Parliamentary Connections

100 days of the Coalition government. What has it meant for financial services?

Sun, 15 Aug 2010 17:58:12 +0000

Our first post-war coalition government has now lasted 100 days; not a great achievement in itself but a convenient moment at which to pause and consider its impact on the financial services sector.

I thought it would provide an interesting perspective to look at what has been done by considering impact that the Liberal Democrats have had on policy in this area. After all, the only real alternative to the Conservative/Liberal Democrat coalition following May's General Election was a minority Conservative administration. This would have been unstable and would have be looking to create a suitable opportunity to call a fresh election later this year or early in 2011 to drive for an overall majority. This would have made it rather more cautious in a couple of crucial areas.

The first would have been overall economic policy where I think it is inconceivable that a minority Tory government would have proposed such a drastic programme of public expenditure cuts, as much as it may have wanted to. It is only the security of the coalition's majority and the prospect of not having to face the electorate for five years that has instilled the confidence in George Osborne and the Treasury team to announce a high risk strategy of spending cuts. They are prepared to run the risk of a stalling recovery because they believe the economy will come out of the other side much stronger and know they have the time to wait for the hoped for benefits to become manifest.

The second policy area where I think we would have seen a more cautious approach applied is pensions. The backlash to the various announcements about raising the retirement age and abolishing barriers to working longer has been sadly predictable and is not something a government constantly looking over its shoulder at the opinion polls would have risked provoking.

Beyond that, most of the rest of what we have seen so far in the way of policies for the financial services sector would have been much the same.

The reform of the regulatory structure looked initially as if it might be strongly influenced by the Liberal Democrats but, after some debate within the coalition we have seen the Conservative manifesto proposals rolled out virtually unchanged. The Financial Services Authority is going and its responsibilities split between the Bank of England and a new Consumer Protection and Markets Agency, coupled with a clearer focus on financial crime. The Liberal Democrats were dismissive of calls to restructure the delivery of regulation, preferring to stress the need for more effective management if systemic risk within the existing structure. They would have retained the FSA.

Action to get the banks lending and to rein in remuneration has largely reflected the promises and rhetoric of the Conservative election campaign. They may not be as keen as their coalition partners on shaking up the banks but they know full well that they cannot afford to be seen to be soft on them. This is one area, however, where policy could take a more distinctively Liberal Democrat turn over the next few months. The Treasury is currently consulting on the proposal to impose a levy on the banks and Vince Cable's Department of Business, Innovation and Skills published a wide-ranging consultative document - Financing a Private Sector Recovery - just before the recess containing some quite radical proposals to force banks to lend more to businesses. The more fundamental battle over the structure of the UK banking sector, with the possible separation of retail and investment banking (favoured by Cable and the Lib Dems), has been temporarily postponed with the creation of the Independent Commission on Banking to review this area but it will force its way back onto the policy agenda next year.

The final policy that merits a mention is the decision to press ahead with compensating the policyholders of the failed Equitable Life. In opposition both the Conservatives and Liberal Democrats were highly critical of the Labour government's steadfast refusal to bring this long running saga to a conclusion and both included pledges to act quickly in their manifestos. The recent proposals to set in train a process of compensation would have happened with or without the coalition.

Apart from banking reform, there are relatively few significant policy differences between the Conservatives and Liberal Democrats in financial services so we are not likely to see many battles here which threaten the stability of the coalition. Those battles will be fought elsewhere as the full implications of the depth of the public expenditure cuts dawns and as the process of electoral and political reform begins to gain some real momentum.

Cable hints at the battle in the Coalition over the FSA

Mon, 09 Aug 2010 09:26:45 +0000

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Vince Cable's candid interview in today's Guardian confirms that the decision to abolish the Financial Services Authority and split its role between a beefed-up Bank of England and a new Consumer Protection and Markets Agency was a matter some some contention within the newly-formed Coalition government.

