Betrayal of long-term savers
So farewell to insurer Friends Provident. Quaker founders who formed the company 177 years ago to provide succour to families facing hardship would hardly welcome the company's fate.
It is being gobbled up by Resolution, a Guernsey-based entity, with no track record of care for policyholders.
Many of these concerns were raised from the floor of the extraordinary general meeting at the Mermaid Centre in Blackfriars but to no avail.
There were crocodile tears from chairman Sir Adrian Montague who insisted that Friends, as the smallest listed life insurer, would have struggled alone.
But as we have learnt from the recent financial panic, size means nothing when it comes to financial safety as Royal Bank of Scotland could testify.
Some of the investors, including the 740,000 policyholders with demutualisation shares, may think themselves lucky to have found a buyer in current circumstances. But there is reason to be wary of the new owners. Clive Cowdery and his Resolution team may present themselves as benevolent. However, the record suggests that they are in for quick profits and place their own interests above those of policyholders.
All one has to do is to look at the way in which Resolution sold off its previous collection of zombie life companies in a highly leveraged deal to a businessman who built his reputation selling pizzas.
Not surprisingly the buyer, Hugh Osmond's Pearl, found it could not afford to fund the acquisition during the market disruption of the last year and it was sold off to another opaque vehicle Liberty.
The idea that the life savings of loyal policyholders can be sold on so many times - as if they are junk at a car boot sale - is anathema.
No doubt Friends Provident chief executive Trevor Matthews, the plucky Australian who will now be working for Resolution, is well meaning and thinks he can turn the enterprise into a major player by picking up discarded financial assets.
But the record of old Resolution makes it clear that the interests of policyholders is the last thing on its mind. Cowdery and his backers are financial engineers.
As a whole the Financial Services Authority has done better with the insurers than with other financial groups. Its stress-testing of Standard Life, before it came to the market, was exemplary.
In the case of Resolution 1, Pearl and now Resolution redux, the FSA has failed miserably in ensuring policyholders - many of whom have tied up their savings for decades - have a stable future.
Cash is king
No-one can accuse the Financial Services Authority of rushing into the new liquidity requirements it intends to impose on large financial institutions. Senior Bank of England officials were talking about the lack of cash cushions in Britain's financial sector long before the credit crunch hit in August 2007.
Unfortunately no-one, including colleagues in the broken three-legged regulatory regime, was listening.
The Bank, for its part, felt it lacked the authority to tell the FSA how to do its job properly. Now the City watchdog is first among the global banking regulators to adopt more robust cash requirements.
It will be costly for the banks, gobbling up £2.2bn a year. But this is a small price to pay to have a sector which has enough liquid resources to meet its obligations without toppling over at the first sign of trouble.
It would be best if every financial centre were to adopt the same rules so as to prevent arbitrage and stop UK-based enterprises fleeing overseas. So, hopefully, the new global Financial Stability Board will eventually come up with similar proposals. But this should not be allowed to delay action. Far better for Britain to have the highest standards (a tough regime did no harm to Spain) than find itself in a position where it has to spend another trillion pounds on bailing out a lightly regulated system.
Tax breaks
George Osborne deserves a pat on the back for his plans to encourage small businesses to take on new staff. The tax system, through breaks on national insurance, is a far better way of encouraging enterprise than handing the money to government.
Osborne and the Tories need to be even bolder. Clearly, this is not the best of times for offering tax relief. However, in the same way as tax incentives can work miracles at the lower end of the food chain, by encouraging small firms to take on new people, it also works at the top end too, making sure we keep our most skilled scientists, engineers and the like in Britain.
That is why the Tories should have no truck with Labour's 50% new top rate of income tax.
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