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FSA media clampdown is ‘misguided’

The FSA’s clampdown on listed companies talking to the media “will only injure the market integrity they purport to protect”, four media groups have warned the regulator.

In a joint letter, the editors of the Financial Times, Thomson Reuters, The Times and The Guardian have expressed “profound concerns” about recommendations in the FSA’s September Market Watch newsletter.

The newsletter recommended that all non-media staff at listed firms should be banned altogether from responding to media enquiries, in a bid to crack down on the leaking of insider information.

But the editors’ letter suggests this is a “misguided response” which would damage rather than protect the interests of investors.

It says: “Properly functioning financial markets rely on the flow of accurate and timely information, available to all participants simultaneously. in the world of instant media, the pressure on journalists is to publish information ahead of anyone else. This information, in turn, is swiftly picked up by others. So the media, contrary to the assumptions underlying the recommendations, actually play a key role in protecting investors and other markets’ participant by inhibiting the creation of an unlevel and unfair market place due to the limited circulation of insider information.

“These proposals reflect a wilful misunderstanding of the relationship between the City and the press and will ultimately do more harm than benefit to the flow of reliable information. Regulated firms will find it much easier to hide behind bland press releases that conceal inconvenient corporate realities and there is a heightened risk that journalists will feel compelled to publish unconfirmed reports and rumours, increasing the flow of misinformation.”

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Media Manipulation

    Judge, Jury and Executioner with no recourse of accused to due legal process

    Not accountable for their own misgivings and mistakes

    Hmmmm

    I am living in the UK in 2010, not Germany in 1938 am I?

    For ****** sake government, get a grip on this un elected, un accountable unjust quango who have done more to destroy the UK savings industry and savings ratio than the minority of rip-off IFA’s ever have!

  2. Another instance of the FSA meddling in something of which it knows nothing.

  3. The FSA is a quasi judicial body that is unelected and unaccountable. the press is subjected to far more scrutiny than the FSA. The FSA stands above the law. The only challenge to its powers vests in a free press.

    The Universal Declaration of Human Rights states: “Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference, and impart information and ideas through any media regardless of frontiers”

  4. This is a prime example of abuse in public office, the purpose of which is to protect the F.S.A. from public opinion and to restrict free speech.

    The question is why do it now when the FSA is finished, or at least overdue for a new coat of paint.

    When the new ? regulators are on watch can they defend, on the basis ” Not me Guy, it was that lot from the FSA that did it”.

  5. I would urge the FSA not to go down the route of curbing media comment.this type of censorship has been tried by various policital groups over the years and has only made the situation worse.

    We must have a free open press with comments from within the entire industry.We live in a democracy and must keep our industry open to comment from all sources
    Mike Fitzgerald
    The EMBA Group Ltd

  6. “Properly functioning financial markets rely on the flow of accurate and timely information, available to all participants simultaneously. in the world of instant media, the pressure on journalists is to publish information ahead of anyone else”

    The problem, my dear misguided Editors, is that your information is not necessarily always accurate or timely and bad news usually given far more column inches that the good news. Not what I’d call a balanced view in my opinion but then that doesn’t seem to come into it. Balanced views are apparently not news even if timely and/or accurate

  7. Is it not time that all Government and Quangos became transparent and accountable.

    No more he/she did a wonderful job, their a juicy pay rise and golden goodbye, when infact they achieved nilch.

  8. Is it possible that the FSA are going for the Guinness Book of Records for the most dysfunctional, authoritarian public body on record. There is virtually nothing they have done that has had a beneficial impact on the markets – all these pronouncements are merely to create administration for administrators.
    The trouble with concentrating on administration is that the rest of life walks around it, and you end up with mega-financial problems, because the regulator is permanently looking in the wrong direction.

  9. But whistle-blowers are still fully approved of and indeed actively encouraged by the FSA, whether they’re “non-media staff” or not.

    So what this edict amounts to, in effect, is the FSA saying that anybody at any level in any business is obliged to tell it [the FSA] anything in which they consider it might be interested, but those very same people mustn’t talk to the media.

