Another round to common sense

The decision by the new UK Chancellor (or Finance Minister), George Osborne, to avoid tangling with the new EU-wide rules for regulating hedge funds and private equity firms is another victory for common sense.

Though not all is looking rosy on the US front (which needs to be watched closely), the next round in the EU will be the debate in June over plans to create an regulatory system for EU financial services as a whole.

My view continues to be that a patchwork of national or regional (EU) regulatory systems does not make sense, and that we ought to move to a global regulatory system.

However, national and regional systems may be a necessary step in that direction.

Meanwhile, without transparency, the best-designed regulatory systems will fail. So the essential battle continues to be whether or not we will have accounting systems that provide transparency (see my review of the book Unified Financial Analysis by Dr W. Brammertz and others).

I agree of course that rules and regulatory systems (and even transparency) by themselves will not prevent people who are determined to do so from obfuscating and cheating, and that therefore the renewal of morality, and the evaluation of the moral standards of the key players in the financial system remains key to everything.

Which is why it is so distressing that financial services providers continue to resist integrating ethical evaluations even for new recruits.

As I pointed out elsewhere, someone who recently completed his doctoral dissertation on a topic related with this broad field wrote to me as follows:

"Though I was able to graduate, the story of my dissertation is largely the story of research that never took place.... I approached (more than two dozen) banks and investment funds with a proposal to do ethics related research, and was consistently turned down. In my dissertation defense, I compared myself to a fly trying to get through a glass windowpane, (but) the financial world remained forever on the other side."

The parentheses above are mine.

As far as I can work out, his research started at the height of the boom, and he persisted with his efforts to do the research till well after the bust.

Was the refusal of the banks and funds to co-operate with the research mere cussedness, or did the banks and funds know that they should not be letting any research get done on the ethics in their companies? Well, that was then...

Now we are in a new world of transparency and re-regulation. Is this not the right time for ethical testing to be introduced into recruitment for all companies? Sphere: Related Content