Connect with us

Features

With Libor fixing, the surprise is that anyone was surprised

Published

on

Recent debacles in banking from various insurance mis-selling scandals (payment protection and interest rate swaps), on-going IT failures (Natwest) and Libor fixing (Barclays, the first of many), have been the natural conclusion of unfettered evolution in financial services that has been taking place since financial deregulation in 1986. Simon Leadbetter explores the inexorable rise of unethical banking and suggests it is time to do some ruthless fettering.

Banks perform a vital task in any liberal economy. They look after savers’ deposits far more effectively than stuffing cash under a mattress (no really), and then invest or lend this money wisely to earn a return for their depositors. This is retail banking and where most people’s experience with banking starts and ends.

Without the borrowing and investment that banking enables, many people would not be able to buy their homes, start or grow businesses and our economy would be a shadow of the sixth largest economy in the world that it is today. Those prudent savers who attack ‘reckless’ borrowers are attacking the very people who pay them a return and grow our economy through consumption, entrepreneurship and innovation.

Banks perform a vital task in any liberal economy

The ecosystem of banking contained many banks, building societies, mutual, friendly societies and credit unions (although an evolving group of four or five banks have dominated the current account market since first world war). The Building Societies Act 1986 allowed building societies to convert into banks. Consolidation rapidly occurred and none of the demutualised building societies remains as a standalone bank today. A sad loss when you consider that the remaining mutuals have not been heaped with the opprobrium of banks in recent years.

What was apparent to mainstream bankers after Big Bang, the 27th October 1986 when the London Stock Exchange rules were relaxed, was that simply lending and investing deposits in safe financial vehicles was a labour intensive business generating marginal returns. Investment banking, gambling on commodities, stocks, bonds, property, currency and derivatives, offered far higher returns albeit with far higher risk.

The solution was simple; close local branches and encourage telephone then online banking, outsource the more mundane operations of the bank such as dealing with customers and allow technology to replace humans, centralise operations and sack thousands of low paid banking workers, to massively lower the cost of the boring retail operation. Management time, the main scarcity in banking as they have plenty of money, could then be devoted to growing the far more exciting investment banking world.

At the same time, loss-making current account holders could be turned to profit if they could be charged exorbitant fees, aggressively sold cheap credit linked to payment protection and several other dubious financial products. Low or average income customers were to be treated like cattle and prodded every now and then to get them to go in the right direction. Personal service was reserved for those who had wealth to invest, that could feed the speculative machine.

Greed, for want of a better word, is good

Gradually the speculative financial markets became disconnected to the definite real markets. For every dollar traded in the real world, £26 is traded on speculative markets. Once it became possible to make digital money betting on the performance of gambles that speculated on the performance of further bets that occasionally had a real outcome, the vital role of retail banking in the non-financial economy was sidelined.

Gradually the speculative financial markets became disconnected to the definite real markets

The relentless bailing out of the banking sector from 2007 to date has removed any moral hazard from bankers who now know that profits from their gambling activities are theirs to keep and losses are nationalised. Markets operate in an atmosphere of fear and greed. In the current era of greed, quantitative easing and bailouts, the fear has gone entirely. A perfectly rational investment banker can still afford to take massive risks as they are using other people’s money, there is no personal risk and any downside is almost certain to be underwritten by the taxpayer.

Tragically, government and opposition parties lack the moral authority to sit in judgement of a financial service sector that lobbies them extensively (to the tune of £93m according to a July report by the Bureau of Investigative Journalism) and pays their bills (50% of Conservative funds come from the City). Nearly one in seven members of the House of Lords has paid connections with the financial sector.

But we desperately need retail banks that behave honestly, with integrity and practice plain talking – the founding principles of Barclays. We need them to lend to small businesses and households.  We need them to be part of the communities in which they work so that they can understand and meet the needs of local markets, where most of our trade takes place.

We desperately need retail banks that behave honestly, with integrity and practice plain talking

The time for endless inquiries is over and that uncommon quality, common sense, must prevail. The solutions are simple.

– Crime is crime whatever the colour of a collar, so white collar bankers who have profited through deception must be given exemplary criminal sentences, just as looters were after the summer riots 2011. Personal assets must be seized to repay those that have suffered. Those guilty of a financial crime should not profit in any way. Final responsibility rests at board level so there should be no scapegoating to more junior ranks – if this means a wholesale prosecution and clearing out of boardrooms, so be it. The current cohort of directors have shown little aptitude in developing an ethical banking culture beneath them

– Retail banking plays a vital role in our economy, so investment banking must be separated from retail banking before the next election. If a retail bank fails it should be nationalised. Shareholder will take a far more aggressive role if their investment is on the line. If an investment bank fails, it should be allowed to fail

– Competition works, so big banks must be broken up more aggressively than is currently proposed to encourage far greater competition – an initial limit of 750 branches and 10% market share in current accounts would be a start – both limits would only affect the top four. It is essential that this encourages innovative new entrants rather than the growth of incumbents. This may be painful initially, but an independent commission could ensure that the banks are broken up in a way that ensures national coverage rather than cherry picking of the most affluent areas

– Sunlight is the greatest disinfectant, so there should be significantly greater transparency and public oversight with a well-staffed, well-funded regulator with uncompromising attitude and statutory investigative powers to root out financial crime and unethical behaviour

– Ever more complex regulation isn’t the solution, so financial rules need to be simplified, setting out principles of honest banking rather than the lawyer’s paradise that the current loophole-ridden system represents

In July, we will explore banking in more detail in our Guide to Sustainable Banking. In the meantime, we recommend that you read our Guide to Sustainable Investment. It explores how you can use your money to do more good and less harm, delivering a return for you and vital investment for companies that balance the needs of the planet, its people and prosperity.

