Hiding The Law Is No Defence

Bizarre, but true: the most frustrating thing about providing legal advice is actually finding the law. I'm not just talking about judgments, but also the statutes and regulations that burst out of Westminster like confetti at a wedding. It would be interesting to measure the cost of this inaccessibility, because it seems likely to be one of those nasty, unseen root causes of a lot of other problems, not the least of which could be higher legal bills, delay and the exorbitant cost of legal information services.

One impact was highlighted recently in a case in which HM Revenue & Customs inadvertently misled the Court of Criminal Appeal, no less, as to the relevant regulations in force until the "11th hour", when a Revenue lawyer spotted the problem while researching another case. Other cases may have been decided on the wrong regulations.

Given the law is ultimately there for our protection, it won't be much help if it's hidden.

The Free Legal Web initiative recommends 3 ways to improve the situation:

"Firstly, let’s improve access to existing legislation. This is the task OPSI have and it is one which FreeLegalWeb is addressing. But this is applying sticking plaster to the wounds.
So, let’s improve legislation via new legislation! The Leader of the House of Commons is on the case, describing the several ways in which the Government is simplifying and consolidating legislation. But that does not address the huge corpus of remaining existing fragmented legislation.
The third way we can improve access to legislation will be by far the most effective and it does not appear yet to have attracted any public discussion - and that is to improve the legislative drafting process. Legislation is drafted by the Office of Parliamentary Counsel and it is therefore to the OPC that we should look for the answer. To do their job in preparing amending legislation OPC need to work from a consolidated version of the current legislation. Why cannot that be made available to us?"

Indeed.

But I also think we could escalate the issue on the demand side of the equation. Representatives of consumers, SME's and large corporates alike should be demanding ready access to the statutes and regulations that govern our affairs. That should include not only the likes of the CBI and FSB, but also public sector representatives like BERR (doesn't "better regulation" include better access to it?). Even industry-specific bodies could get in on the act (excuse the pun) . The FLA would do well to insist that the Consumer Credit Act and regulations, fully annotated as endlessly amended, should be freely available online in all its ugly glory. And any self-respecting public information provider should be making the same demands - not only the likes of Which? but also DirectGov and Consumer Direct.

While it's perhaps not the sort of grandiose issue that The Great And The Good relish as a chance to strut their stuff on the dais at the Guildhall, it's actually the sort of "small" or "administrative" issue that needs their extra careful attention. As Ghost Dog famously recalled:

"Among the maxims on Lord Naoshige's wall, there was this one: "Matters of great concern should be treated lightly." Master Ittei commented, "Matters of small concern should be treated seriously."

Will The Semantic Web Kill Price Comparison Sites... Please?

Maybe I'm confused, but every time I see a TV ad for one of the multitude of financial services price comparison web sites, I wonder what proportion of the gross product price or insurance premium is commission to cover all those advertising costs.

Yet it's claimed that I'd pay the same price if I went directly to the product provider...

So then I wonder: if there has to be enough fat in the price to cover multiple distributors' TV ad campaigns, why don't product providers start semantic publishing? That way, a widget on my own computer could scan their datafeeds and identify the product that's right for me, based on my personal profile and other parameters I specify?

Surely this would bring down the cost of products and I would also see the whole market, not just those who are prepared to pay to be on the price comparison sites?

PFI Bailout: One Last Gulp Of The Kool Aid

To be fair, I did warn Ministers when Gordon drained the Cabinet tea urn and filled it with his own lethal Kool Aid cocktail. Don't drink it, I said. Do something useful. Take one of the nation's never-been-used military helicopters and fly out to meet the Taliban.

But oh, no. They just sipped away. Nonchalantly playing with the country's finances until, when they lifted the Union Jack piggy bank to their ears and shook it... nothing.

Well, hell. When you're mainlining on fearless ineptitude, that won't stop you. You just get taxpayers to stand in long lines outside banks with IV tubes running straight from their wallets into the vaults.

And as economy grinds into reverse, we have their last, best, brightest idea. The last big gulp from the Kool Aid: bridging loans for stalled PFI projects.

Boy, has that one knocked over the cappuccinos at the Taxpayer's Alliance!

Bridging loans? A bridge to where and when? "Until the economic climate changes, at which point the loans would be renegotiated." That's not a bridging loan. That's the financial equivalent of lighting an oil well and running away. How are we going to fund these things for an indeterminate period? How will they be repaid when the economic climate doesn't "change" in the way that is mysteriously expected?

Who knows? They certainly don't care. It's over for them.

