Sanderson Recruitment Blog

Cowboys and Consumers - Who rules the Finance Industry?

2013-09-09T14:07:00.000+01:00

RSG Debates is a series of round table events held throughout the year, which bring together industry leaders who are relevant to a central topic of discussion. As Head of Sanderson's Financial Recruitment division, Tim Donaghy joined some of the UK's leading CFOs to discuss: Can Business Self Regulate? To find out more about future RSG Debate events and how you can participate, please click here.

Is the Financial Services Industry run by cowboys making rash decisions with the hard earned cash of the unsuspecting public, or is this an industry that is regulated and genuinely consumer/customer focused?

The rules and conduct of people in responsible positions within The Financial Services Industry are well documented in the FCA Handbook and the theme of the handbook is indeed consumer and customer focused. I would recommend a quick read as it is very simply written and specific in its purpose.

A quick look on the FCA website shows that there are indeed implications to breaking the codes of conduct. On the home page the following headlines jump out at you:

“FCA fines Guaranty Trust Bank (UK) Ltd £525,000 for failures in its anti-money laundering controls”

“FCA fines compliance officer and broker whose actions enabled market abuse to be committed in October 2010“

So, if the rules are plain and simple and implications of breaking the rules are obvious, why are there still breaches and why is consumer confidence so low?

Is the punishment severe enough? Or does the punishment fit the crime (Fred Goodwin et al)?

How many people were imprisoned on the back of the meltdown in 2008, or at any stage for that matter?

When does incompetence become negligence?

Maybe the answer lies in the level of punishment; maybe it lies in the expectation on returns demanded by an often ill informed public, or maybe it lies with the well publicised bonus culture of the industry. What is clear and certainly stressed at the event is that the challenges are complex, no one group is to blame for recent issues and that plenty of questions remain unanswered.

Debate: Is the Consumer a Regulator of Business Behaviour?

2013-07-15T14:18:00.004+01:00

June 2013 saw the launch of RSG Debates, a series of round table dinners held throughout the year, which invite thought leaders to join together to discuss the most topical issues concerning one appointed theme. In June, the spotlight was focussed on the financial services sector and the question of whether business can self regulate. Held at Benares restaurant in Mayfair, London, the dinner was hosted by Nick Hall, Partner at KPMG, and was attended by finance directors and CFO’s from FTSE 100 companies.

The concept of regulation vs. self regulation is vast and it was to be expected that we would gather a varied range of arguments and opinions on the topic, the most interesting (and perhaps most controversial) of which I am going to share with you over the course of my next few blog posts. Don't forget, if you are interested in the financial sector, you can subscribe to the Sanderson Financial posts. To begin this series we will focus on:

What role does the consumer have to play in bringing about positive change to errant business behaviour?

Starbucks were used as a relevant example during this particular discussion as they paid £5m in UK corporation tax this year – something they have not done since 2009.

“The move followed a barrage of criticism, including a comment from David Cameron at the World Economic Forum in Davos in January when he attacked low tax payers using the coffee reference – though not specifically naming Starbucks, Google or Amazon. A spokeswoman for Starbucks declined to say how many customers it had lost following the high profile row which started with demonstrations outside some of the outlets by the campaign group, UK Uncut and ended with scorching criticism from parliament's public accounts committee.” Guardian June 2013

It was thought that this was a particularly interesting scenario that illuminated the potential power of the consumer to influence businesses’ decisions on how they account for themselves. Yes, this was an act of ‘self regulation’, but had they not been put under the glare of the media’s spotlight, would Starbucks still have paid up? Should David Cameron have even mentioned these companies in public? In a world of straplines and media sensationalism, the whole truth is far from being accurately represented and consumers often react to the one sided story they are presented with. In this instance, shouldn’t the thousands who campaigned outside of Starbucks stores also have been campaigning against the fact that there are legal loopholes within regulation in the first place?

“Accounts filed by Starbucks UK with Companies House this week will show the British side of the business still not formally profitable. Starbucks is expected to close up to 30 of its shops around the country this year. A similar number were shut last year amid tough competition from Costa and other brands” Guardian 2013

The Consumer: Irregular Regulator

As pointed out by a number of our Debate guests, it is particularly interesting to note that consumers do not always react with their feet as they did with Starbucks. The collapse of the Rana Plaza clothing factory in Bangladesh was identified as a case where a company’s operating habits were below standard and caused a large number of casualties. However, this has had little effect on consumer habits. In fact, the most recent reports from Primark, one of the stores which had clothing manufactured in Rana Plaza, has said that their profits have actually increased by 20% over the past three months.

