There is a saying that truth is hard to tell, sometimes it needs fiction to make it plausible. Last week saw the publication of a detective novel – written by one of the journalists who founded this magazine no less – which is set amid the ruins of a collapsed pension scheme.
The financial crisis has provided all the motives needed to drive a good murder mystery: greed, corporate reputations at stake, and the catastrophic loss of many people’s life savings. When you think about it, it is surprising that more actuaries, bankers – or financial journalists even – have not been bumped off, at least between the covers of some hard-boiled whodunnit.
Those in the industry might enjoy trying to guess what events or characters have provided the inspiration for the novel, although I am assured by the author, Teresa Hunter, all are entirely fictional.
But the book, Dead Money, also raises some serious points when it comes to financial crime and punishment.
When you look at the various financial scandals that have dogged us in recent years, few have provided such a satisfying ending.
Think of Equitable Life, Northern Rock, HSBC which mis-sold high risk bonds to the elderly through its NHFA arm, the split-cap trust debacle, or PPI mis-selling.
There have been countless reviews and regulatory “enforcement” action but there has been a conspicuous lack of individuals held to account for such significant financial failings. Typically it is shareholders who have paid the cost, not those in charge at the time.
This isn’t just revenge for revenge’s sake. Surely if the directors, auditors, actuaries and senior staff at banks, insurance companies or fund managers knew they could be held personally responsible for management failures and widespread consumer loss, then this could prove to be a more active deterrent in future.
It is true, there has been some censure. Those at the top might be no longer be authorised to hold a similar position at an FSA-registered firm, and many have lost their well-paid jobs – along with far more further down the corporate food chain.
But as a rule we don’t see such individuals stripped of bonuses, share options or generous pensions earned while they presided over such scandals, let alone facing civil or criminal charges.
It is not surprising that there is the widespread perception that not only are some companies too big to fail, but that the people that run them are too powerful to be held to account.
Regulators point out that such actions can be extremely difficult to pursue; the bigger the organisation the harder it can be to identify who exactly knew what, when, or who was involved in making the decisions that led to failure.
In addition, it can be difficult to differentiate between misguided investment decisions, which did not pay out, and a more reckless gamble with investors’ money. Both can lead to significant consumer detriment but those in charge may not have broken any regulatory or legal rules.
In the US there seem to be far tougher corporate governance laws, and the penalties are more severe. White collar crime is treated as a crime, rather than cause to be black-balled from the golf club. Just look at Enron.
It may be a while before “pensions noir” nestles between “Nordic” and “Tartan” noir on the crime shelves at Waterstones. But if the new regulator proves to be as similarly toothless as previous watchdogs, and financial scandals proliferate, expect to see more of this genre. Really, you don’t need to make it up.
Emma Simon is deputy personal finance editor at the Telegraph Media Group