problems with the culture of finance: fca sanctions state street uk January 31, 2014Posted by Bradley in : financial regulation , add a comment
The UK’s Financial Conduct Authority fined State Street UK £22,885,000 for overcharging customers in its Transitions Management (TM) business. The FCA press release states:
The systemic weaknesses in State Street UK’s business practices and control environment around the UK TM business were so serious that the overcharging only came to light after a client notified staff that it had identified mark-ups on certain trades that had not been agreed. Those responsible then incorrectly claimed both to the client and later to State Street UK’s compliance department that the charging was an inadvertent error, and arranged for a substantial rebate to be paid on that false basis. They deliberately failed to disclose the existence of further mark-ups on other trades conducted as part of the same transition.
The Final Notice says that
State Street UK failed to treat its customers fairly by allowing a culture to develop in the UK TM business which prioritised revenue generation over the interests of customers. As a result, the UK TM business developed and executed a deliberate and targeted strategy to charge substantial mark-ups on certain transitions, in addition to the agreed management fee or commission, that were deliberately not agreed with clients or disclosed to them.
But State Street had held itself out as adhering to the principles in the “T-Charter” a self-regulatory code of practice for participants in the Transitions Management business which provides that participants in this market should only impose charges they agree with their clients. State Street was a “founding signatory” of this Charter.
court of justice distinguishes kükükdeveci January 15, 2014Posted by Bradley in : eu , add a comment
In Association de médiation sociale v Union locale des syndicats CGT, the Court of Justice of the EU (Grand Chamber) has held that Article 27 of the EU’s Charter of Fundamental Rights cannot be invoked in a dispute between individuals in order to disapply a provision of national law implementing Directive 2002/14/EC which is incompatible with EU law.
The Directive established a general framework for informing and consulting employees (“employee is defined as “any person who, in the Member State concerned, is protected as an employee under national employment law and in accordance with national practice.”) Article 3(1) of the Directive limited the application of the Directive as follows:
This Directive shall apply, according to the choice made by Member States, to: (a) undertakings employing at least 50 employees in any one Member State, or (b) establishments employing at least 20 employees in any one Member State. Member States shall determine the method for calculating the thresholds of employees employed.
Article L. 1111-3 of the Code du Travail establishes rules for calculating the relevant number of employees for the purposes of the Directive. A dispute arose as to whether the Association de médiation sociale (AMS) was subject to the Directive’s requirements. The Court of Justice held that the French rules were incompatible with the Directive:
An interpretation of Directive 2002/14 according to which Article 3(1) thereof allows the Member States to exclude from the calculation of the staff numbers of the undertaking a specific category of workers on grounds such as those put forward by the French Government in the case in the main proceedings is incompatible with Article 11 of that directive, which requires Member States to take all necessary steps enabling them to guarantee the results imposed by Directive 2002/14, in that it implies that the States would be allowed to evade that obligation to reach a clear and precise result imposed by European Union law … it must therefore be concluded that Article 3(1) of Directive 2002/14 must be interpreted as precluding a national provision, such as Article L. 1111-3 of the Labour Code, under which workers with assisted contracts are excluded from the calculation of staff numbers in the undertaking when determining the legal thresholds for setting up bodies representing staff.
Article 3(1) of the Directive was capable of producing direct effects, but not between private parties (which AMS is, as “an association governed by private law, even if it has a social objective”). The Court then considered whether Kükükdeveci (where a national court was instructed to apply the general principle of non-discrimination on grounds of age, as given expression in a directive, disapplying contrary provisions of national law if necessary) might help. It didn’t. Art 27 of the Charter provides:
Workers or their representatives must, at the appropriate levels, be guaranteed information and consultation in good time in the cases and under the conditions provided for by Union law and national laws and practices
The Court said:
the facts of the case may be distinguished from those which gave rise to Kücükdeveci in so far as the principle of non-discrimination on grounds of age at issue in that case, laid down in Article 21(1) of the Charter, is sufficient in itself to confer on individuals an individual right which they may invoke as such.
The Court suggests that a damages remedy might be available in these circumstances – the usual next step, although I don’t know how useful it would in fact be in such a case. And there isn’t much in the judgment to allow us to know which general principles will merit Kükükdeveci treatment and which will not.
financial conduct authority website feedback survey January 10, 2014Posted by Bradley in : stakeholders , add a comment
I find the pictures on the FCA website really irritating: presumably the pictures of attractive people are supposed to make the website more appealing but I don’t know what they have to do with the FCA’s functions. So, seeing that the FCA was carrying out a website feedback survey I clicked on the link. The first question is “Are you visiting the FCA website today as a consumer or on behalf of a financial services firm?” the possible options are as a consumer or on behalf of a financial firm. No “other” option. Perhaps they don’t think journalists or academics are likely to participate in the survey? Or they only care about what consumers and financial firms think about the website?
justice in 2014? January 6, 2014Posted by Bradley in : law , add a comment
The criminal bar in the UK protests funding cuts by withdrawing labour. Nigel Lithman QC, Chairman of the Criminal Bar Association, complains that figures about barristers’ earnings released by the Government to the press (the Daily Mail) were misleading (citing the earnings of the better paid, rather than the median barrister). He writes:
Should not the Ministry of Justice be on our side? Should the Lord Chancellor not want a balanced picture given to the press?