Further reading:

Diamond faces grilling from parliament as public fights back

Bob Diamonds are not forever

Why I switched to ethical banking

Interest in ethical options surges amid UK banking melee

Simon Leadbetter is the founder and publisher of Blue & Green Tomorrow. He has held senior roles at Northcliffe, The Daily Telegraph, Santander, Barclaycard, AXA, Prudential and Fidelity. In 2004, he founded a marketing agency that worked amongst others with The Guardian, Vodafone, E.On and Liverpool Victoria. He sold this agency in 2006 and as Chief Marketing Officer for two VC-backed start-ups launched the online platform Cleantech Intelligence (which underpinned the The Guardian’s Cleantech 100) and StrategyEye Cleantech. Most recently, he was Marketing Director of Emap, the UK’s largest B2B publisher, and the founder of Blue & Green Communications Limited.

Environment

How to be More eco-Responsible in 2018

Published

on

eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

Continue Reading

Energy

Top 5 Changes You can Make in Your Life to Reduce Your Carbon Footprint

Published

on

By

reduce carbon footprint
Saving money and reducing your carbon footprint? What isn’t to love? - Image from Shutterstock - https://www.shutterstock.com/g/thodonal88

In a world, where war rages and global warming threatens our very existence, the inhabitants of earth need to be extra vigilant in their efforts to go green. This includes reducing your carbon footprint on the earth and leading a more sustainable life.

Many homeowners feel perplexed by all of the options available to reduce their carbon footprint. They may even feel (falsely) that making their household more green will fail to make that much of a difference in the fight to save our planet.

Even a single home going green has a massive impact on the environment. We can win this battle on home at a time. If you’re interested in accepting the challenge of making your household a green home, read on below for a few of the top changes you can make in your life to reduce your carbon footprint. We all stand to benefit from making the earth safer for future generations – and your wallet won’t complain when you start to see the savings in annual energy costs.

Switch From Dirty Energy to Clean Solar

The ION Solar reviews tell it all–solar is the best way to go. Whether your goal is to slash your energy bills, or to reduce your carbon footprint, the sun is a fantastic source of renewable energy.

It’s important to get past the hype from solar installers. Instead, listen to the plethora of impartial customer reviews that mention everything from a $20 energy bill, to the incredible feeling of knowing that you are doing your part by going green and minimizing harmful emissions in to our atmosphere.

The average investment is $15,000 to $30,000 for installation and purchase of solar panels. Optional battery power packs can help provide consistent power during both night and day. And many government agencies provide federal, state or local grants to help offset upfront investments in clean energy.

Depending on which installed you choose, your household may qualify for low-interest or zero interest loans to cover the up-front cost of your installation. And the loan payments are usually less than your current monthly power bill.

It really is a win-win, as home buyers are looking for homes that feature this technology – meaning solar power installation improves the resale value of your property.

Home Modifications

And there are a number of additional home modifications that can help improve the energy efficiency of your home. A programmable thermostat can better manage energy consumption from home cooling and heating systems while you’re away from home. And weather stripping your doors can help keep cool air in during the summer, and warm air in during the winter.

Of course, energy conservation starts at home. And this includes setting a powerful example for your kids. Teach your children how to close windows, strategically keep doors open or closed based on airflow, and encourage them to leave the thermostat alone – opting for adding or removing layers of clothing instead.

Unplug Appliances and Shut Off Electronics

Unplugging your appliances when they aren’t in use, such as the toaster and the coffee maker, has more of an impact than you might think. Set your TVs and stereos on sleep timers, instead of letting them run around the clock. The cumulative impact of wasteful electronic device usage is horrible for our environment – putting unnecessary strain on our electrical grid.

Recycle

One of the simplest and easiest ways to reduce your carbon footprint is by recycling. You are already throwing this stuff away anyway, right? It doesn’t take much more effort to just put recyclables in a separate container to be recycled, now does it?

Oh, and did I mention that you can earn money for recycling? Yes! Many cities and towns have recycling centers that will purchase your clean plastic and glass bottles for reuse.

Minimize Your Water Usage

Water is one of the easiest things to forget about when it comes to reducing your carbon footprint. Preserve water by turning off the faucet while brushing your teeth. Shorten your shower by a few minutes and turn down the heat on that water heater. You’ll be surprised at how much lower your water bill and your energy bill will be.

Saving money and reducing your carbon footprint? What isn’t to love?

These are just a few of the top ways that you can reduce your carbon footprint and start living a greener lifestyle. And we aren’t factoring in all of the advantages that we’ll reap from public investments in a smarter energy grid.

From decreasing your water usage, to switching to solar for your home’s energy needs, you will feel good at the end of the day knowing you are doing your part to save the future of this planet for generations to come!

Continue Reading
Advertisement

Facebook

Trending