The original agreement between the Conservatives and Liberal Democrats was silent on the matter and it looked as if the FSA had won a reprieve - certainly this is how quite a few of us read the agreement. That turned out to be a premature judgement as Chancellor George Osborne seized the initiative and announced to a dinner of City grandees at Mansion House in the middle of June that the reform of financial services regulation was going to proceed largely along the lines set out in the Conservative manifesto. He added some clarity over the split in responsibilitry between the Bank of England and the new CPMA, especially by adding the oversight of markets to the new body's role, but it was a Tory policy through and through.

Now Vince Cable has confirmed that this was more or less how it happened, trying hard to relegate it as an issue behind what he sees as the more pressing problem of getting the banks lending again. His dismissal of the debate about "how you organise the furniture, the quangos and so on, is to my mind a secondary problem" isn't entirely convincing given his thorough going pre-election condemnation of the collective global failure of regulation to prevent the slide into crisis from the middle of the last decade onwards which was especially well articulated in his book, The Storm: the World Economic Crisis and What it Means. It was, he argued, a broader problem of tackling of systemic risk on a multi-national level, rather than shuffling and re-shuffling regulatory responsibilities on a national level.

Equitable Life: it wasn't meant to be like this

Fri, 23 Jul 2010 14:46:47 +0000

The announcement yesterday by Treasury minister Mark Hoban that we are still probably at least a year away from getting compensation into the hands of Equitable Life policyholders falls some way short of the expectations that the coalition government partners raised during the General Election campaign just three months ago.

I pointed out at the time just how unusual it was to see such specific pledges in election manifestos but both the Conservatives and the Liberal Democrats followed through their longstanding criticisms in Parliament of the Labour government on this issues with clear cut promises.

"We will implement the Ombudsman's recommendations to make fair and transparent payments to Equitable Life policyholders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure" - p12, Conservative manifetso.

"We will make pensions and benefits fair and reward savers by...meeting the government's obligations towards Equitable Life policyholders who have suffered loss. We will set up a swift, simple, transparent and fair payment scheme" - p18, Liberal Democrat manifesto.

We can certainly say there is nothing "swift" in what has been proposed. Mr Hoban made it clear that there are several stages to go before any money finds its way into the hands of policyholders who will be especially disappointed to hear that yet another commission is going to be set-up, albeit with the more encouraging brief of advising on the best way to allocate payments. This is expected to report in January next year with the best estimate of when compensation payments might actually start flowing being the middle of 2011.

I still struggle with the need to keep setting up more and more committees, enquiries and commissions, certainly for this final stage of calculating and distributing payments. We have a very good mechanism in place already for handling compensation claims - the Financial Services Compensation Scheme. The FSCS has already proved itself very capable of acting beyond its original remit with the way it responded to being tasked by the last government to hand out £7.4bn of public money to the 300,000 savers with the collapsed Icelandic banks. Equitable Life requires less money to be distributed to more people and the calculation of losses on different types of pension plan are much more complex than with bank savings plans: this just further reinforces my view that we should make a start on this by using the expertise and systems that are already tried and tested.

The next problem is sorting out just how much the Treasury is prepared to put on the table and this is where the government does seem to be getting into some difficulty. The report from Sir John Chadwick - commissioned by the last government to come up with a limited scheme to compensate those worst affected - was also published yesterday and it has some extraordinary figures ranging up to £4.8bn for the relative loss suffered by policyholders. It is, of course "relative loss" that the Tories focused on in their manifesto with the important qualification "as a consequence of regulatory failure". Some headlines today have suggested that the actual compensation fund could be set as low as £500m. This figure has been arrived at by taking Sir John's lower range of £2.3bn to £3bn for absolute loss together with his suggestion individuals be paid only 20% to 25% of that. The chances are that this approach would have been broadly adopted by the Labour government but it doesn't really match up to the promises that the coalition partners have made.

The two big problems that are really contributing to the further delay are the need to focus on the proportion of the relative loss caused by regulatory failure. A fair chunk of that £4.8m is generated by the fact that comparable life companies have performed very well in the intervening years and policyholders need to be told that they cannot expect to be compensated for a poor choice of fund managers: that is how markets work. What they can be compensated for is the failure of regulators in the early 1990s to pick up on how Equitable Life was over-stretching itself by promising guaranteed returns that were not achievable, at least not without huge detriment to non-guaranteed annuity policyholders. We are still no nearer to putting a percentage on that, although maybe Sir John is trying to help us in the right direction.

