20 th September 2018, Newgate Communications, Sky Light City Tower, - - PowerPoint PPT Presentation

20th September 2018, Newgate Communications, Sky Light City Tower, 50 Basinghall Street, London.

Welcome to

Alistair Kellie,

Managing Partner, Newgate Communications

• n

“Time for Transparency: It must never happen again! How can we reduce the chance of another financial crisis?”

andy.agathangelou@transparencytaskforce.org Mobile: +44 (0)7501 460308

Andy Agathangelou

Founding Chair, Transparency Task Force

Welcome to

• n

“Time for Transparency: It must never happen again! How can we reduce the chance of another financial crisis?”

andy.agathangelou@transparencytaskforce.org Mobile: +44 (0)7501 460308

About

• We are the collaborative, campaigning community, dedicated to

driving up the levels of transparency in financial services, right around the world

• We believe that higher levels of transparency are a pre-requisite for

fairer, safer, more stable and more efficient markets that will deliver better value for money and better outcomes

• Furthermore, because of the correlation between transparency,

truthfulness and trustworthiness, we expect our work will help to repair the reputational damage the sector has been suffering for decades

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About mission

• We are an informal but increasingly influential forum of ethically-

minded people that care about the financial services sector and the people it serves

• We are collaborative, collegiate and consensus-building; focusing on

solutions not blame

• We believe the financial ecosystem is profoundly important to the

wellbeing of society, the global economy and political stability; but there’s a great deal wrong with it that needs fixing ➢ Our mission: “To help Fix Financial Services by harnessing the transformational power of transparency”

• The Trust Deficit
• The Engagement Deficit
• The Understanding Deficit
• Hidden costs
• Hidden risks
• Opportunistic opacity
• Opportunistic obfuscation
• Opportunistic complexity
• Short-termism
• Inadequate client-centricity

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What is

• Asymmetries of information
• Regulatory Capture (USA?)
• Scams and scandals
• A ‘profit before principle’ mindset
• Reputational damage
• Conflicts of interest

➢ Financial instability

• Malpractice; lack of market integrity
• Harmful incentive structures
• Miss-selling; and so on

helping to fix?

➢ How? - by shining a light into the darkness ➢ “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman” (Louis D. Brandeis, Other People’s Money and How the Bankers Use It, 1914)

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strategy for driving change:

Our Strategy for Driving Change is all about bringing togethor two groups of people: #1, those with a sense of passion & purpose about what needs to be changed; #2, those with the power & position to make change happen We do this in many ways, for example through our Transparency Symposia; and through our Special Events Here’s three very good examples of our Special Events:

‘The First Transparency Strategy Summit in the World’

‘The primary purpose of the first Transparency Strategy Summit in

the world is to begin to build consensus on the best way to protect the interests of the UK’s pensions-saving public through full disclosure on all the costs and charges they are paying but not being told about’.

• 12th September 2016 at the Houses of Parliament

‘Launch of the TTF Banking Team’s White Paper on Current Accounts’

• 26th June 2017 at the Houses of Parliament

‘Sensible recommendations about the lack of transparency around charges for Free-If-In-Credit personal current accounts’

“Ideas to help reduce the chance of another Global Financial Crisis”

• 7th February 2018 at the Houses of Parliament

‘A special meeting at which we presented our White Paper on the topic and initiated the launch of a new All Party Parliamentary Group

• n Financial Stability’; the inaugural meeting is on 23rd May

Founding Members of The APPG on Financial Stability

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• Anneliese Dodds, Member of Parliament for Oxford East
• Jonathan Reynolds, Member of Parliament for Stalybridge and Hyde
• Jim Fitzpatrick, Member of Parliament for Poplar and Limehouse
• Jim Shannon, Member of Parliament for Strangford
• Lee Rowley, Member of Parliament for North East Derbyshire
• Mark Garnier, Member of Parliament for Wyre Forest
• Neil Gray, Member of Parliament for Airdrie and Shotts
• Paul Masterton, Member of Parliament for East Renfrewshire
• Rt Hon Dame Margaret Hodge, Member of Parliament for Barking

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• Rt Hon Liam Byrne, Member of Parliament for Birmingham, Hodge Hill
• The Baroness Altman CBE
• The Baroness Bowles of Berkhamsted
• The Baroness Falkner of Margravine
• The Baroness Greengross OBE
• The Earl of Lindsay
• The Lord Bird MBE
• The Lord Sharkey
• The Rt Hon. Frank Field, Member of Parliament for Birkenhead
• The Rt Hon. The Lord Lamont of Lerwick

Founding Members of The APPG on Financial Stability

Suggested 1st Draft for the APPG ’s Statement of Purpose:

The APPG on Financial Stability’s Statement of Purpose is: “To respond to the universal shared interest in avoiding another Financial Crisis by providing a helpful forum for parliamentarians to work cross-party, developing fledgling policy initiatives to buttress the resilience of our financial system; supported by participation from industry, academics, experts, think tanks, civil society, campaign groups and regulators.”