    As for hiding “behind bland press releases that conceal inconvenient corporate realities” ~ well, the FSA has Robin Gordon-Walker handling that end of things. What’s his salary, I wonder?

  10. Dear Anonymous,

    Just for once, I wish that people that work in financial services would think for a one second before passing comment on what the FSA were trying to do. I believe that the FSA have not been the greatest regulator and need to become a better regulator even if that means changing the name and the individuals.

    Let us look at the reasons why the FSA would like control individuals comments in the media particularly from listed companies.

    1. The effect on the markets with rumours spread about potential performance for non-performance of shares or managed funds e.g. insider trading or market manipulation. This has been rife over the last 10 years with the banning and potential conviction of two big market players.

    2. The media’s own fascination on single asset like property and the potential effects to the wider population. I for one would like to see greater regulation of the media particularly when concentrating so much attention on one asset class and the price of that asset. Programs like Under the Hammer and To Buy or Not to Buy are just a few examples of what I mean.

    3. Programs like Panorama that give a half-hour presentation on pensions and concentrate on one aspect e.g. charges, without giving a clear understanding of the reasons why people need to save for their retirement.

    These were just a few things I could think about when you have a totally unregulated media in respects to financial markets. Why is it that if I publish information in the media as an IFA it has to adhere to the FSA rules but newspapers and news programs can almost print what they like under freedom speech and so-called public interest. I am all for freedom of press as long as they act responsibly and it is clear that our media are NOT able to act responsibly and therefore in the area of financial services a degree of regulation is required.

    Just look at the level of media coverage that hyped the property market up before 2007 and the destructive media coverage that led to the banking collapse post-2007. If you were regulator, you want to regulate the media to stop this happening again. I for one would never want to see Robert Peston given the power to talk the market down with dramatic language and pictures in the background with a red line going down and a sinking house.

    I want to see the media act responsibly and if they have a story that is uncovering fraud or indeed bad practice and want those stories to be verified and checked before publication. I also want to see large fines put in place when the media get it wrong and for them to publicise with the same level of fanfare their retractions. We could also say that the media has done an awful lot of damage and increased savings gap in the UK, just like the FSA.

    With great power comes responsibility and the media has proven itself to be not responsible and therefore we need some simple rules that both the media and public can understand. This I would hope would stop the media sensationalising the financial stories to get ratings as it is so important to make sure that fact are being reported and not fiction

  11. in other words “shut it”
    You can’t have your say – very TCF

  12. This is a recommendation, repeat recommendation from the FSA and there can be no sanction of you decide not to follow it.

    Personally when I want advice (or recommendations) from the FSA regarding who in the media to talk to I shall ask.As we are not a listed company though I’m not sure any advice would be forthcoming.

    As for the “insider dealing”, my sources (who shall of course remain anonymous) tell me this seldom arises out of pure and simple employees chattering to the media but more old pals meeting at (say) the Old Boys reunion dinner or family members in the know passing the information on to sometimes distant relations; after all if you talk to the media and they publish it it is no longer “insider” information is it, as the editors’s letter suggests?

  13. Most of what comes out of the media is misguided. Most of what comes out of the Media is misguided.

    However if anyone listens to yhe inanne ramblings of P Herd then to draw them to a natural conclusion the most corrupt President of the USA would never have been caught. One R M Nixon.

    The saddest thing to emmerge in this country over the last 10 years is that the regulators of any industry do not serve the people that they presume or are mandated to protect, Nor do the Govt (Final Salary Pension Schemes and Equitable Life to name a couple – the IRAQ war to name one in particular) – the public, the consumer, the IFA, the man/woman in the street all feel that they can get a more effective form of Justice via the press.

    I am an IFA not a two bit hack Journo and frankly I take them for what they are, but in thier own misguided way they step in and partially fill a void that has been created by thoughtless and misguided regulation of nearly every sector of Life in this country and inept Govt. in frankley every sector of life.

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