“When the garment factory in Bangladesh collapsed with the loss of more than 1,100 lives, the world was shocked. But many shoppers still value bargain price clothes above the lives of the factory workers. Almost half are no more likely to ask where garments come from than before the April 24 disaster, a study claims. Slightly more than one in ten are ‘a lot more likely’ to ask, the same percentage of shoppers who believe retailers bear the most responsibility to ensure safety and acceptable working conditions” Metro, June 2013

Debate guests suggested that the large majority of consumers are ill informed; they demand that the industry to be more responsible and ethical, while at the same time requesting strong returns on their investments and pensions. As such, they do not fully understand why corporations seek constant strong growth and, while their habits may be a good reflection of how well a business is doing overall and could be considered a regulator of sorts, regulation should be put in place to protect consumers, it should not be led by them.

What are your thoughts on this? You can let us know by leaving a comment below, talking to us on Twitter using #RSGdebate or joining the discussion on our LinkedIn page. We want to hear from you!

How to Make Bankers Accountable for their Actions

2013-06-25T10:28:00.001+01:00

Sanderson's Head of Finance, Tim Donaghy, comments on the Parliamentary Commission of Banking Standards' latest report and whether it will make bankers liable for their negligence.

The cross-party Parliamentary Commission on Banking Standards' fifth reports proposes that bankers are held accountable for their actions in the future, and threatens imprisonment for those guilty of 'reckless misconduct'. The report highlights that, despite numerous scandals being illuminated in recent years, senior level bankers have not been punished for turning a blind eye on their responsibilities.

The report advocates that senior bankers should be assigned clear personal responsibilities, with the legal onus on them to show they have done all that is reasonably required; recklessly disregarding their responsibilities should be a made a criminal offence; senior bankers should adhere to a new set of banking standards set by regulators; bonus pay should be deferred for up to 10 years and cancelled if a banker acts irresponsibly and banks should be legally required to put financial safety ahead of shareholder interest.

These measures are without doubt a step in the right direction, however, it puzzles me as to why five reports on this subject have been made already, yet this is the first time a notion is being mooted! I recently attended an RSG Debates event based around the question of whether businesses can self-regulate. An interesting point was made during the course of the evening; a blue collar worker can be imprisoned for stealing £100 out of the petty cash tin, yet a CEO receives a £1m a year pension after overseeing the complete demise of a bank (RBS and Goodwin). The magnitude of the injustice of this double standard is incomprehensible and, as the report points out, for too long bankers have fallen back on the claim that everyone was party to a decision, therefore, no individual could be held accountable.

It is about time that the high earning executives who we entrust with our money should be made liable if they are found to be negligent. Perhaps the promise of imprisonment, rather than bonus schemes, will incentivise them to be more responsible in the future?

APSCO announces growing need for Finance professionals

2013-06-10T16:10:00.002+01:00

Tim Donaghy, Head of Accountancy and Finance at Sanderson, discusses the latest positive news for the Financial Recruitment sector.

Finally, green shoots of news from APSCO! After a year of hearing from FDs and CFOs that they are confident that there is a growing need for more qualified finance professionals, analysts are finally seeing this as a reality. But where is this growing need coming from? Although 2% doesn't sound like a huge increase, this is significant for the finance recruitment sector and is a good indicator of general business confidence. When the finance (and other) recruitment market is in full swing, requirements are created due to three major drivers:

Natural attrition and churn
Growth
Business change or projects

When the recession hit, all three of the above were severely affected: people were not moving resulting in less opportunities; businesses were seeing negative or no growth, therefore head counts were frozen (or reduced); and major projects were put on ice.

As businesses start to show confidence, candidates become a little more open to moving, and projects start to come back online. This is what we are witnessing on a day to day basis right now. People who 'fancy a change' are now looking for new challenges, which in itself creates backfill opportunities. Many of the CFOs I am speaking to are investing heavily in new technology as competition for clients and business increases. This is having a positive effect on demand for quality interim candidates and aligns itself with the APSCO findings.

Consultants in the finance sector have been living off the bare minimum since 2008, with the industry seeing a huge amount of attrition; only the best, toughest or most foolhardy remain. Here's hoping the wait has been worth it and here's hoping you are positioned to take advantage of the growth.

Budget 2013: The Future of Employment for Young People

2013-03-21T14:46:00.000+00:00

It came as a surprise during the Budget for 2013 to hear that, despite being caught in the worst recession the UK has seen, employment has seen an increase of more than 590,000 positions and is continuing on a steady rise compared to last year – a result that even leading economists are struggling to explain.

Despite this triumph, our next generation of workers, currently aged between 16-24, worryingly comprise the largest percentage of those who remain unemployed. Furthermore, the number of young people who are unemployed, in contrast to the rest of the population, is mounting more rapidly than any other sector of the public. In our last post we discussed the possible social consequences of long term unemployment in this age bracket and the urgent need for schools to provide pupils with an education that will equip them with the skills required to succeed in the workplace. However, this situation is sure to have a ripple effect on the wider employment circle – when we finally come out the other side of the current downturn, will we be facing fundamental skills shortages?

