Libor: what about the regulators?

More light needs to be shone on the FSA.

It’s hard to know who to point the finger at when it comes to the Barclays’ culture of deceit. While most are simply blaming the bankers, Ann Pettifor, for one, blames the economists. Others, meanwhile, are blaming the regulators. 

One should probably blame all three (not to mention politicians), but if an enquiry is to be pursued, more light certainly needs to be shone on the regulators. The Times yesterday implicates the Bank of England in the Libor scandal, suggesting they may have not only condoned the system of manipulation but actively encouraged it. From our experience this doesn’t appear to be at all far-fetched.

Looking into the role of the finance sector in commodity speculation, we became increasingly disturbed by the lax approach adopted by the FSA. When we dug deeper, we found that the FSA was lobbying the European Union on behalf of the City, to prevent effective regulation of speculation by Brussels. 

As the FSA is paid for by the City, almost entirely governed by the City or ex-City bankers, and with virtually no transparency, its weak approach to Barclays’ failings should come as no surprise. This is in stark contrast to US authorities, who imposed fines on Barclays almost 4 times greater than those levied by the FSA.

Barclays has been at the heart of commodity speculation activity AND at the heart of fighting off any regulation. A letter to the Commodities Futures Trading Commision in the US, urges a light touch approach.  However WDM research has exposed Barclays as the biggest UK bank involved in speculation in the commodity derivative markets, which has contributed to price spikes such as those in 2008 and 2011 which pushed millions into hunger and deeper poverty. While the bank claimed under pressure at its 2012 AGM that it only facilitated deals for third parties, the reality is a little more complex, with Barclays' risk-taking approach to dealing suggesting that it effectively speculates itself. They state of the Barclays Capital’s Commodities division that “Our Commodities Traders build ‘trading books’ specialising in goods from energy products to agricultural assets, all over the world.”  

As we gear up for a new regulatory model under the aegis of the Bank of England, we have to question about the direction. And we have to ask questions about the relationship between the regulators and Barclays in particular. Now that more evidence has come to light of the failings of the regulators, and their incestuous relationship with the banks they’re meant to oversee, nothing short of a complete overhaul of the banking and regulatory system will suffice.

The numbers:

Barclays

  • Fines imposed by the FSA: £59m
  • Fines imposed by US Authorities: £230m
  • Earnings from speculation on commodity derivatives: £189m/year
  • Statement from Bob Diamond at the Barclays AGM: “our traders are not involved in direct speculation.”

FSA

Board of Directors:

  • 26 of 36 members of the board linked to the Finance sector since 2000 before or after appointment
  • 9 continued to hold appointments in financial corporations while at the FSA
  • Board Directors linked to consumers or other stakeholder: 1

Meetings held with the finance sector about European Markets in Financial Instruments Directive

  • 87 per cent of all meetings held with industry bodies
  • Only 1 meeting held with a third party stakeholder

Deborah Doane is the director of the World Development Movement

FSA. Photograph, Getty Images.
Photo: Getty Images
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British mental health is in crisis

The headlines about "parity of esteem" between mental and physical health remain just that, warns Benedict Cooper. 

I don’t need to look very far to find the little black marks on this government’s mental health record. Just down the road, in fact. A short bus journey away from my flat in Nottingham is the Queens Medical Centre, once the largest hospital in Europe, now an embattled giant.

Not only has the QMC’s formerly world-renowned dermatology service been reduced to a nub since private provider Circle took over – but that’s for another day – it has lost two whole mental health wards in the past year. Add this to the closure of two more wards on the other side of town at the City Hospital, the closure of the Enright Close rehabilitation centre in Newark, plus two more centres proposed for closure in the imminent future, and you’re left with a city already with half as many inpatient mental health beds as it had a year ago and some very concerned citizens.

Not that Nottingham is alone - anything but. Over 2,100 mental health beds had been closed in England between April 2011 and last summer. Everywhere you go there are wards being shuttered; patients are being forced to travel hundreds of miles to get treatment in wards often well over-capacity, incidents of violence against mental health workers is increasing, police officers are becoming de facto frontline mental health crisis teams, and cuts to community services’ budgets are piling the pressure on sufferers and staff alike.

It’s particularly twisted when you think back to solemn promises from on high to work towards “parity of esteem” for mental health – i.e. that it should be held in equal regard as, say, cancer in terms of seriousness and resources. But that’s becoming one of those useful hollow axioms somehow totally disconnected from reality.

NHS England boss Simon Stevens hails the plan of “injecting purchasing power into mental health services to support the move to parity of esteem”; Jeremy Hunt believes “nothing less than true parity of esteem must be our goal”; and in the House of Commons nearly 18 months ago David Cameron went as far as to say “In terms of whether mental health should have parity of esteem with other forms of health care, yes it should, and we have legislated to make that the case”. 

