Table of Contents
Independent regulation has not been a complete success, as users of wastewater-polluted water utilities and those harmed by get-rich-quick energy startups could attest.
So City regulator Nikhil Rathi found himself in a tough spot before the Treasury Select Committee.
Ahead of the hearings, the chief executive of the Financial Conduct Authority faced a blast from City Minister Bim Afolami, who attacked non-essential jobs such as pointing out and shaming wrongdoers.
The criticism came on the heels of complaints from chancellor Jeremy Hunt and 16 city trade bodies. Anyone expecting a withdrawal will be bitterly disappointed.
Rathi pointed out that victims of costly misconduct, particularly retirees from the Port Talbot steelworks in Wales, were blissfully unaware that they were being targeted by dishonest advisers.
Disclosure: The city’s watchdog, the Financial Conduct Authority, wants to name and shame the companies it is investigating
They would have been warned if the people and companies involved had been identified. Even scarier is the fact that there is an unnamed company, possibly a start-up lender with millions of customers, that has been under investigation for years but its identity is shrouded in mystery.
Ministers have the right to question independent regulators. If successive environment or business secretaries had been alert to the financial engineering of the ‘vampire kangaroo’ Macquarie, during the ownership of Thames Water and now Southern, people might not swim in polluted waterways and beaches this summer.
We should not be surprised that the City establishment has risen up against the name and shame and persuaded the Treasury that it is a bad thing.
There is potential damage to Conservative fundraising and support.
Hunt also needs to embrace the effort to reinvigorate risk-taking and fundraising in the Square Mile.
It is in the financial community’s interest that sinners, insider traders, cryptocurrency traders, failed auditors or depositors can avoid publicity.
This isolates them for three to five years while the companies’ victims are exposed to financial loss, pain and ruin.
Rathi, rightly, brought up names and shames. If he felt pressured to resign or be fired for doing his job, defending the consumer against the interests of the producer, it would be a shame.
No one in the City should be afraid of transparency and disclosure.
Fashion malfunction
Recapturing its glory days will be a big challenge for Boohoo.
The online fast fashion group appeared to be the retailer of the moment when it snapped up fallen brands Debenhams, Warehouse and Dorothy Perkins during the pandemic.
Since then, high street stalwarts Primark and M&S have come back to life and Singapore-based Shein has taken territory from UK start-ups.
Boohoo joins brands fighting the pandemic and who have fallen on difficult times.
In the United States, the stock market value of exercise champion Peloton plummeted from $50 billion (£40 billion) to $1 billion.
Boohoo’s sales plunged 17 per cent to £1.5bn last year, losses hit £160m and debt levels are rising.
The group has done itself a disservice to investors through its poor management and revelations of poor working conditions in British factories.
The shares are now at a tenth of their peak value, meaning no big payments should be made to founder Mahmud Kamani’s son, Umar, founder of Pretty Little Thing.
Customers have defected at a worrying rate, with an 11 percent drop in active users.
Everyone wants UK startups to do well, but the luxurious lifestyle of their owners – in contrast to the threadbare factories – is not a good image.
Exit route
The valuation gap for UK shares, despite the FTSE 350’s recent gains, still makes it a happy hunting ground for predators.
The latest in the line of fire are North Sea oil engineer Wood Group and AI chipmaker Graphcore.
The former has told Sidara, based in Dubai, to desist, at least for the moment.
SoftBank’s approach to Graphcore is more complicated.
No doubt SoftBank boss Masayoshi Son will provide the research funding Graphcore needs.
But SoftBank is not a buyer that can be trusted with British intellectual property.
