Claims by British banking regulators that a lack of global agreement has prevented them from introducing tougher rules for the financial sector mask inaction that is dragging down standards in the rest of the world, a report warned today.
The New Economics Foundation (NEF) cited weak limits on commodity speculation, tolerance of naked short-selling and inaction on tax havens as evidence that Britain gives financial tricksters an easy ride. In doing so, the country acts as a haven for these activities and prevents wider reform, the NEF added.
The think-tank urged the Financial Services Authority to copy the American model by imposing position limits on commodity speculators driving up food prices. A ban on naked shorting – selling shares without first buying them in the market – would also bring Britain into line with the US, Japan, Hong Kong and other major markets, it argued.
Andrew Simms, the co-writer of the report, said: "If the Government wants a safe and stable financial system, it should stop the UK dragging down efforts toward financial reform. If it doesn't, we are in danger of being seen by our neighbours as a financial rogue state, subverting safer finance."
London is the European centre for commodities traders and hedge funds, which were accused of bringing banks close to collapse by selling borrowed shares in volumes that caused the banks' share price to collapse.
The FSA said the European Union had taken control of regulating financial markets and that rules on short-selling were now in the hands of agencies in Brussels. The watchdog is reviewing speculation in commodity derivative markets, a practice that the NEF says further impoverishes people in developing countries.
The NEF called for the Government to clamp down on tax havens that allowed the rich to avoid paying taxes in their home countries. It argued that the Treasury could bring low-tax centres such as Jersey, Guernsey and the Cayman Islands into line by using reserve powers or exercising its right to impose good governance. The NEF also accused the Alternative Investment Market of attracting companies to list in the UK by offering soft-touch governance and transparency.
The City's glass ceiling
To soften their reputations as macho places where greed rules supreme, investment banks have stressed their conversion to gender diversity. But a survey by Financial News finds that women make up only 8 per cent of 20 investment banks' executive committees. Almost half of these women were heads of human resources or communications, leaving just nine out of 212 senior executives who have fought their way up through the ranks of investment bankers. Credit Suisse was top with four women on its 16-strong committee, whereas Barclays Capital, Deutsche Bank and RBC Capital Markets had none. Women bankers blamed family commitments, managers' prejudices and their own reluctance to "smarm the boss".Reuse content