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What do you see?

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Today’s Programme:

11:00 Registration, refreshments & networking 11:30 Preliminaries:

• Welcome to Newgate Communications and the symposium; by Alistair Kellie,

Partner, Newgate Communications

• About the Transparency Task Force and the new APPG on Financial Stability; by

Andy Agathangelou, Founding Chair, Transparency Task Force 12:00 Presentation by Professor Charles Goodhart, Director of the Financial Regulation Research Programme, The London School of Economics and Political Science

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Today’s Programme continued

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12:30 Power Panel #1, featuring:

• Gavin Starks, Founder, DGen
• Michael Kumhof, Senior Research Advisor, The Bank of England
• Stuart Woollard, Council Member at The Maturity Institute
• Will Price, Global Pensions Consultant
• Alistair Kellie, Managing Partner, Newgate Communications

13:15 Lunch and networking 14:05 Team photo ☺

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Today’s Programme continued

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14:15 The Tragic Comedy Sketch; a semi-serious message wrapped in something that's a tad funny. If you find yourself thinking whilst laughing then it's worked! Featuring:

• Gavin Palmer, Campaigner, ShareSoc Private Investor Member
• Robert Mitchell, Campaigner, RBS Resolution GRG Campaign Group

14:45 Presentation of the Transparency Trophy – who’ll be this symposium’s winner? 15.00 Power Panel #2 Featuring:

• Matt Mayer, Co-founder, Economy for the Common Good
• Neil Esslemont, Head of Industry Liaison, The Pensions Regulator
• Geoff Tily, Senior Economist, the TUC
• Tom Burgess, Executive Director, Progressive Policy Unit

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Today’s Programme continued

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15:45 Refreshment and networking break 16:15 The Great Big Open Debate featuring:

• Stephen Clapham, Founder, Behind the Balance Sheet
• Simon Hill, Chief Investment Officer, Investment Consulting, Buck
• Marti Gorm Pedersen, Founder & CEO, RequirementONE
• +
• +

16:55 Key conclusions, wrap up to the formal part of the proceedings ➢ What are the risks to financial stability that we have identified? 17:00 Drinks, nibbles and networking through to 18:30, courtesy of Newgate Communications

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Many thanks to today’s sponsor:

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But before we go any further…

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• Who thinks there is going to be another serious crash at some time?
• Who thinks more can be done to help prevent one from happening?
• Who thinks the fundamental issues behind the last crash still apply?

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Time for a very quick “Straw Poll”

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Professor Charles Goodhart,

Director of the Financial Regulation Research Programme, The London School of Economics and Political Science

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The GFC: What happened and will it happen again? By C.A.E. Goodhart Financial Markets Group, London School of Economics

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Prelude to the Crisis It is not possible to predict the exact timing of any crisis, but it should have been possible to appreciate the vulnerability

• f the financial system. Only a few did (Rajan). So self-

flagellation amongst macro-economists. But do not forget the NICE years, 1992-2007. Great Moderation.

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What went wrong? The three myths:

• Price stability → No general economic downturn, (but

Minsky).

• Basel II plus no downturn → bank solvency, (but

manipulation).

• Bank solvency → No need for own liquidity, (but market

collapse).

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Also: Reliance on US housing history Mark-to-market, NB not ratings agencies (Ospina and Uhlig, NBER, April 2018).

26

What did we learn? 1) Banks need to be restrained from:- a) Excessive leverage b) Excessive reliance on wholesale markets. Own liquidity. 2) ZLB can be hit; use UMP. Concern about future recessions, especially since fiscal policy is constrained.

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But, focus on levels, rather than dynamic process of adjustment to higher CARs. Raising new equity lowers RoE, benefits debt holders. And how do it when profitability low? USA, Geithner stress test and TARP vs. EU. (NB: Liquidity issues resolved via QE and IOER.)

