Capitalism must keep an eye on itself, too
Appointments to top regulatory jobs do not necessarily set the pulse of the nation racing, but the installation of Samantha Barrass as head of the new Business Banking Resolution Service (BBRS) is one that the City should pay attention to.
Not necessarily because we expect the BBRS to be busy — though in its early days Barrass will no doubt have a full inbox — but because of what it represents about the way British business, when it works well, can right wrongs.
The BBRS was set up after understandable anger from many of Britain’s small businesses about the treatment they received at the hands of the banks — with the work of RBS’ Global Restructuring Group garnering plenty of column inches.
The Financial Conduct Authority’s Andrew Bailey was dealing in epic understatement when he said that GRG “fell short of the high standards its clients expected” and that the scandal damaged the reputation of the industry — and, it’s fair to say, capitalism.
The response has been swift and it appears that it will be effective. The BBRS has been set up, the Senior Managers and Certification Regime has sharpened its language on accountability, the Financial Ombudsman can now dish out more significant payouts.
There will be grumbles on both sides but fundamentally, capitalism has once again (with a little government nudge admittedly) worked to improve the way the market operates.
Heavy-handed government approaches rarely come without unintended consequences, and it’s helpful to remember that during an election campaign most of all.
Far better to improve governance; the Institute of Directors last week warned against “extreme” reactions to corporate misdeeds from politicians caught with that terrible bug of do-somethingitis.
Labour’s manifesto is full of such ideas, running the gamut from nationalisation to customers on boards, and none of them appeal.
But as business leaders ponder why this election appears to be one in which bashing business makes for a poll boost, the arrival of the BBRS should give pause, too.
The easiest way to roll the pitch for populists to mount assaults on big business — be they banks, retailers tech giants — is for regulators to take their eye off the ball or for those same businesses to act in such a way that deserves the opprobrium. One to remember, regardless of who takes the keys to Number 10.
Main image: Getty