Friday, 8 December 2017

Time To End This False Brexit Farce?

As the EU/UK joint report on "progress" makes clear, the parties have done nothing more than agree "in principle” on only three of many, many issues to be resolved if the UK is to leave the EU (and that remains a big “if”). Aside from the ongoing price tag, there are the three aspects worth noting below. But my overriding concern is that the very reasonable steps which people and businesses are already taking to minimise their exposure to the downside (and maximise exposure to the upside) of the Brexit “Black Swan” are probably the main source of lasting damage for the UK, and unless the Brexit process is soon halted that lasting damage will be done. 

The first area of common ground is that if citizens wish to retain their EU rights (with some family members being able to join them), then UK citizens need to be ‘legally resident’ in (another) EU member state, and EU citizens legally resident in the UK, on the date of the UK’s withdrawal. But they may well need to apply for that status, and this opens a chasm of uncertainty. 

After some scary moments early this week, the UK now seems clear that the Good Friday Agreement must remain paramount. That deal was predicated on EU membership, so it's a Trojan Horse for what the “Leave” camp are now calling “Leave in name only” (or “LINO”). There is no clarity at all, for example, on how the absence of a ‘hard border’ between Northern Ireland and the Republic of Ireland can be accommodated in light of typical import/export checks and other constraints between the EU and ‘third countries’ (as the UK will be). My sense is that there could never be agreement on that, the result of which is stated (in para 49) to be that: 
“the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North - South cooperation, the all-island economy and the protection of the 1998 Agreement.” 
The demands from Scotland, Wales and London to receive equal treatment with North Ireland in this respect also seem to be honoured in paragraph 50 of the report. Other provisions suggest free movement of labour will continue, as will free movement of goods ‘placed on the market’ prior to UK withdrawal. There are references to transitional arrangements but no cap on their duration...  Uncertainty abounds.

There is no mention of free movement in relation to any services, let alone financial services - which are a bellwether for the UK economy. Financial passporting was ruled out by Mr Barnier on 20 November, but perhaps it might yet leap out of the Good Friday Trojan Horse. Be that as it may, there is nothing sufficiently certain on this front that should tempt firms which are currently passporting from the UK to delay the process of establishing new EEA passport ‘hubs’ within one of the EU27 countries by March 2019 (or, indeed, EEA firms from establishing a UK presence). Management and staff will also be considering their own personal risks and opportunities related to this, particularly where they might benefit from rights that flow from becoming legally resident in an EU27 member state before the UK’s withdrawal. 

No doubt there are also people and firms in other sectors who will be similarly disinclined to halt or pause their own efforts to minimise their exposure to the downside of Brexit, and maximise their exposure to the upside. It is this risk management activity in the face of continuing uncertainty that seems likely to cause lasting damage to the UK...

Wednesday, 29 November 2017

Brexit Needed Your Fully Informed Consent

In 2016, the Swiss parliament realised the people had made a terrible mistake in a narrow, binding 2014 vote to impose quotas on EU workers.

While Switzerland is not an EU member, it's the EU's third largest trading partner after the USA and China - so more important than the UK on its own - and has a free movement agreement for all EU citizens, meaning EU citizens can live and work there.

The EU was not intimidated by the Swiss vote in 2014. The EU (including the UK, even after the Brexit vote) continued to insist that any attempt to restrict free movement of EU citizens would automatically exclude Switzerland from the EU single market. Imposing quotas would end all of Switzerland's 120 trade deals with individual EU members and result in exclusion from the EU’s chemical regulation, research and education programmes.

So the Swiss parliament decided not to implement the quotas on EU workers. Voters had not been informed of all these consequences of voting to impose the restrictions. Conservative politicians were outraged, but that was felt to be a price worth paying to protect the Swiss economy.