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Political/public outcry over Bail-out, so move to Bail-in. But bail-in is unlikely to reduce losses; just redirects to

• ther, more concentrated, group of individuals,

pensioners, etc. Litigation. Contagion is more likely, even if moral hazard is somewhat less. Section 13.3 and dollar swaps. Bail-in probably OK for idiosyncratic failure, but doubtful in a systemic crisis. Need for liquidity after bail-in, (Continental Illinois), so similar need for public funding, via different channels.

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Will it happen again? Advances:-

• Banks stronger.
• No economic euphoria.
• Memories quite fresh.

Disadvantages:

• Little, or no, policy space: fiscal or monetary.
• Debt increasing dramatically.
• Are we in a debt trap?
• Tired expansion?
• Politics

TTF Ambassadors: UK

David Pitt-Watson Executive Fellow London Business School Daniel Godfrey Co-Founder The People’s Trust Catherine Howarth Chief Executive Officer ShareAction Con Keating Head of Research Brighton Rock Group Ralph Frank CEO DC (UK) Cardano Steve Conley Founder Values Based Adviser Henry Tapper, Founder, Pension PlayPen; Director, First Actuarial Markus Krebsz, The United Nations Group

• f Experts on

Risk Management in Regulatory Systems

TTF Ambassadors: UK continued

Philip Meadowcroft Independent Shareholder Activist Rory Maguire CEO Fundhouse Ian Peacock Chief Client Officer IG Group

• Dr. Anna Tilba

Associate Professor in Strategy and Governance, Durham University Business School JB Beckett UK Lead, Association of Professional Fund Investors Robin Powell Founder Evidence-Based Investor Jackie Beard Director of Manager Research, EMEA Morningstar Mark Polson Founder and Principal the lang cat

TTF Ambassadors: UK continued

Mike Barrett Consulting Director the lang cat Julia Dreblow Founder SRI Services & Fund EcoMarket Helen Scott, Chief Executive Officer, Eris FX Andrew Parry, Head of Sustainable Investing Hermes Investment Management James Daley Managing Director Fairer Finance Will Price Global Pensions Consultant The World Bank David Stripp Proposition Manager David Stripp Ltd Jon Spain Treasurer Law for Life

TTF Ambassadors: EMEA

Tomas Wijffels, Senior Policy Advisor, Pensioen Federatie Eric Veldpaus, Founder, Institutional Benchmarking Institute Peter Kolthof, Partner and Head of the Netherlands, Avida International

TTF Ambassadors: USA

Paul Secunda, Professor of Law and Director, Labor and Employment Law Program Marquette University Bernie Nelson, President, Style Research, North America

• Dr. Kara Tan Bhala,

President and Founder, Seven Pillars Institute for Global Finance and Ethics Matthew Murray, Co-founder, The Center for Business Ethics and Corporate Governance George Kinder, Founder, The Kinder Institute

• f Life Planning

Stephen Davis Associate Director and Senior Fellow, Programs on Corporate Governance and Institutional Investors, Harvard Law School Jon Lukomnik, Executive Director, Investor Responsibility Research Institute Richard Field, Founder, The Institute for Financial Transparency

TTF Ambassadors: USA continued

Darby Hobbs Founder Social 3 Chris Tobe Founder Stable Value Investments Lorelei Graye Founder Leodoran Financial Adam Choppin Investment Director FIS Group Greg Rogers Co-founder Eratosthenes Charlie Atkins Co-founder Envonet

TTF Ambassadors: Canada

Larry Elford Founder, Investor Advocates Larry Bates Founder, The Wealth Game

TTF Ambassadors: APAC

Ian Fryer, Head of Research, Chant West, Sydney David Knox, Senior Partner, Mercer Melbourne

• Dr. Nicholas Morris,

Adjunct Professor, University of New South Wales, Sydney

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Power Panel #1, featuring:

• Gavin Starks, Founder, DGen
• Stuart Woollard, Council Member at The Maturity Institute
• Will Price, Global Pensions Consultant
• Alistair Kellie, Managing Partner, Newgate Communications
• Michael Kumhof, Senior Research Advisor, The Bank of England

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Lunch & networking break

Team photo at 14:05 then back for the afternoon’s programme at 14:15

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About today…

1. We have run 21 Transparency Symposia; London x19, Boston x1, Hague x1 2. The Transparency Times goes to many thousands of people, monthly

• 3. We have awarded 20 Transparency Trophies
• 4. We have held 3 special meetings at the House of Commons
• 5. We have over 350 volunteers; organised and mobilised into 13 Teams
• 6. We have responded to 11 formal Government/Industry Consultations
• 7. Have had dozens of meetings & calls with Regulators & Government Officials
• 8. We have produced 7 Thought Leadership White Papers
• 9. We have gathered over 100 Transparency Statements
• 10. Have had 100’s of articles/comments published; on Radio 4 three times
• 11. Spoken at dozens of conferences and events
• 12. We are growing our presence in 18 countries
• 13. We have recruited 44 Ambassadors

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The Tragic Comedy Sketch; a semi-serious message wrapped in something that's a tad funny.