Odd then, that the president of the British Association of Counselling & Psychotherapy (BACP), Dr Michael Shooter, unveiling a major report, “Psychological therapies and parity of esteem: from commitment to reality” nine months later, should say that the gulf between mental and physical health treatment “must be urgently addressed”.  Could there be some disparity at work, between medical reality and government healthtalk?

One of the rhetorical justifications for closures is the fact that surveys show patients preferring to be treated at home, and that with proper early intervention pressure can be reduced on hospital beds. But with overall bed occupancy rates at their highest ever level and the average occupancy in acute admissions wards at 104 per cent - the RCP’s recommended rate is 85 per cent - somehow these ideas don’t seem as important as straight funding and capacity arguments.

Not to say the home-treatment, early-intervention arguments aren’t valid. Integrated community and hospital care has long been the goal, not least in mental health with its multifarious fragments. Indeed, former senior policy advisor at the Department of Health and founder of the Centre for Applied Research and Evaluation International Foundation (Careif) Dr Albert Persaud tells me as early as 2000 there were policies in place for bringing together the various crisis, home, hospital and community services, but much of that work is now unravelling.

“We were on the right path,” he says. “These are people with complex problems who need complex treatment and there were policies for what this should look like. We were creating a movement in mental health which was going to become as powerful as in cancer. We should be building on that now, not looking at what’s been cut”.

But looking at cuts is an unavoidable fact of life in 2015. After a peak of funding for Child and Adolescent Mental Health Service (CAMHS) in 2010, spending fell in real terms by £50 million in the first three years of the Coalition. And in July this year ITV News and children’s mental health charity YoungMinds revealed a total funding cut of £85 million from trusts’ and local authorities’ mental health budgets for children and teenagers since 2010 - a drop of £35 million last year alone. Is it just me, or given all this, and with 75 per cent of the trusts surveyed revealing they had frozen or cut their mental health budgets between 2013-14 and 2014-15, does Stevens’ talk of purchasing “power” sound like a bit of a sick joke?

Not least when you look at figures uncovered by Labour over the weekend, which show the trend is continuing in all areas of mental health. Responses from 130 CCGs revealed a fall in the average proportion of total budgets allocated to mental health, from 11 per cent last year to 10 per cent in 2015/16. Which might not sound a lot in austerity era Britain, but Dr Persaud says this is a major blow after five years of squeezed budgets. “A change of 1 per cent in mental health is big money,” he says. “We’re into the realms of having less staff and having whole services removed. The more you cut and the longer you cut for, the impact is that it will cost more to reinstate these services”.

Mohsin Khan, trainee psychiatrist and founding member of pressure group NHS Survival, says the disparity in funding is now of critical importance. He says: “As a psychiatrist, I've seen the pressures we face, for instance bed pressures or longer waits for children to be seen in clinic. 92 per cent of people with physical health problems receive the care they need - compared to only 36 per cent of those with mental health problems. Yet there are more people with mental health problems than with heart problems”.

The funding picture in NHS trusts is alarming enough. But it sits in yet a wider context: the drastic belt-tightening local authorities and by extension, community mental health services have endured and will continue to endure. And this certainly cannot be ignored: in its interim report this July, the Commission on acute adult psychiatric care in England cited cuts to community services and discharge delays as the number one debilitating factor in finding beds for mental health patients.

And last but not least, there’s the role of the DWP. First there’s what the Wellcome Trust describes as “humiliating and pointless” - and I’ll add, draconian - psychological conditioning on jobseekers, championed by Iain Duncan Smith, which Wellcome Trusts says far from helping people back to work in fact perpetuate “notions of psychological failure”. Not only have vulnerable people been humiliated into proving their mental health conditions in order to draw benefits, figures released earlier in the year, featured in a Radio 4 File on Four special, show that in the first quarter of 2014 out of 15,955 people sanctioned by the DWP, 9,851 had mental health problems – more than 100 a day. And the mental distress attached to the latest proposals - for a woman who has been raped to then potentially have to prove it at a Jobcentre - is almost too sinister to contemplate.

Precarious times to be mentally ill. I found a post on care feedback site Patient Opinion when I was researching this article, by the daughter of a man being moved on from a Mental Health Services for Older People (MHSOP) centre set for closure, who had no idea what was happening next. Under the ‘Initial feelings’ section she had clicked ‘angry, anxious, disappointed, isolated, let down and worried’. The usual reasons were given for the confusion. “Patients and carers tell us that they would prefer to stay at home rather than come into hospital”, the responder said at one point. After four months of this it fizzled out and the daughter, presumably, gave up. But her final post said it all.

“There is no future for my dad just a slow decline before our eyes. We are without doubt powerless – there is no closure just grief”.

Benedict Cooper is a freelance journalist who covers medical politics and the NHS. He tweets @Ben_JS_Cooper.