The Leadership Crisis Is Ours To Resolve

Paul Moore's recent evidence to the Treasury Select Committee reveals the kind of top-down culture in the UK financial system that explains not only rampant over-expansion and the financial chicanery that went with it, but also arrogant, self-interested foot-dragging over such things as slow payments, mis-selling of PPI, acceptance of falsely self-declared income on mortgage applications and allegedly excessive bank charges. Intensive regulatory activity, checks and balances aimed at preserving the banks has not been enough to save them. For this, the very taxpayers who are poorly served as consumers must now pay.

After a string of CEO departures, the resignation of Sir James Crosby from his post as Deputy Chairman of the FSA, and with the "blame" now lying at the door of the man who was Chancellor through it all, there is no doubt we are in the midst of a leadership crisis.

But what lies in store for us once the "old guard" has gone? Who are the new leaders? Will their leadership improve?

Leadership is a rather nebulous concept. Over centuries, people have literally died trying to define it by reference to specific character traits, sundry personal qualities, types of behaviour, situational responses, functional responsibilities and so on. But regardless of whether or not leadership features all or some of these characteristics, it is ultimately a very complex, contextual, dynamic, inter-personal relationship between the purported leader and those he/she is trying to lead.

In other words, leadership is what the participants in the relationship make it, and we get the leaders we deserve.

But we know this, and we're acting on it. Our decline in faith in our institutions over the past 30 years, and the corresponding surge in political awareness, participation in informal politics, and personalisation of previously mass consumer experiences all reflect our growing individual pragmatism and our confidence in acting on it from the bottom-up. We have learned that great leadership is within our control because we are a fundamental part of that relationship. In essence, we are the leaders.

That is why, when Chris Skinner issued an apology to 98% of bankers for his rather apt criticism of banks, I suggested that in fact they should take his remarks personally. Because we know that as people they are not powerless. We know that great leadership will emerge when the 98% respond to the criticism, bottom-up, by forging a decent relationship with their customers, putting those customers first, ahead of their managers, executives, board directors or shareholders. Only then will we see decent, sustainable profits from the finance services industry.

BarCampBank Valentine's Day

Forsake your loved ones! Your country needs you at BarCampBank in London on Valentine's Day.

Given that a BarCamp is about as grass-roots as you can get without actually going out into your snow-filled garden and digging, it's a great opportunity to question everything from the bottom up - to really turn the world on its head.

While, unfortunately, I have other commitments on Valentine's Day, I'm fascinated by what the attendees will come up with in terms of "new business models in the world of banking and finance", and possibly democratising the financial markets.

In an attempt to help, I plan to jot down on this post various issues and observations that occur to me this week.

Closest to my Zopa heart are person-to-person mortgages and person-to-person invoice discounting for SME's. But I'm aware that those two suggestions assume an awful lot. The real starting point should be what financial problems do people face today, how big are those problems and what array of solutions might solve them? Ideally, this inquiry should not be driven by, or viewed through the lenses of products in the market today. But it would also be interesting to question today's retail products. Do we need credit cards, for example? If so, why? And why/for whom do the financial markets exist. And so on.

Indeed, what would happen if I went AWOL for about 10 hours on Saturday ;-)

Here are my builds:

1. I reckon there are 8 characteristics that any new retail financial service will need to acquire critical mass.

2. Banks can be the back-office of financial services 2.0 - after all, the money that's not currently lent out at Zopa sits in a segregated account at RBS.

3. See Dave Birch's post on payments without banks. My 10 cents worth on alternative currencies:

• A facilitator would need to gather enough reasonably reliable data on each "currency" for users (or the facilitator itself) to estimate the exchange value.
• People could list "currencies" they have a surplus/deficit of and the facilitator could show matches, with or without estimates of exchange value.

What functions currently reserved for "authorised" financial institutions could be opened up for more lightly regulated players (following the trend set by e-money and now payment services for example).

4. Chris Skinner has listed various "next generation" financial services firms due to present at Finovate in April.

5. Note that "payment service providers" will be able to passport their services throughout the EU from 1 November 2009 - the UK regs went before Parliament yesterday. Similarly, the E-money Directive is also to be overhauled, largely to reduce the capital burden on e-money businesses, and to ease the restriction on conducting other business.

6. Here's an interesting piece of context. In December 2007, Royal Bank of Scotland paid $100bn for ABN Amro. A year later, the same money would have bought:

• Citibank $22.5bn
• Morgan Stanley $10.5bn
• Goldman Sachs $21bn
• Merrill Lynch $12.3bn
• Deutsche Bank $13bn
• Barclays $12.7bn
• And with the change $8bn .....they would be able to pick up GM, Ford, Chrysler and the Honda F1 Team.