Previously we have seen that recessions have been followed by periods of severe skills shortages where economic growth has returned (everyone remembers McKinsey’s oft quoted – War for Talent of the late 1990’s). However, this is our worst recession yet and, therefore, will we also face the worst period of skills shortages in the next decade? What are organisations doing to prepare for this? Can you and should you invest now to avoid the issue in the future? Or does this require a more market wide move to ease regulations around employment, which would in turn make it easier for firms to invest in the development and progression of their staff?

Companies can find some solace in the budget’s proposed National Insurance Tax Breaks, which will help in reducing the tax burden on new hires, making the decision to take on new staff a little easier. Yet, is this enough? In an ideal world we would see a wider approach to investment being made in helping organisations to achieve confidence in the hiring, training and developing of their staff. Added to this, a reduction in employment regulation would make it easier to make quick decisions on a company’s staff base, injecting more life into those challenging hiring decisions within the 18-25 bracket.

That said, individual companies cannot address this issue in isolation; it will take a wave of renewed confidence in the marketplace to drive the level of hiring required to avoid what could be a growth inhibiting skills shortage / ‘War for Talent’ in the latter part of this decade.

Nick Walrond, Managing Director, Sanderson Recruitment

Food for Thought Leadership

2013-03-19T12:06:00.001+00:00

How do you entice some of the UK’s leading CFOs into a room to discuss regulation? Tell them it is being held at Michelin Star chef Atul Kochhar’s restaurant, Benares, and that the food and wine is free!

Seriously though, regulation in today’s business world is anything but a dry subject. In the Coalition Agreement published in 2010, the TorieLibDems said that they would cut red tape for businesses or individuals and not rely on rules and regulations by themselves to ‘get things done’. Exciting times for the money makers and entrepreneurs of these sunny isles I hear you say? May be not... is there less regulation now than five years ago?

RSG, one of the largest independent UK recruiters (and my employer) is holding a round table dinner for a number of CFOs to discuss the above topic. This is being held at Benares on the 17th April. The evening will be leading with the question ‘Can business self-regulate?’ As a Kiwi with a love of good food, wine and conversation, I am looking forward to a glass of (hopefully Marlborough) Sauvignon Blanc, a good Lamb Pasanda and some real insights as these business leaders share their views and experiences on these subjects. My gut feel is that the government’s words and the government’s actions are some distance apart (surprise, surprise)!

No doubt, as the evening progresses, there will be references to The All Black’s loss in the Autumn Internationals, The up and coming Lion’s tour and Ashes series. I need to prepare my responses thoroughly.
I promise to come back to you all after the event to update on the thoughts of these leaders, the quality of the food and on the sporting banter...

Tim Donaghy, Head of Finance Division, Sanderson
(Sanderson is part of RSG group of companies)

Taxing Times

2013-03-14T15:32:00.000+00:00

Questions on what is an appropriate level of taxation never go away. However, in the current economic climate the need to cut income taxes for lower income workers to put a little more money in the pockets of working families is juxtaposed with demand to tax the wealthy more heavily whether through income or so called wealth taxes on property.

In the business sector, the debate is equally vexed. On the one hand, government has made welcome cuts to corporation tax but, on the other hand, it is laying in to companies that seek to minimise tax exposure through conducting their business where it is most tax efficient to do so.

While complicated tax avoidance schemes may, as George Osborne says, border on the morally repugnant, the hassle and complicated legal and financial structures required to take advantage of such schemes means that it is only few businesses that go down this route. For most businesses, such as our own, we prefer to focus our efforts on developing the business, being a responsible corporate citizen (that pays its tax) and delivering the best possible return for our shareholders. However, like any other rational business, or indeed individual, we will seek to minimise our tax exposure (who will not be filling up their tank next Tuesday expecting fuel duty to rise in the budget).

But the anti-business message goes beyond corporation tax. For whatever reason, any company making a profit, especially if from government contracts or traditional government services, is seen as a target. Yet, unless companies up and down the country can deliver a return for their shareholders, who is going to bother to invest their money to get a return and deliver the tax revenue and continue to create the jobs and wealth that is so badly needed.

With the budget around the corner, let’s just hope that the Chancellor can lighten up a little, advance a pro-business agenda and use the tax system to give the economy a little impetus. But if you want me to be radical I suggest our government looks across the Irish Sea where corporation tax is down at 12.5%. I’d raise a glass to that this St Patrick’s Day!

Mike Beesley, CEO, RSG (Sanderson is part of RSG Group of companies)