Gordon Brown’s willingness to pump money into the banking sector seems to have had its second wind… though apparently he is ‘angry’ at banks’ ‘irresponsible mistakes’ and says that banks’ customers have a right to be angry about that too.
I may be able to offer him some insights into the matter of consumer anger. I paid into a personal pension plan with Equitable Life during the period when Gordon Brown was responsible for regulation of the UK financial services market (a period, let’s not forget, when he missed no opportunity to encourage us to be prudent, to provide for the future, and to save more). I have suffered directly from regulatory failure, the government’s refusal to prevent Equitable Life from raiding the deposits of the prudent investor to pay those people it had offered guaranteed annuities no matter what, and the government’s subsequent refusal to offer compensation to those who had lost out.
Last Thursday, Treasury Minister Yvette Cooper admitted that there had been maladministration. She apologised to the 1.5m savers who had lost out as a result, but talk of compensation was heavily qualified: it would have to “take account of the position of the public finances”, and would compensate only those “hardest hit” (according to some criteria yet to be announced, but potentially including means-testing).
Just in case you’re under the impression that this is a voluntary apology, bear in mind that an ombudsman’s report was published in July 2008 documented ten years of regulatory failure and as many instances of maladministration. When that report was published, the House of Commons Select Committee on Public Administration endorsed it and “said the government should accept ‘without delay’ the findings of maladministration by the former Department for Trade and Industry, the Government Actuary’s Department and the Financial Services Authority”.
So, while one part of the government “shelters banks from the consequences of their own fecklessness”, another part is busy trying to wriggle out of compensating prudent savers who have fallen foul of its own regulatory failures.
Angry, Mr Brown? Why would I be angry?