In an open statement released this morning, UNI-Europa Finance, representing 237 finance workers’ trade unions, said that financial markets were out of control and that greater regulation was needed. It described thirteen steps felt necessary for more effective regulation of financial markets, to protect the well-being and futures of many sectors of society and to allow national economies to flourish.
- Increase transparency - Balance sheets which show all risks - hedge funds, sovereign wealth funds and private equity companies to be subject to the same rules.
- Statutory regulation – One regulatory system for all the financial market including hedge, sovereign wealth and pension funds - banning off-shore centres subject to reduced controls.
- Supervision of the financial sector – Greater supervisory cooperation, but also a common supervisory playing field.
- Rules on capital adequacy - Capital adequacy ratios (i.e. Solvency 2 and Basel II) for all – with ratios reviewed.
- Pension funds and life assurance - Pension funds and life assurance companies may not take high risk investments, for example in hedge funds or private equity funds.
- Tax breaks for private equity - The tax concessions given to the private equity and hedge funds industry in many countries must stop.
- Pay systems for executives - Incentive and remuneration policies to be controlled, kept at reasonable levels, and linked to the revenues and results of the companies.
- Leveraged buyouts - Loans made to companies that are to be taken over for the purpose of funding the purchase price must be prohibited.
- Rating agencies - An end to the current world oligopoly of rating agencies – removal of conflicts of interest – an independent European public rating agency should be established.
- Tax havens - Tax havens must be put out of business - national taxes if a certain minimum level of tax is not paid abroad.
- Company takeovers/outsourcing/offshoring – Mandatory employee representation and involvement in decisions – otherwise a takeover cannot go ahead.
- Consumer protection – Higher consumer protection at national and international level – financial institutions must guarantee customers qualified and proper advice based on their interests.
- Employees at the core – Improved working conditions, pay incentives and training that promote regulatory objectives and excellent customer service.
Separately, the Financial Times this morning reported that Charlie McCreevy of the European Commission would, in a speech today, criticise the credit rating code of conduct proposed by IOSCO two weeks ago and would call for mandatory regulation of rating agencies.