The other problem is the Treasury's over-riding desire to cut public expenditure significantly and Mr Hoban acknowledged the importance of this in his speech to Parliament yesterday: "This scheme will be a significant spending commitment for this government and cannot be considered in isolation from the other spending decisions that it will need to make over the coming months and what is affordable in that context".

Where does this leave us? It leaves us waiting for the government to put a sum of money on the table. This is what should have been done some years ago. I actually do not think you can ever really pin down just what proportion of the losses suffered by policyholders are down to regulatory failure and what proportion is down to all those other factors constantly present in the savings, investment and annuities markets, so you might as well put an ex gratia sum on the table and get on with distributing it. Regardless of the figures Sir John Chadwick has come up with I have always thought that anything over £1bn would satisfy most of the political campaigners for compensation, although unlikely to appeal to the more ardent members' action groups. Funny enough if you apply Chadwick's 20% to 25% cap to his estimates of relative loss rather than absolute loss you get to this sort of figure. In the current political and economic climate a settlement of £1.2bn to £1.5bn would be seen as very reasonable and I think that is where we will end up.

All Party Group newsletter now out as membership grows

Tue, 13 Jul 2010 12:28:08 +0000

The latest newsletter keeping key executives and public affairs professionals up-to-date with the activities of the All Party Parliamentary Group on Insurance & Financial Services is now out. APPG News28e.pdf

The group is growing steadily and is looking to put in place a strong autumn programme with a particular (but not exclusive) focus on the reform of financial services regulation. If you are interested in contributing to this please contact me - david.worsfold@incisivemedia.com

Evans sets out his views on regulation

Wed, 07 Jul 2010 14:16:32 +0000

I took advantage of Incisive Media's close relationship with the All Party Parliamentary Group on Insurance & Financial Services to invite Jonathan Evans, the new chairman, into our offices to meet some of our editors. It led to a fascinating round table discussion on the likely course and impact of regulatory reform.

I think there were two things that struck us most about his views on this: firstly, the importance on the international perspective and, secondly, the relative lack of political blame he attached for the failures of the current system. Of course, he was critical of what he described as "the lack of clarity" in the tripartite regime and its failure to get to grips with systemic risk that eventually almost overwhelmed the entire sector but he implicitly acknowledged that most people went along with the general thrust of regulatory structures (if not delivery) over the last 13 years. This lack of all out criticism of the previous regime meant that he welcomed the decision of Hector Sants, chief executive of the Financial Services Authority, to stay to head up the new prudential regulator that will sit within the Bank of England: "Most people in Parliament think that the continuity offered by Hector Sants is beneficial. The idea that we sack everyone would lead to such a lack of legacy knowledge and that would be a retrograde step."

It was his warnings about the change of mood internationally that deserve the greatest attention. Most of his focus was on Europe where he spent ten years as a member of the European Parliament closely involved in the debates on most of the financial regulations that came out of Brussels in that time. His key warning was that we are can expect alot more regulation from Europe: "We will see significantly more European activity in the financial markets post-crisis. We will see a more activist regime". This, he said, would manifest itself on several levels.

There are going to be new European financial bodies set up in the next few months and the challenge will be to keep these operating at the level of setting out clear principles and acting in a supervisory capacity, leaving detailed regulation to national regulators. There will, nevertheless, continue to be detailed new regulations coming out of the European Union with Solvency II heading the list followed by narrower issues such at the Insurance Mediation Directive which is currently being reviewed. The challenge with all of these will be to ensure uniformity of implementation and enforcement, Mr Evans told our editors. Too often he said he saw MEPs and ministers from countries like France demand amendments to legislation that they had very little intention of enforcing. This will be a familiar secnario to brokers and intermediaries who complain bitterly about UK regulators "gold plating" directives like the IMD while France and Germany drag their heels in implementing them and certainly do little to enforce them.