UK citizens are already personally familiar with the need for consent - especially where that is the basis for processing their personal data under the Data Protection Act 1998. Indeed, the UK government was instrumental in developing the new, more stringent General Data Protection Regulation (GDPR), and has committed to retain it post-Brexit

Where consent is relied upon for the processing of personal data, it must be a "freely given, specific, informed and unambiguous indication of the data subject's wishes... a statement or ... clear affirmative action [which] signifies agreement to the processing of personal data relating to him or her."

The UK's own EU referendum was a non-binding vote and a simple Yes or No to leaving the EU.  No one would argue that any voters were really "informed" as to the consequences of Brexit. Only a few of those consequences are clear 18 months later.  Many people are very angry that they were misled by Leave campaigners who claimed that leaving the EU would be easy, that it would cost nothing, that there would be new trade deals by now and the UK would be able to spend its EU contributions on the NHS instead.

But it is clear that the EU does not feel the need to compromise with the UK - after all it didn't need to for Switzerland.

On this basis, the non-binding referendum vote to leave the EU was not fully informed and Parliament should now now decline to proceed with it. The Article 50 notice to leave the EU can and should be withdrawn.

Wednesday, 22 November 2017

Mau-Mauing The Brexiteers

In 1970 a group of indignant, physically intimidating citizens gathered in San Francisco's Office of Economic Opportunity to confront a useless bureaucrat over the fraudulent failings of the Office's poverty relief efforts. The bureaucrat's initially condescending approach soon turned to humiliation and he ended the meeting with a pathetic promise to call his absent boss for some real answers the following morning. Satisfied with the bureaucrat's humiliation, however, nobody turned up to hear him make the call. 

Re-reading Tom Wolfe's famous article on the confrontation last night, it struck me as something of a parable for the campaign against Brexit, and yet revealed a key difference that firmly points to that campaign's success. 

Wolfe called his article on the confrontation in San Francisco "Mau-Mauing the Flak Catchers" in reference to both the intimidation by Kenya's anti-colonial Mau Mau Uprising and the tendency for public officials and politicians to send an underling to 'catch the flak' rather than face it themselves. He ends it with the observation, however, that the bureaucrats were ultimately successful. The flak catcher caught the flak and everyone went on with business as usual.

Brexit was billed by the Brexiteers as a poverty relief effort, but we've since discovered it was riddled with fraud, from the claims that there would be an "extra £350m a week" to be spent on the NHS, to the claim that the Tory leader could send the Article 50 notice without reference to Parliament, to the claim that the notice could not be withdrawn and the Brexit process stopped, to the notion that the UK would not need to settle its membership tab on the way out, to the claim that new trade deals would be easy... to the now utterly hollow claim that "Brexit means Brexit".

Such lies and misinformation have cast the Brexiteers as very, very low grade officials indeed. Whether or not you applaud their elevation to cabinet minister by a weak (and faux-Remain or closet Leave) Prime Minister, that step has at least highlighted their total and complete incompetence to lead or achieve anything. Years after launching their mendacious campaign to 'free' the UK from some imagined EU 'dictatorship' they are yet to offer any concrete details for an EU trade deal, let alone a 'Global Britain'. They have even failed at the first hurdle, skewered by their bizarre denial that the UK would need to settle its membership bill before leaving. These people are simply living a fantasy.

The indignant citizens actually confronting these bureaucratic flops are an intimidating bunch. They draw strength from representing at least 16 million people, for a start. They also tend to be the very people whom the Brexiteers must have been relying on to actually achieve the impracticable task of unwinding over 40 years of British efforts to make the UK a key player within the European Union. Beyond the disaffected UK civil servants there are millions of importers, exporters, manufacturers and their workers throughout British industry, investors and investment managers, QCs, judges, academics, teachers, nurses, doctors, students... a whole civil society of people who understand how the UK works, the value of its EU membership and that it does not work in isolation and who consider themselves EU citizens as well as UK citizens. They are angry and they are fighting for their rights and in many cases their homes.

