Regulation in Britain: Compare and contrast regulation of Citizens and of Companies. Company executives pay piffling fines, ordinary citizens do jail time.

In May 2014 the energy regulator OFGEM boasted about its latest ‘record fine’: £12 million inflicted on E.on. OFGEM’s press release stated:

• E.ON’s large scale mis-selling results in biggest supplier payout to consumers 

• Ofgem found management arrangements were insufficient to protect against mis-selling

OFGEM has the power to fine upto 10% of revenue. E.ON’s UK revenue in 2013 was £9.9 billion. The £12million fine, about 0.1% of revenue, is not even a drop in that ocean of cash.

Money is the one thing that is not in short supply for Energy companies. They are awash with it. Fraudulent behaviour by our Energy and Financial sectors have been ‘punished’ by taking from them that which they have most of: money taken from their customers. Like fining Billy Bunter a doughnut – he may not like it, but he has plenty more. The loss of a doughnut will not reform him.

Fraud is directed by people, not companies. Directors don’t fear fines – after all it is almost inevitably the company that pays them. But while they have more than enough money to brush off fines, they have about the same amount of time as anyone else. A year in jail is a year in jail, whoever you are.

The Sentencing Council, appointed by the Lord Chief Justice and the Lord Chancellor of the UK, provides guidance to the British Justice System. Here is the guidance when it comes to frauds by ordinary citizens:

• "Confidence Fraud" (not unlike doorstep selling by energy companies) for sums of £500,000 or more: 5-8 years custody 

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TNT posties dumping your letters in bushes: Rivals to Royal Mail accused of ditching deliveries to earn more

Fee, Chris and KJ look into the future...

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Excuses for being completely useless - Regulators (OFGEM; FCA/FSA; OFTEL et al), here are some good excuses for not doing your homework

In January 2014 the Labour Party issued another report, “Powering Britain: One Nation Labour’s plans to reset the energy market”. The report made various assertions relating to the period after 2010, conveniently overlooking Labour’s own lamentable record regulating the energy industry. It is quite extraordinary how much politicians care for us when out of power, and how little when in power. Wasn’t it Spiderman who said “With no responsibility comes great power”. Power to talk without having responsibility to deliver. Anyway, the report stated:

"Since 2010, household energy bills have gone up by over £300 a year whilst small businesses are paying over £13,000 a year more

Lack of competition in the retail market has resulted in consumers paying £3.6 billion more than they need to"

The report includes graphs showing how energy companies’ blaming wholesale cost (what the energy companies pay) for retail price (what you pay) rises since 2011 are phoney. Average annual increases between 2011 and 2013 have been:

• Electricity: wholesale up 0.5% per year; retail up 9.7% a year
• Gas: wholesale up 1.59% per year; retail up 11% per year

OFGEM, the energy regulator, denies that consumers are being ripped off though OFGEM accepts the need to “break the stranglehold of the big 6 in the retail market” (so we're not being ripped off, just strangled?) and has repeatedly blamed energy companies for not being "transparent" (i.e. telling the simple truth) about their wholesale costs.

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How much do those "cheap rate" 0845 etc. numbers really cost?

 Confused by phone charges or don’t know how much a phone call really costs? Perhaps that's their intention...

By Tony Monk. The information is based on research Tony did as a volunteer for KentLINk after it was discovered that several local GP practices were found to be using 0844 numbers, possibly on a revenue sharing basis.  Tony was also particularly incensed when he noticed that the expensive 0870 series number was rather cynically used by the Government as an emergency number for the public to ask for names of victims of the 7 July 2005 London bombings. 

WHAT THE AVERAGE PERSON THINKS

Many callers think that that 0843/4/5 calls are charged at a local rate or similarly cheaper cost.

THE TRUTH

0845 and 0870 numbers typically cost between 1p and 10.5p/min with or without set up fees and again are normally far more expensive from a mobile phone, typically 12 to 41p per min.

0871/2/3 numbers typically cost more than 0845 and 0870 numbers.

Charges for 0843/4 numbers from a landline vary greatly, typically between 1p and 13p/min plus a call set up fee. For example, Talktalk charge a set up fee of 13.87p per call and then 5p/min. One company was unable to quote a charge as it depends on the recipient’s telephone service provider.  Charges to these numbers will normally be far higher from a mobile phone.

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For the Knights and Lords, Dames and Ladies of British Industry

http://en.wikipedia.org/wiki/File:Siege_perilleux_galaad.jpg

December 2012 saw a former chief of the Financial Services Authority (Hector Sants) and December 2013 a former deputy governor of the Bank of England (Paul Tucker) knighted. Men whose responsibilities included regulating the banks during the banking crash. They joined the array of lords and knights in the well padded seats of the City of London's financial district.

Every bank, insurance company and investment firm covets a noble or two to adorn its board. What could possibly go wrong if a peer of the realm is at the helm?

It is not just financial services. Lords and ladies, knights and dames grace the boards and regulators of electricity, transport, education, health, and just about every major commercial endeavour. Judge them not by their fruits, but by their titles.

