Fit and Proper Person

Generali

To work in any job regulated by the FSA, the minimum standard is that you are a 'fit and proper person'.

From today's FT:

Neither Sir Mervyn nor the UK’s top regulators, speaking at a news conference on financial stability, was willing to provide public assurance that Bob Diamond, chief executive of Barclays, or other banking leaders were “fit and proper” people to hold their positions

http://www.ft.com/cms/s/0/fb6e8350-c1e0-11e1-b76a-00144feabdc0.html#axzz1zFT99cGx

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It is utterly amazing to me that the CEO of a 'clearing bank' can't be called a fit and proper person by the regulator.

These are the hurdles you have to jump to be considered fit and proper:

• honesty, integrity and reputation (the FSA must be satisfied that the individual will be open and honest in his dealings and is able to comply with the requirements imposed on him);
• competence and capability (the individual must have the necessary skills to carry on the function he is to perform); and
• financial soundness.

http://www.fsa.gov.uk/doing/regulated/approved/persons/fitness


(my bold)


Clearly Bob is financially sound as he has, I believe, earned ~£100,000,000 over the past few years. Is he honest? I have my doubts.

wymondham

Is anyone in that position 'truely' honest. The temptations must be enormous. I'm more concerned about the regulators themselves - happy to let things roll when the good times are about, and point fingers when the bad times come, shirking all responsibilities...

ruggedtoast

Banking regulator denounces bank as "very naughty".

Severe shaking of finger in general direction of bank meted out.

Vast bonuses handed out to bank execs for added stress caused by such treatment.

oldvicar

ruggedtoast wrote: »

Banking regulator denounces bank as "very naughty".

Severe shaking of finger in general direction of bank meted out.
...

In the golden days the most severe reprimand was the raising of an eyebrow by the BoE guvnor.

Wookster

I find the Barclays relationship with BlackRock to be rather peculiar.

Barclays owns 20% of BlackRock and BlackRock owns 6.5% of Barclays.

Bob Diamond sits on both boards.

That is somewhat odious to me and I'm surprised it is legal!

moneyinmypocket

Most people in that situation would sell out too - its the human condition

vivatifosi

Wookster wrote: »

I find the Barclays relationship with BlackRock to be rather peculiar.

Barclays owns 20% of BlackRock and BlackRock owns 6.5% of Barclays.

Bob Diamond sits on both boards.

That is somewhat odious to me and I'm surprised it is legal!

Barclays announced last month that it wanted to sell its 20% share in Blackrock. The sale would then effectively remove Diamond's seat. More worrying for Blackrock will be what message to send to its clients given that a lot of its key people are leaving.

chewmylegoff

The fit and proper test is applied in two different ways:

1) to receive approval, you have to prove than you are fit and proper

2) for the fsa to remove you, it has to prove that you are not

Much as the 'man on the street' will believe that all you need to do to prove 2) is to say "x is evil" unfortunately the legal process requires evidence, evidence which directly links x to misconduct.

macaque_2

The 'Gordon Gekko' attitude to business ethics has very become popular and even respectable in recent years. People no longer condemn asset stripping, cheating, lying, market manipulation, misselling and slave wages in the pursuit of short term gains.

The founders of the Labour movement must have been turning in their graves at the sight of Gordon Brown favouring the interests of foreign oligarchs, banks and financial crooks over those in productive employment.

Everything is cyclical including ethics but it takes a disaster to change attitudes. What we are seeing at the moment are scandals rather than disasters. That means that powerful vested interests can successfully resist the most important regulatory changes by playing the 'mutually assured destruction' card. If homeowners think that house prices are falling as a result of regulatory changes, the Tories will be out of power for another decade.

Ultimately, house prices will have to fall (no one can afford them anymore) and then the banks will be in a much weaker position. At that time (hopefully) the regulators will use the opportunity to put banks and other lenders back in their boxes.

On a matter of pure self indulgence I would also welcome the sight of crooked city employees being dragged out of offices in handcuffs.

Conrad

Generali wrote: »

To work in any job regulated by the FSA, the minimum standard is that you are a 'fit and proper person'.

I'm regularly sent emails by the FSA, detailing the latest brokers to have been punished, for example for using fake payslips to help a renter become an owner, given the backdrop where repossessions remain a tiny minority of thr whole.

Typicaly brokers get fines often of £125k, loose thier business, often have thier home and other assets sequestrated and some serve time.

This to me is the greatest example of how the great and good are above the law.


Did you see those 3 Labour peers, Lord Paul, Lord Bhatia and Baroness Uddin got away with suspensions and fines for thier fraudulent activity, none had thier homes or livelyhoods taken away.

It's time the public started making a proper fuss.

GeorgeHowell

Non-executive directors and shareholders are supposed to be the people to deal with this, by voting down excessive or reward-for-failure remuneration packages, ensuring that the right people are in the top jobs, and censuring those who do not deliver or who step out of line. Mostly they fail to do these things, either because they are part of the problem themselves, or too weak and spineless to do more than huff and puff. The government itself is a major shareholder in RBS and Lloyds HBOS and one wonders what it is doing to change the ethic and modus operandus in those organisations.