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Sir David Howard, former Lord Mayor of London and chairman of stockbrokers Charles Stanley, today called for small brokers to be regulated more lightly than the big investment banks.
He said the credit crunch and ensuing global financial meltdown had seen private client brokers, like his firm, punished for crimes committed completely at the other end of the financial markets.
“There has been a stark difference between the heavy regulation of retail business, which has posed little or no systemic risk, and the thinner regulation of over-extended wholesale businesses, which are the immediate cause of the systemic collapse,” Howard said.
“We share the view that, in all our interests, controls must be tightened. But this needs to be proportionate and rather more accurately focused.”
He said the introduction of Mifid, the European directive on financial markets, almost two years ago had cost Charles Stanley over £1 million.
Howard also blamed the previous American administration for its failure to deal with Wall Street's problems and the US economic slump.
“The blunders of the Bush administration had plunged the world into a crisis from which it has yet to emerge,” he said.
“By and large the short-term problems which that has created can, I am sure, be alleviated and possibly resolved by the sweeping measures being taken both in Britain and elsewhere.
“But the deeper causes of the crisis, the global imbalances between producing and consuming nations, call for a more profound solution which still evades us.”
Charles Stanley's profits fell 24% to £9.3 million on revenues 4% lower at £102 million in the year to end-March.
Funds under management fell from £11 billion to £9 billion over the year which is less than the fall in the stock market. Since the year end those funds are up by another £1 billion.
That might reflect Howard's cautious optimism today: “The stock market has held up very well in the circumstances, and there are increasing signs of recovery.
“But it is too early to say if this is a short-lived bounce or if the gathering momentum is the beginning of a cyclical upturn. “I veer towards the latter.”