To recognise these valiant men and women who fearlessly take responsibility for our nation's well being, ensuring the good and chivalrous behaviour of their companies and those they regulate. In praise of these goodly citizens who use their bodies, minds and reputations as buttresses against all the unseemly pillaging and ripping-off, we give you an excerpt from Monty Python's tale of Camelot:

Brave Sir Robin ran away.
Bravely ran away, away!
When danger reared its ugly head,
He bravely turned his tail and fled.
Yes, brave Sir Robin turned about
And gallantly he chickened out.
Bravely taking to his feet
He beat a very brave retreat,
Bravest of the brave, Sir Robin!

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Labour's fairness pledge for consumers

Labour reinvent the wheel in the name of consumer rights

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The law that makes it quite legal to rip off 50% of Britons

The rotten secret hidden inside “The Consumer Protection from Unfair Trading Regulations”:

Jesus’ reference (Mathew 23:27) to certain individuals as “whited sepulchres” compared them to white painted tombs – pristine on the outside and full of rotting decay inside. Among the whitest of legislative sepulchres is “The Consumer Protection from Unfair Trading Regulations 2008”. 

The foulest corpse in this graveyard of ‘fair practice’ is the reference to “the average consumer”. The legislation states that a practice is only “unfair” if it brings detriment to the “average consumer”. It is this camel-sized loophole that has given the banking, television, energy, lottery, train, insurance, and charity industries and just about any other economic actor free range to rip chunks off Britons to the fullest extent of their appetites.

It is this legislation that allows Ripped-Off Britons to be entirely legally ripped off. Subtle references to the “average consumer” by well compensated lawyers have kept up company profits and executive bonuses at the expense of the less than average consumer. The fact is, half the population falls into this ‘less than average’ category.

Is it an indictment of us Britons that half the population of the UK has a lower than average IQ?  Are schools failing because half of students have less than average literacy for their ages? And that half the population is less than average height? And that half of everything and everyone is less than average in just about every way? Because, that is what “average” means.  It broadly means the middle value, from which half are above and half below.  (***Mathematical pedants, please see note at the bottom of this post).

With “The Consumer Protection from Unfair Trading Regulations 2008” British legislators declared open season on half the population of Britain! An invitation few successful British corporations hesitate to pitilessly accept.

Defining the “average consumer”, the act states

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From tobacco to banks to television - don't blame us, its all been a horrible misunderstanding.

People can fail to understand anything if they are paid enough to not understand it.

For decades the bosses of the tobacco industry denied that smoking harmed your health. They would roll up for British parliamentary and US Congressional committees, look the nation straight in the eye and claim that the link between smoking and lung cancer was unproved. The nation would pour scorn over these men for their evident stupidity. The chief tobacco pushers, careless of their fellow citizens' opinion of them, would pocket their generous pay and allowances, and smugly go shopping under cover of this smog of their apparent ignorance.

The tobacco industry managed to fail to understand a tsunami of evidence building since the 1950's. In 1956 the American Cancer Society stated

"The sum total of scientific evidence establishes beyond reasonable doubt that cigarette smoking is a causative factor in the rapidly increasing incidence of human epidermoid carcinoma of the lung and that smoking of tobacco, particularly in the form of cigarettes, is an important health hazard."

35 years later a spokeswoman for British American Tobacco showed that they had successfully managed to fail to understand this, claiming

Smoking has not been proven to be a cause of disease . . . smoking is merely a `risk marker' for diseases like lung cancer, in the same way that driving licences are `risk markers' for car accidents

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Wishing you a better new year than the last one.

Having just reached our fiftieth “Ripped-Off Britons” cartoon in the Guardian, and with the imminent end of 2010, we would like to wish our readers a better New Year than the last one. Why are we so mean-minded? Why not wish you all prosperity? Prosperity is a dubious thing to be wished in a Britain where prosperity has become a threat wielded by the well connected to fend off justice and regulation.

Britain’s treatment of BAE Systems, our country’s biggest remaining manufacturing company, perhaps provides the clearest example. An arms dealer whose defence against prosecution for corruption is not innocence, but loss of prosperity and jobs. A defence that continues to succeed to such a great extent that while some investigations are completely abandoned, even the recently ended legal case in the British High Court was not about whether and to what extent the perpetrator should be punished, but about whether and to what extent the victims should be punished. The Serious Fraud Office, having capped the fine and issued a blanket get-out-of-jail card to BAE over their mischievous, we dare not use the C word, sale of a military air-traffic control radar to a country with virtually no air-force had also agreed that any further fine should be paid by the people of Tanzania. In the form of a deduction from their £30m in compensation money. The SFO clutches at BAE’s straw promise that it has reformed. After all, it’s always worth clutching at straws if someone else is drowning – isn’t it? And BAE’s stench drifts in over the channel from distant lands. In Britain the company only brings prosperity and jobs.

The Financial Services Industry, on the other hand, craps on its own doorstep. For years we have known that we are ripped off by providers of financial services from every angle. As customers we are ripped off by rapacious charges for our borrowings and pitiful returns on our savings. As pension fund holders we are ripped off by the excessive extraction of profits to pay for ridiculous bonuses, leaving our pension funds with meagre compensation for the excessive charges and pitiful returns we suffered to create those profits. And we are comprehensively ripped-off as taxpayers, as has been seen by the massive fines imposed on the industry by the less compromised US authorities, most recently on Deutsche Bank, for aiding tax evasion, and threatened most recently on Ernst & Young for aiding and abetting the ‘Repo 105’ tactics of big banks to hide their swingeing debts culminating in the Credit Crisis.

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