If you find yourself thinking whilst laughing then it's worked! Featuring:

• Gavin Palmer, Campaigner, ShareSoc Private Investor Member

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• As well as shining a light on bad market practice the Transparency Task

Force wants to shine a light on good practice and exemplary behaviour

• The Transparency Trophy is a top-quality transparent star, that winners

keep

• The star-shape is significant - people can navigate using the stars so the

star shape has been chosen to symbolise the idea that the winners are helping to navigate the industry towards a more transparent, and enlightened state.

• The winners are those that are leading the way for others to follow
• The Transparency Trophy is awarded to a winner at each of our

Transparency Symposia

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About

andy.agathangelou@transparencytaskforce.org

• February 2016: Tomas Wijffels, Pensioen Federatie
• April 2016: Rachel Haworth, ShareAction
• June 2016: Jackie Beard, Morningstar
• September 2016: Gina & Alan Miller, the True & Fair Campaign
• October 2016: Robin Powell, Evidence-Based Investor
• November 2016: Daniel Godfrey, The People’s Trust
• December 2016: Ralph Frank, Cardano Risk Management
• February 2017: Con Keating, Brighton Rock Group
• May 2017: David Pitt-Watson, London Business School
• July 2017: Mike Barrett, The Lang Cat
• September 13th 2017: Steve Conley, Founder, Values Based Adviser

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Previous winners of

andy.agathangelou@transparencytaskforce.org

• September 28th 2017: George Kinder, Founder, The Kinder Institute
• November 15th 2017: Angela Brooks, Founder, Pension Life
• November 23rd 2017: Dr. Chris Sier, Independent Chair, FCA’s IDWG
• November 30th 2017: Dan Brocklebank, Head of UK, Orbis Investments
• March 8th 2018; Henry Tapper, Founder, Pension PlayPen and Director at First

Actuarial

• March 14th 2018; Bob Compton, Director, ARC Benefits Ltd
• May 24th 2018: Susan Flood, Vice Chair, Ark Campaign Group
• May 24th 2018: Nicholas Morris, Adjunct Professor, Faculty of Law, UNSW
• July 11th 2018: John Howard, Director, Consumer Insights
• July 26th 2018: JB Beckett, UK Lead, Association of Professional Fund Investors
• September 20th 2018: ?

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Previous winners of continued

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Power Panel #2, featuring:

• Geoff Tily, Senior Economist, the TUC
• Tom Burgess, Executive Director, Progressive Policy Unit
• Neil Esslemont, Head of Industry Liaison, The Pensions Regulator
• Matt Mayer, Co-founder, Economy for the Common Good, UK

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Most severe wage crisis for two centuries

All for nothing

Income for me/wealth for we

www.ppunit.com www.realagendaradio.com www.tomburgess.com

Tom Burgess

DM 7221625 v1D These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Neil Esslemont Head of industry liaison

Matt Mayer

London, 20 March 2018

@ECG__UK #ECGuk

What does the current system look like?

Current System

Economy type

Free market economy

Goal

Money

Strategy

Competition

Success Indicators

Profit GDP

Current System

ECG

Economy type

Free market economy Free market economy

Goal

Money Common Good

Strategy

Competition Collaboration

Success Indicators

Profit Common Good Balance GDP Common Good Index

What is different in the ECG?

How to define the Common Good?

ALL STAKEHOLDERS

• Owners / Investors
• Employees
• Suppliers
• Customers / Business Partners
• Community / Society

ETHICAL VALUES

• Human Dignity
• Solidarity and Social Justice
• Environmental Sustainability
• Transparency and Co-determination

What matters? Who matters?

