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Victoria Chick: ‘The financial system has gone completely off the rails’

December 10th, 2013

This short film, Transforming Finance, features some of my all time financial heroes including John Kay, Andy Haldane, Victoria Chick, Richard Werner, Catherine Howarth and Giles Andrew

Where did the finance and banking sector go wrong … and what can we do to fix it?

Transforming Finance, a 23-minute documentary film produced by the Finance Innovation Lab, features interviews with a number of the most prominent advocates of change in the world of finance. The film seeks to identify policy interventions to reform the financial system – both through incentives to persuade existing players to mend their ways, and through the promotion of alternative business models (such as peer-to-peer lending and crowdfunding). The Finance Innovation Lab describes the film as both a “manifesto for action” and as a campaign tool, that will act as a catalyst for change.

The film, directed by Marcos Villaseñor and sponsored by Calouste Gulbenkian Foundation, opens with John Kay saying:

What we have is a financial system that has evolved in ways in which it very largely serves itself rather than the needs of the non-financial economy.”

That – the parasitic nature of the current financial system – is the root of the problem. The Finance Innovation Lab, launched in 2008, is backed by the World Wide Fund for Nature and the Institute of Chartered Accountants in England and Wales.

The film makes some very good points but, in my view, falls short. The following three things must also happen if finance is going to be reformed:

(1) More effective regulation

(2) The prosecution of financial criminals

(3) A radical overhaul of auditing

A host of other things also need to change, including politicians ceasing seeing their role as being to protect corrupt banks and bankers, and global structural reforms.

Here’s a report on the film by Alex Blackburne from Blue and Green Tomorrow

The Finance Innovation Lab’s Charter for a New Financial System has already been signed by a number of advocacy organisations, academics, finance professionals and public interest groups. Click here if you want to add your voice.

Short URL: http://www.ianfraser.org/?p=10046

Posted by on Dec 10 2013. Filed under Blog. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

6 Comments for “Victoria Chick: ‘The financial system has gone completely off the rails’”

  1. […] By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser. Originally published at his website […]

  2. […] By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser. Originally published at his website […]

  3. The almost total silence in the mainstream UK press (notably the Daily Telegraph and the Times) over last week’s conviction in an Icelandic court of 3 top former Kaupthing bankers is deafening. Even the Guardian kept a pretty low profile (though they did report the event, as did the BBC, on their respective websites).

    Maybe the reason may be sought in the spot-on comment by Tony Shearer (ex-CEO of Singer & Friedlander prior to its disastrous take-over by Kaupthing in 2005) in response to Sigrun Davidsdottir’s pertinent question “Why are bankers investigated in Iceland and not so much elsewhere?” on her latest excellent Icelog: http://uti.is/2013/12/why-are-bankers-investigated-in-iceland-and-not-so-much-elsewhere/

    It’s hard not to agree with Tony’s conclusion that:
    “The Chancellor, supported by the Prime Minster, has hung a large sign over the City of London to say that we are open to business for crooks and those with low morals. Iceland has hung out a sign to say the opposite. By the actions of the Icelanders and the inactions of the UK, the undesirables will avoid Iceland and chose London.”

    How have we sunk so low?

  4. anrigaut, Thank you for your post.
    Why is it that Iceland has taken action and the UK authorities have not? We know that the Serious Fraud Office has a catastrophic record, but it seems clear that the political will simply does not exist to make these prosecutions. The UK banks and the 4 big accounting firms have effectively corrupted the politicians, regulators, and civil service. They have so placed their partners and former partners into the system, and their level of lobbying, secondments, and work that they do for these people is so great that they have undue influence. It seems to me that, as a result, the Chancellor of the Exchequer and the Prime Minister as well as the heads of the regulatory bodies and the civil servants regularly make the wrong decisions.
    We will continue to have scandals involving the banks until such time as the senior politicians and senior civil servants clear out from the system those people in the banks and major accounting firms who have the wrong legal and moral attitudes.

  5. Thanks for your comments anrigaut and Tony Shearer. I agree with both of you. Urgent action is required.

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