Parliamentary Connections

The steady flow of stories about MPs, MEPs and Peers abusing expenses are doing huge damage to their credibility, standing and support among the general public. This, in turn, damages and undermines the entire political system.
I know many senior people in business who scornfully dismiss the idea of engaging with politicians on the grounds that "they are all in it for what they can get out of it". Like most sweeping generalisations this does not tell the whole truth and it is a dangerous assumption to make for anyone with an interest in influencing how our laws are made. Every business leader should have an interest in this area as it shapes - or distorts depending on your point or view - the markets in which business operates.
Politicians, of course, deserve alot of the criticism that is currently coming their way. It seems to me desperately naive of them not to think that the last decade of demanding ever more transparency across the rest of society wouldn't eventually see the spotlight of scrutiny turned on them. It wouldn't have taken much to get the system of parliamentary allowances cleaned up so that it was capable of being judged favourably against today's standards.
All that said, it is important that we recognise that the majority of MPs are not there to make their fortunes: in my experience they genuinely want to serve the country, however pompous that aspiration might sound in today's cynincal world. This means that people must look beyond today's headlines and continue to engage with the democratic and political processes. This is never easy at the best of times because finding out where to start can be difficult. This remains one of the over-riding reasons why we – by which I mean Incisive Media – continues to work with the All Party Parliamentary Group on Insurance & Financial Services to provide that starting point. They genuinely want to hear from you and many people who meet the senior members for the first time will tell you how taken aback they are by their knowledge of the financial services sector: proof alone that some of that cynicism is miss-placed.

I have often wondered at the informal hierarchy of the City and its financial institutions which always seems to put bankers at the top of the tree. Do they deserve to be there? The case for such pre-eminence looks very shaky to me.
It seems that the live on the edge of the fool’s paradise of power without responsibility. Is that abit harsh? Just look at the current economic crisis gripping the developed world and ask yourself where does the responsibility really lie?
Bankers have been at the forefront of persuading governments to adopt a light touch in regulating them and to hand over to(central) banks control over a lot of the central levels of economic policy. Have they used that freedom and control well? The answer has to be a resounding no. Irresponsible lending, the growth of financial instruments that are little more than gambling and a dreadful track record in running their own businesses – the charge sheet is very long and very serious.
Will they be punished? Far from it. At the slightest hint of real trouble the banks have looked for state handouts and have largely been given them for the simple reason governments know they cannot afford a collapse in the banking system. Just look what happened in the UK when a relatively modest bank, Northern Rock, got into trouble and the government hesitated before stepping in.
Bankers know that they are immune from the consequences of their decisions which is why they constantly make such bad decisions. It is a pity that they don’t display a little more humility and awareness of their responsibility for the pain other business and ordinary people are now experiencing.

The UK insurance market is slowly retreating from offering flood insurance as a standard feature of household and commercial property policies. That is the message from the latest iteration of the Statement of Principles issued at the end of last week.
This statement was first put in place after the severe floods during the autumn of 2003 and was tested beyond its limits by last year’s double flooding whammy. The insurance industry has used it relentlessly since to put pressure on government to increase flood defence spending and tightening up of planning permission for developments on flood plains. No-one can blame the insurance industry for doing that. The UK market is the only market in Europe where flood insurance is readily available. With weather patterns changing and flooding become a more frequent occurrence, the industry is entitled to ask for better flood prevention and an end to the obvious stupidity of allowing developers to build on flood plains.
The Association of British Insurers has got a lot of what it asked for but knows that in the current economic and political climate it is no good returning to their desks at their Gresham Street HQ with an air of smug triumph and sitting back reflecting on a job well done. They have rattled the government’s cage again and again, dropping dark hints that the Statement of Principles – and the obligation to keep offering flood insurance that goes with it – might not be sustainable for much longer.
What we have now is some certainty as far as insurance company bosses are concerned: the agreement to keep offering flood insurance will come to an end in 2013. If we have another summer like last year before then, expect to see insurers queuing up under the exit sign.
In the meantime, the industry has trimmed back its commitment with immediate effect with some properties no longer eligible for flood insurance and, as the British Insurance Brokers’ Association rightly points out, some new builds won’t get insurance after the end of this year.
The industry has so far handled all this with some skill but it has set a timebomb ticking. 2013 might sound a long way off at the moment but as that cut-off looms closer and the reality of flood insurance suddenly being much harder to find, at least at affordable rates, there could be a political explosion that will be hard for the ABI to contain.

Are we finally turning the pages of the final chapter of the Equitable Life saga? You have to hope so for the sake of the many investors who have struggled along for so many years waiting for someone to admit they got it wrong, very wrong.
Incompetent management that tried to dishonestly duck out of the promises the company made to policyholders was allowed by negligent regulators to destroy a company that was once a mainstay of the life assurance market. The management has been firmly nailed for its part in the fiasco of hyped up promises and unrealistic returns but they have no money to compensate the people who trusted them with their money. The regulator at the time was the old Department of Trade and Industry, later the Treasury, so it has been to government that the investors have looked for compensation: so far, it has callously stonewalled every attempt to persuade it that it has a moral duty to compensate those who have lost out. It is almost as if it hopes the battle will drag on long enough that the annuity holders most affected by the collapse will have died out before it has to do anything.
Unfortunately, it is hard to see anything changing despite the damming report from the Parliamentary Ombudsman.
Gordon Brown as Chancellor wouldn't listen to their pleas so he is hardly likely to change his tune as Prime Minister at a time when there is very little spare public money to be had. He has probably made the cynical calculation that most of the people who lost out were home counties Tory voters so there is no political gain in helping them out. On that he is probably right as very few Labour MPs have ever been exercised by the demise of Equitable Life.