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Party conferences 2008

As usual, ACCA held a range of events and meetings at the three political party conferences this year, including a joint fringe event with think tank Politeia at the Conservatives, and a private breakfast with Kitty Ussher MP, Economic Secretary to the Treasury at Labour.

A short note of the two key events follows below. If you would like more information on any of this, please contact Veena.Hudson@accaglobal.com

Labour Party conference, Manchester

ACCA's breakfast at Labour Conference was very successful, with a wide-ranging debate on some interesting issues surrounding the credit crunch. Attendees at the breakfast included representatives from the BBA, FSA, and Engage Mutual Assurance. Steve Priddy, Director of Technical and Policy at ACCA, introduced ACCA's new paper 'Climbing out of the Credit Crunch', which formed the basis of the discussion with the Minister.

The top line points to come out of the event were:

• Dysfunctional corporate Boards - in particular the fact that the stability of the traditional 'Board of Directors' has been eroded while following well intentioned governance principles (the separation of the Chief Executive from Chairman; up to half of the Board being composed of non executive directors etc.)
• The role of independent remuneration advisers needs to be examined more closely and the claims for what they claim to be standard practice in remuneration design
• We need to explore 'non US/UK' corporate governance models, looking internationally for better ideas - or even at cooperative or mutual models where a great deal has been learned and shared over recent years
• We need to make the investment banking products at the heart of the current crisis less complex.  This needs to be accompanied by an unbundling of the complexity of international accounting standards which seek to represent the transactions in those products.
• The balance of power in the financial services industry has now moved toward the taxpayer, who will increasingly be alongside the shareholder - a new form of accountability is emerging
• There may be a renaissance of the mutuals as part of the need to encourage people to save again

Conservative Party conference, Birmingham

Philip Hammond MP, Shadow Chief Secretary to the Treasury, and Irwin Steltzer, economist, director of Hudson Institute's Center for Economic Policy and business columnist for the Sunday Times, spoke at ACCA's fringe event which was entitled 'Credit crunch or failed policy'. President Richard Aitken Davies spoke for ACCA. The event was well attended and sparked an interesting discussion with members of the audience.

The main points raised in the meeting were:

• The 'credit crunch' situation in the medium-term may well be more grave in the UK than in the US . There have been major failures of policy and regulation on both sides of the Atlantic and the regulatory environment must respond. However, while there are regulatory lessons to be learnt, we need to avoid knee-jerk reactions, particularly in over-regulating the US . Irwin Steltzer said that we need to avoid heavy handed regulation in favour of regulation aimed at making markets work better. He spoke of a need to get incentives right, setting markets on the right path, and then getting out of the way. He added that setting up any SME in the UK is daunting, saying that what is needed is sensible regulation and low taxes to make it easier to have any entrepreneurial society.
• The importance of oversight of credit conditions, was stressed - nobody is overseeing the creation of credit and the quality of debt. We need to get a handle on the credit cycle, saying that there should be a separate focus on credit creation in the system as a whole and that there needs to be better transparency regarding the role of credit ratings agencies.
• The UK economy may rely too heavily on factors including the housing market, financial services, public sector spending, and migrant workers.
• Richard Aitken Davies told the meeting that the main cause of the crisis was a catastrophic failure of corporate governance and that risk management needs to be upgraded in banks. He went on to say that the accounting profession needs to re-examine its models, and added that senior people need to be held accountable for the credit crisis as they were for Enron, in order to send a message.
• The fringe was followed by a private dinner attended by front bench MPs and journalists, at which the subject was discussed further.

Related photographs

      
(click on each photograph to see a bigger version)

Photo 1: Andy Love MP introducing ACCA's paper Climbing out of the Credit Crunch
Photo 2: Richard Aitken Davies addressing a meeting at Conservative Party Conference
Photo 3: Steve Priddy and the Minister, Kitty Ussher MP

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