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Refreshments & networking break

Please be back by 16:15

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Sponsorship is mission critical for the Transparency Task Force

✓ Andrew Mills, Director, Insight Financial ✓ James Daley, Managing Director, Fairer Finance ✓ Valborg Lie, Director, Borg Consulting Thank you! Individual Sponsors so far, £100 each:

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Sponsorship is mission critical for the Transparency Task Force

✓ Mark Evans, Business Development Director Tavistock Investments PLC ✓ Rory Maguire Managing Director Fundhouse Ltd Bronze Corporate Sponsors so far, £1,000 each: ✓ Matthew Simms Director, Asset Solutions River & Mercantile Solutions

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Sponsorship is mission critical for the Transparency Task Force

Silver Corporate Sponsors so far, £5,000 each:

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Gold Corporate Sponsors so far, £10,000 each:

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Sponsorship is mission critical for the Transparency Task Force

✓ Dan Brocklebank Director, Orbis Access UK Ltd ✓ Saker Nusseibeh Chief Executive Officer, Hermes Investment Management

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Sponsorship is mission critical for the Transparency Task Force

Platinum Corporate Sponsors so far, £25,000 each:

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Sponsorship is mission critical for the Transparency Task Force

Diamond Corporate Sponsors so far, £100,000 each:

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Upcoming TTF Events

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➢ 6th November: “Costs & Charges – are we there, yet?“ At Dimensional Fund Advisors, Triton Street, London

Venues wanted for Transparency Symposia in:

The Americas Boston New York Washington D.C. Chicago San Francisco Los Angeles Santa Monica Toronto Ontario Montreal Vancouver EMEA London Paris Brussels Frankfurt The Hague Amsterdam Berlin Dublin Zurich Geneva Dubai Cape Town Johannesburg APAC Sydney Melbourne Auckland Tokyo Singapore Hong Kong Beijing Shanghai

➢ Do you or any of your contacts have a venue we can use that seats 30+?

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The Great Big Open Debate featuring:

• Stephen Clapham, Founder, Behind the Balance Sheet
• Martin Gorm Pedersen, Founder & CEO, RequirementONE
• Simon Hill, Chief Investment Officer, Investment Consulting, Buck
• Heather Buchanan, Director of Policy and Strategy, APPG on Fairer

Business Banking

• Caroline Hopper, Senior Writer, Quietroom

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Forensic Accounting

Stephen Clapham, September 2018

Fraud: Why Now?

Unusually long economic cycle

Low volatility/upward markets trend breed complacency among investors Increases pressure on executives to maintain quarterly earnings trend High valuations creates risk of share price collapse if earnings falter

Incentives for fraud are much greater than formerly

E gregious compensation awards encourage CE Os/CFOs to cheat

Brokerage analysts less experienced

Follow many more companies Focus on quarterly earnings Not enough time for detailed accounts analysis

Universe of stocks has shrunk, particularly in US Risk of fraud is much higher today

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Contact Details

sclapham@behindthebalancesheet.com @steveclapham https://www.linkedin.com/in/behindthebalancesheet/ https://www.Behindthebalancesheet.com

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7 7 CONTACT US

T: +44 (0)7590 532 943 E: mpedersen@requirementone.com W: www.requirementone.com

Martin Pedersen CEO and Founder

One Canada Square Level 39 Canary Wharf London, E14 5AB United Kingdom

• The Foreign Exchange Team
• The Banking Team
• The Market Integrity Team
• The Costs & Charges Team

➢ The Financial Stability Team

• The Scams & Scandals Team
• Team PISCES
• Team PAM
• Team APAC
• Team Americas
• Team EMEA
• Team GTI
• The Pensions Team

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➢ For more information including a list of all our 350+ volunteers see: https://www.transparencytaskforce.org/teams-of-volunteers/

(Purpose, Impact Investing, Sustainability, Corporate Social Responsibility, Environment Social & Governance, Socially Responsible Investing) (Progressive Asset Managers) (Global Transparency Index) (Asia Pacific) (North and South America) (Europe, Middle East and Africa)

About

Teams of volunteers

✓ 300+ valiant volunteers in 18 countries, mostly the UK ✓ Organised and mobilised into 13 teams ✓ Small groups of people working together ✓ Subject-matter experts ‘that want to stand up, not stand by’ ✓ Building consensus on how to solve known problems ✓ Not just ‘a talking shop’ ✓ One or more campaign

• bjectives per team

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Key conclusions, wrap-up & close to the formal proceedings

➢ What are the risks to financial stability that we have identified? ➢ White Paper: “Ideas to help reduce the chance

• f another financial crisis” V2

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Our work is done, for today! Thank you for your attendance, input and ongoing support! Optional networking, drinks and nibbles until 18:30

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Andy Agathangelou

Founding Chair Transparency Task Force

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Many thanks again to today’s sponsor: