system that better serves society, the environment and the wider economy. The coalition includes Share Action, The Finance Innovation Lab, New Economics Foundation, Positive Money, Move Your Money and Friends of the Earth The statement challenges politicians to take action to transform finance, by setting out five fundamental recommendations around more diversity, transparency, responsibility, sustainability and democracy. This is a summary of what they are calling for, which I support:
The 2015 election will be nearly 7 years after the financial crisis of 2008, yet the root causes of that crisis have barely been addressed by any mainstream political party. We believe there are five major change that the next government should put in place to create a finance system that serves the needs of society, environment and wider economy:
ï‚· more DIVERSITY in banking, using the Competition & Markets Authority investigation in retail banking to accelerate growth in mutuals, P2P lending, community and stakeholder banks.
ï‚· more RESPONSIBILITY in financial markets, encouraged by joining the EU Financial Transaction Tax designed to curb unnecessary speculation.
ï‚· more TRANSPARENCY in savings & investment, backed by a new Responsible Investment Bill.
ï‚· more SUSTAINABILITY, through the expansion of the Green Investment Bank into a broader state investment bank akin to those in other developed countries like Germany, France and Japan.
ï‚· more DEMOCRACY, by asking the Bank of England to carry out a review of all monetary policy options available to government and central banks to influence the allocation of credit in the interests of the whole of society and the economy, then debate the options in Parliament.
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I would also add to this list a close examination of money generated by individuals or groups within the financial sector which does not add to general wealth of the community but merely allows that group or individual to access the wealth created by the rest of us whilst contributing nothing in return. This seems to me to be one of the biggest confidence tricks of all.
YUP, crucial! Should be working to benefit the common weal and not to be given license to leech from it.
From 2010 to 2012 I worked with other social landlords on a project with a consortium of Credit Unions in the East Midlands to generate ‘jam jar’ accounts for social housing tenancies so that they could pay their rent under the forthcoming (?) universal credit regime.
This government has criminally under used and under funded the credit union sector whilst offering more juicier contracts to established companies to offer payment facilities denied by traditional high street banks to people who live in certain areas of our cities.
I remember them offering something like £60-70 million to the whole of the UK CU sector to develop services for universal credit but offered (if I remember correctly) millions more to the ONE successful bidder for the UC service the Government put out to tender.
The costs of these services to poorer people from these more favoured providers was always higher than becoming a member of a credit union.
At the same time, credit unions have suffered increasing problems with even the smaller amounts of cheaper credit they have been offering to people whom the mainstream banks won’t touch, with knock on effects to CU ability to offer services.
I do hope that the CU sector benefits from the implementation of some the ideas above.
My own feeling on the “Transparency” proposals is that they do not go far enough or address some key underlying big issues. Investing in the “long term interest of savers” cannot be realised within the constraints of our current thinking about investment and regulation of financial markets. Pension funds are said to be “long term investors” but in practice are anything but. Long term pension investing requires a focus on the generation of adequate cash flows (income) on an on-going basis, in order to meet obligations to pay current pension benefits into the distant future. This is objective is obstructed by a focus on asset and liability valuations (i.e. a balance sheet focus). Pension funds would have greater scope to invest differently than is now the case (relying on securities trading – essentially speculation) if they were freed from the tyranny of “funding” regulations based on balance sheet valuation (and the terror of “deficits”). An effective “Responsible Investment Bill” needs to deal with a much more fundamental agenda than is encapsulated by a call for “transparency”.
I agree with you
But the process has to start somewhere
Of course the process has to start somewhere but I think we need some sense of what the destination is as well. The “Transparency” proposals look like they are derived primarily from ShareAction’s thinking. The problem with it I think is that it fails to challenge the securities trading model of pension investing. It’s shareholder activism focus is fine as far as it goes but it is based on “long term” investing and associated “engagement”. “Long term” in this context is only a relative description…..at the “long” end of a short/long spectrum which still relies on the buy-hold-sell approach of securities trading. The only difference on this spectrum is the length of the “hold” – from milliseconds at one end to a few years at the other. If pension fund investing is to escape from this trading model then this implies a different destination and a need for new thinking to commence a journey to that destination. ShareAction do a lot of good work but they remain stuck within the securities trading paradigm and so are the “Transparency” proposals for a Responsible Investment Bill.
I tend to agree on your criticism of Share Action
Why is HMRC not collecting £billions in VAT and duty from Chinese importers ? Evidence is easy to find. HMRC, The Treasury, Minister, and others involved will not comment ????
Have you seen the evidence?
Where?