So, clearly, short-termism has resulted in the downfall of many companies and this has been exacerbated by the stock market and its ‘requirement’ to have firms delivering greater profits year-on- year regardless of the risks required to make this money. Ultimately, the risks taken were too great and for many the whole house of cards collapsed. Compare this to companies who are not in thrall to the stock market, such as John Lewis Partnership. Companies like John Lewis continue to perform well for many reasons, but the fact that there is no stock market pressure to produce short-term gains means the senior management can play the ‘long game’ which will certainly be much steadier but ultimately beneficial for all.

regulation

Regulation of the financial sector played an enormous part in the crisis and how the FSA reacted too late to stop the excesses that were taking place. ‘React’ is the important word here as the FSA has historically been ‘reactive’ – we have seen a regular sequence of events and crises which having taken place, brought about regulatory change. This type of regulation ultimately does not protect the consumer as the abuse has already taken place and the damage already done. So, where does the FSA go

now? Well, if we are to believe the

Conservative Party pledge, it’s the knackers’ yard, however, even with this threat looming it must still continue to regulate. It is already looking to recruit more staff, it has welcomed more reform on a global basis and is (almost) admitting that in crucial areas it got it wrong. However, Lord Turner, its chairman is also suggesting it still may not have all the necessary tools to correct things and here we come back to perhaps the central issue – how can the FSA (or any future regulator) ensure it gets a firm’s culture right? Now withstanding the regulatory questions that need to be answered in a future Parliament we also have significant other issues to tackle in order to get the economy back on track. There are too many to mention but clearly in the mortgage arena lending is still tight and subject to volatility and we continue to have a relatively fragile housing market albeit with prices in some areas bouncing back to 2007 levels. Coupled with this is the demographic time-bomb that no political party wants to address; that being an aging population and how it pays for its retirement and long-term care. A recent SHIP survey found that only 7% of people expect to be able to afford an independent retirement and figures from unbiased.co.uk.co.uk> showed that consumers are keenly interested in getting retirement advice. We have a

problem with those in or near retirement now so what future generations will have to deal with doesn’t bear thinking about if we don’t address these issues quickly. The fact is problems such as pension shortfalls, funding care for the elderly, and maintaining standards of living in retirement are not going away, in fact they are only likely to get worse. Is having more regulation the right way to go? If the answer is yes then how is it going to make a difference? Does more regulation only widen the parameters but we still end up with something going wrong on the fringe in a way that has not been accounted for? Importantly, will market drivers change – will we see that move away from short-term gains and big bonuses to more sustainability, ethical/green action, etc. This move can only happen with widespread support and the biggest power-broker, the media, certainly needs to get behind it. All the previous crises have led to media focus and outpourings which then resulted in further regulation – could this media power not be used to drive a more ethical, long-term approach? This would certainly help in allowing businesses to focus on more traditional values such as what they are like as employers, what service they provide, what are their values and mission statements and overall what value they add to society. n

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