“We are committed to leading the necessary changes to help fight online scammers,” trumpeted Google’s UK managing director, Ronan Harris, this week, as if the tech giant were somehow a pioneer of a crackdown on online financial fraud and adverts offering “bonds” with implausibly high rates of interest.
The reality is that Google’s harder approach has taken an age to appear. It was 18 months ago that the frustration of Andrew Bailey, then the chief executive of the FCA, boiled over. He called for “more assistance from the big internet service companies, particularly Google” on taking down obviously dodgy adverts quickly. If a bank or a regulated financial institution had received such a public shaming, immediate action would be expected.
Even last autumn, however, Charles Randell, the chairman of the FCA, was still trying to embarrass Google. It was “frankly absurd”, he said, that the chief financial regulator was “paying hundreds of thousands of pounds to Google to warn consumers against investment advertisements from which Google is already receiving millions in revenue”.
That absurdity, let’s hope, will now stop, or be substantially reduced. What, though, if Google’s new policy to “help” the fight comes up short?
Note the key line in the FCA’s response to the company’s “positive” move: investment fraud caused by online advertising should be covered by the online safety bill due to go before parliament this year. In other words, don’t rely on voluntary measures; put a legal responsibility on Google and social media platforms to protect users.
As things stands, investment fraud has escaped the scope of proposed reforms because the bill is concerned with user-generated content, such as “catfishing” identity scams, rather than paid adverts. You’ll struggle to find a serious financial organisation that thinks such a limited scope is a good idea. About 17 organisations – from Which? to the City of London police – have been arguing for months that tech firms should have a legal responsibility to prevent fraudulent adverts appearing. The Treasury select committee last week described “a missed opportunity”.
The concern is widely felt because dramatic talk about “an epidemic” on online fraud is not far off the mark. Action Fraud calculates that UK savers were cheated out of £1.7bn last year, with the activity increasingly happening online. Google’s belated expression of good intentions is not enough. The bill needs amending.
Andy Haldane’s inflation warnings need heeding
Andy Haldane, the Bank of England’s outgoing chief economist, was right on two scores in his farewell speech on Wednesday. First, in his knockabout description of the typical City audience at a Mansion House banquet – “about as diverse a set of white, male, middle-aged, slightly pissed financiers as it is possible to assemble”. Second, in trying to generate a debate about the risks of rising inflation, where the lack of diversity – in opinion – is also glaring.
Haldane has been the sole outlier on the Bank’s monetary policy committee in recent months in voting for (slightly) tighter policy. The refrain from elsewhere has been uniform: rising prices were inevitable as the economy bounces back from lockdown, but they will be “transitory” and will disappear next year. That view may prove correct, but it smacks too much of complacency.
Haldane’s position is that inflation will be “nearer 4% than 3%” by the end of year, which is a notch above the Bank’s current forecast. Among other factors, he points to “leakages from the savings lake”, as he put it, meaning involuntary savings accumulated during lockdown – £200bn for UK households and £100bn for UK companies. Yes, that force may be being underestimated. At very least, it’s something to debate.
There’s little fretting elsewhere within the Bank about the risk of temporary price factors morphing into permanent ones. Or not that outsiders can tell from the official communications. Instead, we are in the strange position where financial markets, as judged by interest rate expectations, look more worried than the policymakers. It ought to be the other way around.
Crucial detail is missing in NS&I’s green bonds
“Make a difference with green savings bonds,” implores NS&I, doing its bit for the chancellor’s “green financing framework”. So are these government-backed green bonds for the punters a flyer?
It depends entirely on the interest rate, which NS&I hasn’t yet revealed, even though the chancellor first flagged this initiative in his budget in March. Why does the government insist on announcing everything five times before it gets to the point?