There was some good news in his views on European attitudes, however. He felt that the initial knee-jerk phase of heaping all the blame onto the Anglo-Saxon model of financial services was now passing. Much of the hostility to British and American banks and investment markets in the immediate aftermath of the financial storm breaking was because they were quick to acknowledge the problems they had while other European institutions kept quiet: "Now the pressure is on non-UK and non-US banks who are having to come clean about the extent of their own holdings of poor quality debt and other threats to their solvency".

He was also asked about the levy on banks that the Chancellor of the Exchequer proposed in his recent Budget which he said was "more modest than the banking sector feared but has still left the public feeling that the banks should pay more", suggesting that the way may be open to come back for more depending on how the economy responds to the crisis measures put in place by the coalition.

His attitude to the coalition? This came up - inevitably. He is an enthusiast. As a pro-European, pro-electoral reform Tory he sees much to praise in the way the Conservatives and Liberal Democrats have launched their joint programme and set about implementing it.

For those interested in more of Jonathan Evans' views on regulation and how it will affect the retail financial services sector I made a video with him on this after the round table - this is on broking.co.uk

Liberal Democrat business spokesman joins the All Party Group

Tue, 06 Jul 2010 09:38:28 +0000

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John Thurso, the Liberal Democrats' business spokesman and their representative on the key Treasury Select Committee, has joined the All Party Parliamentary Group on Insurance & Financial Services.
He has the rather strange job of 'shadowing' his Lib Dem colleague Vince Cable from the government benches where the Liberal Democrats now sit. At a meeting in the National Liberal Club last night, he made it clear that he sees his role as supporting Mr Cable while making sure that some of his party's key pledges on on better support for smaller businesses are still on the Coalition's agenda. In particular, he stressed the need for regional enterprise funds that are not dependent on the current banking sector for making judgements on the viability of business plans as at present. Mr Thurso also explained his enthusiasm for the creation of regional stock exchanges which he beleives could help small to medium sized firms expand by raising equity rather than become reliant on debt.
He also set out his view that part of the problem in the banking sector is the clash of cultures between investment banking and retail banking which is why he is a keen supporter of the separation of the two. His concern wasn't so much about so-called casino banking, a view he dismissed as rather superficial, but more the simple fact that the dominance of investment banking (especially in terms of profits) in some of the large banking groups has sidelined the retail side and diluted their expertise in the small business sector.
John Thurso is one of the more colourful members of the House of Commons - the first hereditary peer to sit as an MP, a successful businessman and probably the only MP to have appeared naked on television. The Wikipedia entry fills in some of the gaps.
The current list of members of the All Party Group is here: APPGmembers 07:10.pdf

Lord Lipsey joins the officers of the All Party Group

Wed, 30 Jun 2010 17:13:41 +0000

When Baroness (Muriel) Turner decided to stand down as vice-chairman of the All Party Parliamentary Group on Insurance & Financial Services last month, the group was left without a Labour peer among its officers. This was recitifed today when Lord (David) Lipsey was appointed as one of the two Joint Hon Secretaries of the group.
Lord Lipsey has been a keen supporter of the group since he joined it a few years ago and brings a wealth of expertise to the table. He was an adviser to Prime Minister Jim Callaghan back in the late 1970s before embarking on a journalistic career that took him to the Editor's chair of New Society, the Sunday Times as economics editor, deputy editor of The Sunday Correspondent and associate editor of The Times. He finished his journalistic career with The Economist as political and public policy editor.
He has also served as a public interest director of the Personal Investment Authority and a member of the Royal Commission on Long Term Care and has been a Labour peer since 2000.

This will go down as one of the most controversial Budgets of modern times...but it could have been even more dramatic

Wed, 23 Jun 2010 10:20:30 +0000

Already George Osborne's first Budget is being marked out as one of the more controversial and dramatic of modern times. This is not unusual for the first Budget of an incoming administration - just look back to Gordon Brown in 1997 or Geoffrey Howe in 1979, or even (I shudder at the memory of the economic disaster that followed) Anthony Barber in 1970. You have to remember that Budgets are as much political events as economic events and it is the twin political pressures of wanting to mark out the new government's territory and to set a course that delivers a hoped for prosperity nicely timed for the next General Election that does as much as anything to shape a Budget.
There is alot that is bold about Osborne's first Budget but, equally, there is alot that is cautious, giving him crucial room for manoeuvre later on in this Parliament. He has, for instance, left himself scope to push Capital Gains Tax rates higher if he needs more revenue in the next couple of years. Another area where he could potentially look for additional money is the bank levy now he has made the first steps by introducing it (alot there will depend on what other major financial centres such as Germany and the USA do). On the other hand, if it all comes right and the deficit falls as far and as fast as predicted over the next five years there looks to be enough room for cuts in personal taxation to be back on the agenda in 2015.
He has also shifted a little from his original intention to achieve deficit reduction through 80% expenditure cuts and 20% tax rises to a mix that is nearer 75:25, partially, I suspect, a nod towards his coalition partners.
The coalition has managed to present a united front over this self-styled "tough but fair" Budget although there seemed to be hints of unease from among the Liberal Democrats last night and this morning, especially over the 2.5% addition to the rate of Value Added Tax. This is hardly surprising given the vigour with which they campaigned against such a move in the General Election campaign just two months ago. I also think that alot of Lib Dem's will be shocked by the Treasury's own analysis which suggests a disproportionate burden falling on the poorest 10%, and that is before we see where the predictably savage public expenditure cuts really bite. The coalition won't fragment over the Budget but the strains might build up to breaking point by the time we get to the Autumn Statement on public spending.
Economically, Osborne is on a tightrope but then whoever ended up as Chancellor would have been in the same position. The challenge is clear: cut the deficit without pushing the UK economy back into recession. This isn't just a cold calculating game of numbers: it is as much about mood, especially in the financial markets that seem so nervous about any national debt that seems to them to be excessive and out of control. Osborne has won that first battle as the markets have given the Budget the thumbs up.
The economic effects are much more difficult to judge and are already dividing economists. Again, alot will depend on how the 25% cuts in some some departmental budgets are achieved. If they involve heavy jobs losses, then unemployment will soar (and the benefits bill with it despite yesterday's trimming of some benefits) and this will feed through into depressed demand just in time to coincide with the increase in VAT next January. This could dash hopes of a private sector-led recovery.
Are Osborne and the coalition still on the tightrope? At the moment, probably yes but the autumn and the first quarter of 2011 are going to be the key crunch times for the government's survival. Politically hard to swallow expenditure cuts followed by poor economic data could tip them off the tightrope.
History will be the judge of whether Osborne's first budget leads to a decade of economic recovery and relative prosperity as Geoffrey Howe's did at the start of the 1980s or a decade of high unemployment, increasing poverty and social dislocation as we had in the 1970s following the Heath government's ill-judged gambles on assuming office in 1970.

Angela Rumbold played a key role in raising the profile of insurance in Parliament

Mon, 21 Jun 2010 11:23:12 +0000

On reading that former Tory minister Dame Angela Rumbold has died, aged 77, my mind was taken back over a quarter of a century to the early 1980s when she played a part in helping raise the profile of the insurance industry in Parliament.
This was in the early days of broker registration and the British Insurance Brokers' Association which had been formed by the merger of four predecessor trade bodies. These had come together to promote broker registration and represent those intermediaries who submitted to the voluntary scheme. There were, however, some intermediaries who felt the scheme offered little more than protection of the broker name and they formed a rival body called the Institute of Insurance Consultants in the early 1980s.
The IIC had a fractious first couple of years but eventually settled down under the leadership of the colourful Ken Sangster. Seeing that BIBA gained alot of its publicity and favorable press through its Parliamentary spokesman, the late Sir Robert McCrindle, Ken recruited his own local MP, the recently elected Angela Rumbold, to do a similar job for the IIC. She worked hard at the role, speaking at many IIC events and raising some of their concerns in Parliament but she was a rising star and by 1986 was a minister which meant she had to relinquish the IIC role.
The IIC quickly diasppeared into obscurity after that, especially with the emergence of the dynamic Andrew Paddick and his Institute of Insurance Brokers to challenge the dominance of BIBA.

The Tories have got their way over the future of regulation - that's the story behind the abolition of the FSA

Thu, 17 Jun 2010 13:59:42 +0000

Last night's announcement by the Chancellor, George Osborne, that there is to be a massive overhaul of financial regulation with the Bank of England moving firmly into the driving seat and the Financial Services Authority falling by the wayside, is vivid confirmation that the Conservatives have the whip hand in the Treasury. The new policy is straight out of their manifesto and sweeps aside any concerns the Liberal Democrats may have had about abolishing the FSA.
In the first days after the Coalition deal between the Conservatives and the Liberal Democrats was reached, the word from the Treasury was that the changes to the regulatory system would only go part of the way down the road the Conservatives had mapped out before the election. The Bank of England was certainly going to be given the key role in macro prudential supervision and a new financial crime agency was going to be formed but further dismemberment of the FSA was signalled as unlikely. In the few weeks since then it appears that Mr Osborne has asserted his authority over the Treasury - possibly helped by the sudden departure under a cloud of the highly able Liberal Democrat no 2 in his team, David Laws - and so now we are looking at a major reform of regulation.
In addition to the anticipated role in macro prudential supervision, the micro prudential supervision of banks, investment banks, building societies and insurance companies is also going to a greatly expanded Bank of England. Responsibility for economic crime will be vested in a new (as yet formally unnamed) agency, leaving a new organisation born out of the FSA to "regulate the conduct of every authorised financial firm providing services to consumers". This will be called the Consumer Protection and Markets Authority, indicating a slightly expanded - and better balanced - organisation than the Conservatives' original proposal which was just for a Consumer Protection Agency which struck me as a potentially uncomfortable place for intermediaries, independent financial advisers and insurance brokers to find themselves. The "and Markets" bit is quite important and has been casually glossed over in alot of the coverage today, so much so that many people are still calling it the CPA. The Conservative manifesto suggested that market supervision would also go to the Bank of England but, as Mr Osborne explained last night, this is being vested in the new body: "It will also be responsible for ensuring the good conduct of business in the UK's retail and wholesale financial services, in order to preserve our reputation for transparency and efficiency as well as our position as one of the world's leading global financial centres". It is this responsibility that will give it a more balanced perspective, which is very welcome.
Of course, we now face two years of change, and with it uncertainty, although announcements about the key personnel have been made very quickly and some of those people, in turn, have been quick to confirm what is going to happen on key policy areas such as the retail distribution review. There will be critics of these reforms, both political and from within the industry, but it is hard not to find oneself agreeing with Mr Osborne's preface to the key announcements at Mansion House last night: "When a system of regulation fails so spectacularly people are going to ask what replaces it. When the failure of certain banks have cost the country so much, people are rightly going to ask how to stop it happening again". There is a need to restore confidence and giving the Bank of England the pivotal role probably has the best chance of succeeding on that front.
Of course, there is alot else going on beside this: the debate about a levy on banks and longer term reform of the structure of the banking sector is still raging here and in Europe. It does seem that governments are at last, as the immediate crises subside, getting to grips with the need to put in place better systems of regulation so they don't happen again and look at ways of recovering some of the costs of sorting out the crises of the last three years.

All Party Group newsletter and membership list now out

Tue, 15 Jun 2010 16:10:39 +0000

Following the election of new officers for the All Party Parliamentary Group on Insurance & Financial Services last week, it has now published its first newsletter of the session and a revised membership list. APPG News27.pdf APPGmembers new.pdf.
The group is now planning its programme for the remainder of the current session and hopes to publish an outline early next week. If you would like to receive details of this and further newsletters please contact me.

Jonathan Evans takes the helm as chairman of the All Party Group

Wed, 09 Jun 2010 21:00:00 +0000

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The All Party Parliamentary Group on Insurance and Financial Services elected former trade minister Jonathan Evans as its new chairman at a meeting in the House of Commons tonight.

As well as serving as Corporate Affairs Minister (which included responsibility for the insurance industry) in the John Major government, Jonathan served as MEP for Wales for ten years and played a major role in many of the debates on financial services regulation in the European Parliament. At the General Election last month he won the marginal seat of Cardiff North for the Conservatives. A solicitor by training, he has also held several directorships in the financial services sector including with NFU Mutual.

He succeeds John Greenway, who was chairman of the group for 18 years and who stood down at the election. Another familiar figure at the group's meetings also stood down at tonight's meeting: Baroness Turner, who has served as a deputy chairman of the group since its foundation in January 1991, although she is remaining as a member of the group.

Three deputy chairmen were elected - Andy Love, Labour MP for Edmonton, Lord Hunt of Wirral and Liberal Democrat peer Lord Newby - and two hon secretaries - Baroness Wall (Labour) and new Conservative MP Tracey Crouch, who used to work in the public affairs team at Aviva.

This is a very strong line-up, full of experience and knowledge of the financial services sector. The group is still attracting new members from among the newly elected MPs and also from the ranks of former Labour ministers: an up-dated membership list will be available shortly. Meanwhile, the exciting task of putting a programme together for the rest of the session will start in earnest. The group has already had the scene set for it with presentations at tonight's meeting from the group's technical advisers PricewaterhouseCoopers, the British Bankers Association (BBA) and the British Insurance Brokers' Association (BIBA).

One issue that came up at the meeting which might provoke some feedback is the name of the group. There was a discussion about whether to drop Insurance from its title and re-name the group the All Party Parliamentary Group on Financial Services. There was an even split of opinion among the members and it was agreed to leave the name as it is for the time being but revisit it later in the session. It would be interesting to hear from others before that discussion takes place.

UK political parties still have alot to learn from the US about digital political campaigning

Fri, 04 Jun 2010 11:05:54 +0000

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I was a little skeptical when, just a week after the General Election, US digital campaigning expert Joe Trippi (pictured) told a seminar organised by the Personal Democracy Forum that the UK was a major election behind the US when it came to political parties exploiting social media. His response to those inclined to dismiss the impact of social media on the recent election as being marginal was to argue that the UK is now where the US political scene was after the Presidential election of 2004 and that comparisons with the huge impact the Obama campaign made through social media in 2008 were false. My reaction was partially that he probably had a point but also that you would expect an American to say that they were several years ahead of us.

Forgive my cynicisim.

It has been wiped away by reading Digital Political Campaigns 101, published by ClickZ (part of Incisive Media's US-based interactive marketing division). This is simply essential reading for anyone who wants to start developing a thorough understanding of what integrated digital campaigning is really all about. In just 25 information (and link) packed pages it brings home just why Joe Trippi and others think the UK still has a long way to go to catch up with the US in this area - and there is alot of catching up to do if anything like the impact of the Obama campaign is to be achieved here. Just one statistic brings home the scale of what that campaign achieved: $500m was raised through digital campaigns run by the Obama camp. Interestingly, two-thirds of that came through people clicking a 'donate now' link in a targeted email.

In the UK, the excitement was over newer forms of digital communication such as Facebook (preferred by the Liberal Democrats), Twitter (the main channel for Labour) and video, especially through YouTube (very successfully exploited by the Tories). The successful use of email by the Obama campaign highlights two things that the UK political parties must learn.

The first is that list building (of activists, supporters, influencers) is absolutely crucial and takes a long time. Too much of what all three parties did here was about pushing things out via social media and almost just hoping it would be looked at. The US email campaigns are backed by proper customer relationship management software that enables them to monitor exactly what action people receiving the emails have taken.

The second is that there must always be clear calls to action, both in emails as well as on the main campaign websites. I have spent several hours trawling through various UK political websites and reviewing emails from the main political parties that people have sent on to me and they do not match up to the very clear and unambiguous guidelines set out in Digital Campaigns 101.

One of the most enlightening chapters in the booklet deals with the successful campaign run to get Scott Brown elected as a Republican Senator for Massachusetts following the death of Ted Kennedy. Here, Rob Willington, the new media director for the campaign, sets out step-by-step how they used social media, including the little known Ning social network, to build up a network of activists from almost nothing. A key message that the UK parties need to take from this is that much more emphasis has to be put on getting people to feel they are 'joining' a campaign rather than merely 'following' it, one of the key reasons why the Brown campaign preferred Ning to Facebook.

