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If the UK retail financial services sector is to seize the opportunities which will emerge in the future, it will be necessary to restore consumer confidence in the market. This paper argues that this will only be achieved through a radical transformation in the nature of regulatory compliance. The roots of the current consumer crisis of confidence are exposed by retracing the recent history of the sector; particular consideration is given to how the sector has responded to the changing political, economic and regulatory conditions of the post‐War era. It is possible to characterise the sector prior to the 1980s as somewhat anti‐competitive and lacking in innovation. Changes during the 1980s led to highly favourable business conditions, without stringent regulation, making it easy and profitable for the sector to continue to be short term in outlook without considering the longer‐term consequences for consumer confidence. Not surprisingly, the drive for short‐term profits led to the exploitation of many consumers and the subsequent scandals have reduced general confidence in the sector and also resulted in a regulatory backlash. Demographic changes and an emerging political consensus on a reduction in state welfare provision mean that the future business environmnent is potentially very promising. However, if the sector and its constituent organisations do not evolve to regain the trust of consumers and satisfy the demands of their regulators they will face severe competition from outside competitors and an even more hostile regulatory environment. Many of the organisations in the sector will need a complete overhaul in their attitudes to compliance if they are to succeed. Current approaches to developing internal compliance cultures may not be enough but emerging technology may soon provide a revolutionary new approach.

This paper considers the principles underpinning the proposals for a comparative information scheme for personal financial services products. In October 1999 the Financial Services Authority (FSA) issued Consultation Paper 28: ‘Comparative Information for Financial Services’ which outlines the preliminary work carried out by the FSA and its consultants in this area. The scheme has some similarities to the league tables found in the education sector and it is likely that, if implemented, the proposed scheme will become known as the ‘Finan‐cial Services League Tables’. The consultation paper identifies specific outcomes which the FSA states are its policy objectives in this area. These objectives are in the areas of consumer knowledge and competition. This paper considers the rationale for the proposed scheme and looks at its potential benefits and problems. To do this it draws on both the FSA's Consultation Paper and the established body of research int the effectiveness of performance measurement and league tables. The paper considers the issue that in order to be worthwhile a performance measurement system must generate a net benefit. Specifically, the costs of setting up and maintaining the system plus the imperfections in the information generated by the system must be outweighed by the value of the information to its users. The costs of setting up and administering a system for financial services league tables can be quantified. The potential both for imperfections in the information generated and in the way in which that information is used are not so easily quantified, however, and require careful analysis. This paper concentrates on providing analysis of these potential imperfections. It concludes by discussing whether these potential problem areas are of sufficient significance to undermine the purpose and value of the proposed league table scheme.

This paper has the objective of reflecting on the role of non‐executive directors (NEDs) in the corporate governance process. The paper reviews the role of NEDs both from an academic perspective and from the perspective of the lead author’s practical experience of being (having been) a chairman, a chief executive and a NED on the boards of private and public companies. In addition to taking an overview of the main issues involved the paper comments on the specific issues raised in the Department of Trade and Industry (DTI) review of the role and effectiveness on NEDs by Derek Higgs. Finally, the paper offers conclusions and recommendations for improving the effectiveness of NEDs.

This paper examines the potential effects of the Internet and e‐commerce on money laundering activity. Money laundering is a continuing problem both for regulators who are seeking to maintain trust and confidence in the financial system and the investigating authorities who are charged with enforcing the law. There have been a number of developments in recent years both in the detailed regulations and the laws designed to prevent and deter money laundering. There has been an ongoing battle of ideas and innovation between money launderers and the regulators and investigating authorities. To date the authorities have been able to keep up with developments by developing and refining the regulations. With the emergence of the Internet and e‐commerce, however, new opportunities and techniques will be opened up to money launderers. This will present a whole new set of challenges and problems to the authorities. This paper considers these challenges and problems.

This paper examines the Competition Commission report on the provision of small and medium‐sized enterprise (SME) banking services in the UK. The examination will centre on the perceived clash between the ‘remedies’ proposed by the Competition Commission and the present forms of lending decision making, a key function in business banking. It is concluded that the Competition Commission assessment of the provision of banking services by clearing banks to small firms, directs scant attention as to how banking services are ‘manufactured’ or banks actually make decisions and operate in practice.