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uk: banking standards review February 10, 2014

Posted by Bradley in : self-regulation , add a comment

As the FCA publishes its thematic review of Transition Management (the activity with respect to which the FCA fined State Street UK) and stories about banks’ compliance failures and the financial consequences of those failures seem to be in the news on a daily basis, Sir Richard Lambert publishes a consultation paper as part of the Banking Standards Review initiated by “by the chairmen of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander, Standard Chartered and Nationwide.” Lambert says:

I am hoping for the widest possible response. I would like to hear from banks and building societies with UK operations; customers and consumer groups; professional bodies with members working in banks; bank staff and trade unions; the Bank of England, financial regulators and investors; politicians; and anyone else with an interest in banking in Britain.

The consultative document suggests that the proposed new organization and standards – which would be designed to turn banking into a profession, sensitizing financiers to the big picture and moral questions, and a standards body rather than a lobbying organization – should apply to foreign banks doing business in the UK as well as to UK banks.

problems with the culture of finance: fca sanctions state street uk January 31, 2014

Posted 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, 2014

Posted 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, 2014

Posted 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, 2014

Posted 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?

vicar told children the truth (about santa claus) – parents were horrified December 12, 2013

Posted by Bradley in : lies , add a comment

The Guardian reports that a Wiltshire Vicar told a group of children about St. Nicolas. After parents objected he apologized to parents for having told their children the truth (he apparently said he had no intention of undermining the kids’ belief in Santa Claus). The article has this quote from one of the parents:

We wouldn’t just walk into the church during one of his services and tell everyone there that Jesus isn’t real. He’s a person of authority and it’s not his place to be telling the children that.
“It’s the older children who have suffered the most because their parents can’t really talk their way out of it like the parents of younger children can.
“Loads of kids went home crying – it has ruined Christmas for them. It wasn’t a nice story for children to hear, there were lots more he could have told. Not only has he spoiled Father Christmas for them, a lot of them are now questioning the existence of the tooth fairy as well.

Parents can’t talk their way out of it with older kids the way they can with younger ones. But why this need to have children believe in things that do not exist? Especially as a significant chunk of the Santa Claus story is too close to the idea of the bogeyman for my liking.

The headline for the Telegraph’s story reads: Santa Claus is not real, vicar claims to audience of primary school children. Claims?

jotwell: coslovsky & locke on global supply chains December 6, 2013

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My latest Jotwell contribution, discussing Salo V. Coslovsky & Richard M. Locke, Parallel Paths to Enforcement: Private Compliance, Public Regulation, and Labor Standards in the Brazilian Sugar Sector, 41 Pol & Soc 496 (2013) is here.

miami gable stage antony and cleopatra kickstarter campaign December 1, 2013

Posted by Bradley in : markets , add a comment


I think they do theatre better than they do video. But the theatre is good, and this production is designed to bring Shakespeare to a wide audience.

uk: payday lending plans November 25, 2013

Posted by Bradley in : consumers , add a comment

The UK government plans to cap the cost of payday loans in amendments to the Financial Services (Banking Reform) Bill. According to the Chancellor of the Exchequer:

It’s all about the government being on the side of hardworking people.

cfpb: payday lending enforcement and final rule on mortgage disclosure November 20, 2013

Posted by Bradley in : consumers , add a comment

The CFPB announced an enforcement action against Cash America International, Inc with respect to its payday lending practices which includes refunds to customers, a fine of $5m for the violation and for destroying records before the investigation and promises with respect to future compliance. I have been feeling grim because I will be discussing McKenzie Check Advance v Betts in class tomorrow, and this is a step in the right direction. The CFPB also announced new rules on mortgage disclosures. There’s lots of information about this rule on the CFPB website, including a blog post which explains how the final rule is different from the proposed rule, a report on the study of old and new mortgage disclosures, and a page for consumers. Much more user friendly than the usual sort of financial regulation rule announcement.