All the way through this booklet one is struck by the consistent emphasis on taking people on a journey from the initial contact in the virtual world to a commitment to activism in the physical world, whether that be by donating money, attending events or on the street campaigning.

I have no doubt that the next General Election in 2015 will see many of the lessons from the United States absorbed by all the main parties here. They won't go far wrong if they read Digital Campaigns 101.

All Party Group on Insurance & Financial Services set for post-election lift off

Wed, 19 May 2010 13:07:19 +0000

I lost count of the number of times that I was asked before the election and during the campaign about the future of the All Party Parliamentary Group on Insurance & Financial Services. Commonly, these questions focussed on the need to replace the group's long-standing chairman, John Greenway, who stood down at the election after 23 years as Conservative MP for Ryedale.

Of course, John was a huge driving force behind the group's success and its high profile in Parliament and the financial services sector but he would be the first to acknowledge that the group is more than a one-man show. The challenge is now to demonstrate that. And it is a big challenge.

Thirteen members stood down at the election, another three became election casualties (David Drew-Lab, Susan Kramer-Lib Dem and Nigel Waterson-Con) and amazingly ten former members of the group are now ministers, with four of them in the Cabinet. This says alot about the quality of members the group attracts and the potential for influence over future government policy. The ministers from the group now in the Cabinet are Vince Cable (who was one of the group's joint deputy chairmen), Cheryl Gillan, Chris Huhne and Sir George Young. The junior ministers from the group are David Gauke, Nick Gibb, Mark Hoban, James Paice, Sarah Teather and Theresa Villiers.

There are, however, around 40 new MPs elected on 6 May who were previously employed in the financial services sector who I am already getting in touch with to sound out their interest in joining the group and, so far, the responses have been very positive. There are also alot of former ministers who have had departmental responsibilities that have brought them into contact with the insurance and financial services sectors who could bring alot of experience and insight to the group. I will be contacting them too.

Then there are the 40 MPs and Peers still in Parliament who have been members of the group for some time and recognise its value. They have already been very helpful and encouraging it getting the arrangements in place for an initial meeting of the group to elect officers and devise a programme on 9 June. At that meeting we will also look at the Terms of reference.pdf of the group and the name as some people have suggested that it might change to the All Party Parliamentary Group on Financial Services. I would be interested in any views from the industry on that proposal.

Hopefully, we will be in a position to publish the new list of officers and members straight after that meeting and get on with arranging a programme to ensure that the group fulfills its mission to act as a neutral channel of communication between the industry and Parliament.

If you have any issues that you think the new group should look at or you want to arrange a presentation or dinner for the group please do get in touch.

Swift move to compensate Equitable Life policyholders

Thu, 13 May 2010 08:54:14 +0000

As I predicted during the campaign, the election of a Parliament with a Conservative-Liberal Democrat majority has led to the searing injustice of the Labour government's failure to compensate policyholders in the failed Equitable Life being remedied.

This has been a long-running saga but at its heart lay the failure of successive regulators to get to grips with the way Equitable Life over-extended itself and offered policyholders guarantees of returns that were never going to be sustainable. Enquiry after enquiry was set set up as the government tied to wriggle away from its responsibilities, which actually have their origins in the period of Conservative government in the early 1990s.

The insult to people who bought the Equitable Life promise in good faith was re-doubled when the almost instant compensation scheme for savers with the collapsed Icelandic banks was announced at the end of 2008. This merely fired up the determined and tenacious campaigners for justice for Equitable Life policyholders to new levels of activity and today's announcement owes much to their years of lobbying, mostly conducted with a remarkable degree of patience, intelligence and civility given that they were watching their fellow policyholders die stripped of some of the comforts of retirement that had saved so diligently for.

There will undoubtedly be some quibbles over the details of the scheme when it is announced in full but we should be glad this shameful episode in retail financial services is finally being drawn to a close.