But the key difference between the #StopBrexit campaigners and the indignant citizens who gathered in the San Francisco Office of Economic Opportunity in June 1970 is that no one is letting the hapless Brexiteers off the hook.  Unlike short-sighted Leave voters and the dormant botnets of the Leave campaign, their Twitter accounts are very much alive and connected to ongoing investigations, court proceedings, official complaints and petitions. They are relentless in challenging the hollow rhetoric flowing from the Brexiteers. And unlike the Brexiteers, anti-Brexit politicians are not fighting for their credibility - they can safely rely on inertia and the vast weight reality, statistics, events and common sense to expose the Brexiteers' feeble lies and misinformation on a daily basis. They are not satisfied with the mere humiliation of May, Johnson, Gove, Davis, Fox and their supporters and apologists (including the Labour front bench!). No, they are turning up the next day, every day, day after day, demanding answers and an end to Brexit.

Thursday, 12 October 2017

Why Would The #Brexiteers Lie?

Follow the money. 

Years of low interest rates have made investors desperate for higher returns, and volatile markets mean lots of big ups and downs, like the rollercoaster ride we've seen since the Brexit vote and are likely to see for many years as a result. Movement either way is an opportunity for speculators to make money, even if the longer term trend is down. And paying rock-bottom prices for UK assets could mean good profits can be made selling them to predatory trade partners in the future

At any rate, steady as she goes won't cut it for the wealthy investor - which is why "strong and stable" is just another #Brexiteer lie. After all, the wealthy don't have to live in Britain when the going gets tough.

So this is why the Leave campaign was largely funded by 5 wealthy financial investors, and why after the Brexit vote, George Osborne knew it was best to leap into an investment fund manager

And now that Brexit is hitting the buffers, guess what? Legatum, the Tory's hard-Brexit stupidity "think" tank has received £4m from a wealthy investor from New Zealand who Private Eye says made his money "by finding undervalued assets the rest of market ignored – “transition economies or distressed sectors where information is not easily available and standard metrics don’t apply”.

It's still unclear where the so-called "Institute for Free Trade" got its money, but it has similar hallmarks to the other Brexiteer stunts.

Make no mistake: Brexit is for a few, not the many who are unwitting pawns in their game. 

Monday, 9 October 2017

Are Retailers Prepared For Financial Regulation From 13 January 2018?

Three years after being announced in the UK and I suspect many retailers are still yet to realise that their loyalty/store card programmes will be regulated by the Financial Conduct Authority from 13 January 2018 - likewise across the European Economic Area. 

As the FCA now also explains, retailers who offer such programmes anywhere in the EEA will need to track the annual transaction volumes very carefully, starting with the completely arbitrary and inconvenient date of 13 January 2018. 

If the volume meets or exceeds €1 million (or the GBP or local currency equivalent) in any 12 month period (the first ending on 12 January 2019), the retailer must notify the FCA (or local regulator) within 28 days (by 10 February 2019).  Firms may also choose to register at any time from 13 October 2017.

But be sure of the outcome before you decide whether or not to register!

The regulator must then decide whether the programme is exempt from regulation as an e-money/payment service.  

If the firm fails to notify, it commits an offence under the Payment Services Regulations 2017 (or local equivalent implementing the second Payment Services Directive (PSD2)). 

If the FCA decides the programme is exempt, then it must include the retailer on the FCA's register of 'limited networks', and the name will be added to a central register of all such firms across the EEA.

If the FCA decides the programme is not exempt from regulation the retailer can appeal, but basically this means the firm will have been found to be violating the Electronic Money Regulations 2011 and/or Payment Services Regulations 2017 by issuing e-money and/or offering a payment service without being duly authorised/registered to do so. Major problem!

So retailers really have to decide now whether they should outsource the operation of the programme to an authorised firm (or the agent of one); or seek their own authorisation (or agency registration). Ultimately, they might restructure the scheme to fit the exemption, or shut it down.

Of course, the mere fact that retailers with loyalty schemes have to be mindful of these requirements and go through the process means they are in effect regulated by the FCA. Ignorance, as they say, is no defence.

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