Comment: Forex scandal | real wage growth

Martin Flanagan
Martin Flanagan
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THE record regulatory fines on alleged attempts by bank traders to rig the £3 trillion-a-day foreign exchange ­market shows they thought they were clever, and clients and traders not in on the scam were stupid. The question of immoral behaviour was risibly ­irrelevant.

We have been here before on the wilder shores of the banking industry. In this milieu the default attitude seems too often to be that you are ­either sharp-witted or naive. Ethics are for losers.

Particularly damning is that the latest goings-on happened between 2008 and 2013, despite the previous scandal about bank traders’ manipulation of the Libor interbank lending rate.

Were Libor lessons learnt in the electronic wild west of the trading floors? Hardly. It was more a case of break out the Bollinger and business as usual.

Right in the middle of this period, in January 2011, former Barclays boss Bob Diamond, whose background was investment banking rather than retail operations, told MPs on the Treasury committee that “the time for remorse is over”. That is debatable.

It is not just the severity of the ­aggregate £2 billion of fines on Royal Bank of Scotland, HSBC, UBS, Citibank and JP Morgan levied by Britain’s ­Financial Conduct Authority, the US Department of Justice and Finma, the Swiss regulator.

The regulators’ language is disdainful, referring to conduct that undermines ­confidence in the UK financial system and jeopardises its integrity, that ­ethics should not just be something for “compliance to worry about” and a “free-for-all culture” existing on trading floors.

As with language unearthed from telephone conversations and e-mail trails in some previous banking scandals, the names the latest culprits gave their profit-seeking cabals shows a self-regard for their own cynicism that treats the rest of society as mugs playing by the rules.

“The three musketeers”, “the players”, “the A-team” and so on. Oh, the larks we have with these increasingly inappropriately titled “banking legacy issues”.

Glimmer of UK wage growth won’t lift rates

After a lengthy period of lagging ­inflation, wage growth may be just approaching the point of gingerly making up the ground lost in the six lean years following the financial crash.

The Office for National Statistics has revealed that between July and September total average weekly earnings, excluding bonuses, lifted an annualised 1.3 per cent, while monthly inflation in September dropped to a five-year low of 1.2 per cent.

The wage growth was better than most commentators had expected. However, it is probably not enough – either in quantum or timescale – for the Bank of England to cite it as part of a rationale for an earlier interest rate rise.

With latest official data also showing that the UK unemployment rate remained unchanged at 6 per cent ­between July and September, and inflation comfortably below the mid-term target, it remains likely that rates will stay at their historic lows until mid-2015.

But an earnings recovery has to start somewhere, and the latest numbers give cause for one cheer, anyway. The Tory-led coalition, in particular, will hope for further good news on this to defuse the row about falling living standards that Labour will make a central plank of its general election strategy.


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