We were discussing rules and regulations recently, and how the rulebook screws up all meaning and intention of the things they are trying to enforce.
It’s not the regulators fault, but the fault of too many cooks spoiling the broth.
Take the examples we debated.
The US constitution has 4,400 words. It is the oldest and shortest written Constitution of any major government in the world.
The accession treaty for new nations to the European Union has near 100 pages and 50,000 words.
When Paul Volcker called for new rules to curb risk-taking by banks, he wrote his proposal in a three-page letter to the president.
When the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule had been enlarged to 10 pages.
When the final regulations for the Volcker Rule were released for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.
We always ask: who has the time to read such information?
Just the lawyers, consultants and auditors who charge the fees to the bank to interpret such a quagmire?
Me, myself, I, will only ever read the headline, not the detail.
What is the headline?
This is a core discussion right now in banking, and is well illustrated by the regulators interference in the Co-operative Bank’s refinancing.
Take this story in yesterday’s paper:
Co-operative Bank bondholders will vote next week on a complex rescue deal that would see them forfeit part of their investment rather than risk ending up with nothing. But bond expert Mark Taber, who represents 2,500 bondholders, said both his efforts and those of the bank to provide clear information had been scuppered by the Financial Conduct Authority (FCA).
“We tried to convince the FCA to let us produce a one-page document explaining it all, but we’re not allowed to do that. Because of the FCA and their regulation, they require that people are given a 700-page prospectus. There’s so little you can actually say to people, because the FCA is hung up on its rulebook. I find it infuriating when you’re trying to help people and you’re told you could be committing a crime by doing it.”
New Co-op chief executive Niall Booker is understood to have written in vain to FCA boss Martin Wheatley to ask for special permission to simplify communiques to investors. The bank also wanted to hold Town Hall meetings to help confused bondholders, but was told this would fall foul of rules on providing financial advice.
This issue is at the core of financial services and society, as most people can only absorb simple words.
The greatest speeches of all time: “I have a dream”, “we shall fight on the beaches”, “ask not what your country can do for you”, are all based on Plain English, but what is Plain English?
Plain English has its roots in the formation of English, which was to translate between various inhabitants of Briton in the 10th century. We had French, German, Scandinavian, Celtic and native Britons intermingling and they needed a common language.
That language was formed of one and two syllable words that could be interchanged to enable all of these nations to communicate. That is why English has so many words for the same thing - aim, accomplish, achieve, attain, pursue, reach – and why words have ambiguities and synonyms and need a thesaurus to work them out.
Then there are the difficult words that cause complexity and confusion. Most of these are three or more syllable words, and illustrate more of the context of a discussion but for story-telling rather than Plain English purpose.
That is why you don’t hear these difficult words in great speeches, and is why Martin Luther King and Winston Churchill relied on the most basic English for their speeches.
As did Abraham Lincoln.
Abraham Lincoln’s Gettysburg Address, delivered 150 years ago, has 272 words. The main Gettysburg speech was not meant to be by Abraham Lincoln, but was delivered by fellow politician Edward Everett. Everett delivered a 13,607-word talk that lasted two hours before Abraham Lincoln stood up for two minutes to say his 272 words.
No-one quotes or remembers any of Everett’s speech though. Lincoln’s speech lasted two minutes and everyone remembers it. As Dr John R Hale, Director of Liberal Studies at the University of Louisville in Kentucky notes, “it took him several days to perfect the very short, final version”.
The regulators and banks could learn a lot from these simple principles, and it is why my favourite quote of all time is:
“If I had more time,
I would have written a shorter letter”
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...