James Moore: Kay's ideas on target but it will take teeth if we are serious about fixing the City

Outlook: Vince Cable will be formulating a response that could easily be frustrated

Goodness knows the City of London could do with a dose of sanity. Yesterday, an academic, of all people, tried to provide one. In castigating a "lack of trust and poorly aligned incentives" John Kay, a professor at the London School of Economics, is hardly saying anything new.

But he does have some half-decent ideas for fixing the City's problems and there is lots to like about his Government-sponsored report, not least its home truths for the fund-management community, which bears more responsibility for the current sorry state of affairs than its members like to admit.

They are, after all, just as fond of bonuses as bankers, and have continued to pick them up despite the fact that their inaction in the face of corporate malfeasance and just plain old excess is a significant contributor to the City's current low watermark.

Professor Kay's ideas include the creation of a stewardship code, providing guidelines for some of the more recidivist fund managers, and an investors' forum to facilitate collective engagement with companies (so no more excuses about mixed messages from shareholders when it comes to pay). He wants boards to consult with investors before making appointments, an end to the US practice of quarterly financial reporting, and an emphasis on fiduciary duty right down the line.

All this and his other ideas seem rather sensible and had governance groups purring, which is usually a good indication that something is on the right lines.

Leave it to the Trades Union Congress to get to the nub of the one real problem. It's worried that if all this is voluntary it won't work.

The City doesn't really do voluntary. Within its eyries sits a vast corps of vested interests which would far rather spend millions on lobbyists and PR companies to lie about how seriously they take the need for reform while doing precious little in practice.

And they're already sharpening their talons for the months ahead, during which time the Business Secretary, Vince Cable, will be formulating a response that could easily be frustrated by the refuseniks on the Conservative benches who have friends in the City and an interest in it providing them with cushy jobs when they're out of Westminster.

The Investment Management Association's line yesterday is a case in point. It was carefully worded and used the phrase "welcome" with a "but", the standard reponse of organisations to reports they don't like. It then went on to whine that Professor Kay doesn't recognise that fund managers are different to traders and therefore don't contribute to short terminsm.

Except that they do, if not by their actions then by their inaction. They could have moved against the destructive remuneration packages the report has identified years ago, but they didn't. The shareholder spring was only prompted by their fear that Mr Cable might legislate to force their hands.

Mr Cable's more radical proposals were watered down and the bits of Kay the City doesn't find to its taste are likely to suffer the same fate.

The road to the hell of the financial crisis was paved with truckloads of good intentions that got nowhere. Without teeth, this report will simply add another slab.

Rake's a non-runner in the Barclays stakes

Oh dear. If you backed the favourite in the "Barclays City's Second-Worst Job Handicap Stakes" you've done your money. Serial company director and former KPMG boss Sir Mike Rake was many people's idea of the class runner in the race to become Barclays chairman and the best internal candidate to clear up the mess left by the Libor-fixing scandal.

Unfortunately his connections have had other ideas. The Barclays deputy chairman doesn't get much time in the stable: he's also the chairman of BT and of EasyJet and strangely enough it was the latter that scratched him from the race.

"EasyJet confirms that Sir Mike Rake has informed the easyJet board that he has formally informed the chairman of Barclays that he does not wish to be a candidate for the chairmanship of Barclays," it sniffed.

It seems chairing one company with questionable remuneration structures, stroppy investors (stroppy investor in easyJet's case but Sir Stelios is more than enough to be getting on with) and strategic issues is enough to be getting on with. You can hardly blame Sir Mike.

Meanwhile, it's back to square one at Barclays, which has to find someone with the requisite ability, experience, thick skin and willingness to knock heads together. After, that is, it has dealt with the small matter of getting a new chief executive.

French without tears as Brits dodge the Jubilee

Now you know why so many companies are moaning about the Queen's Diamond Jubilee: a lot of their customers used the extra bank holiday to flee the country.

It seems that as many people hot-footed across the Channel to La Belle France as bought Union flags to wave out of their windows while watching the gushing BBC coverage.

Eurotunnel yesterday reported carrying a record 10,000 vehicles in 24 hours. The ferries were probably similarly crammed.

Well, the French have proved they can act magnanimously when their biggest sporting prize gets snaffled by the Brits.

Who also beat them to the Olympics, during which Eurotunnel is expecting another surge in revenues and profits.

Sadly, while Eurotunnel might have made money, with the promise of more to come, it wasn't winning any medals from investors who gave its numbers nul points and headed for the exits complaining about rising costs and missed targets.

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
Jonathan de Guzman of the Netherlands and Willian of Brazil compete for the ball
world cup 2014LIVE BLOG: Hosts Brazil take on the Netherlands in third-place play-off
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice