The UK's Financial Services Authority (FSA) is calling for a clampdown on commissions paid for selling insurance, loans and bank accounts. Banks are rewarding sales staff in ways that encourage mis-selling of financial products and new rules may be needed to protect consumers, the FSA has warned. The review of incentives at 22 financial groups found the failings of one were so serious that it has been referred to the FSA’s enforcement division. Dysfunctional incentive schemes were the cause of most, if not all, of the recent mis-selling scandals such as payment protection insurance. (The Times*, BBC)
Formal EC inquiry into Gazprom
The European Commission has opened a formal investigation into suspected market abuses by Gazprom, which supplies roughly a quarter of the gas the EU region consumes. The commission’s antitrust authorities are focussing specifically on whether Gazprom used its dominant position in the EU gas market to thwart competitors and push up prices in central and eastern Europe. EU officials’ concerns were raised after natural gas prices increased in many parts of central and eastern Europe during the economic downturn – a time when the slowdown in industrial activity would typically lead to a decline in prices. The investigation could potentially result in heavy fines or require Gazprom to overhaul its business practices across a wide area of the EU. (Financial Times*, BBC)
BP accused of gross negligence
The United States Justice Department is ramping up its rhetoric against BP for the 2010 oil spill in the Gulf of Mexico, describing in new court papers examples of what it calls "gross negligence and wilful misconduct." The court filing is the sharpest position yet taken by the US government as it seeks to hold the British oil giant largely responsible for the largest oil spill in US history. A gross negligence finding could nearly quadruple the civil damages owed by BP under the Clean Water Act to $21 billion (£13 billion). (Reuters, Financial Times*, BBC)
Research & Policy
Democratic Platform commits to climate justice
The United States Democrats will this week adopt an official platform that identifies global climate change as "one of the biggest threats of this generation" and pledges to take concerted action to curb greenhouse gas emissions both domestically and internationally. In a document that could hardly be more different in its approach to climate change than the Republican Platform adopted last week, the Democrats are expected to endorse a wide-ranging commitment to use "regulation and market solutions" to tackle US emissions. (Business Green, Sustainable Brands)
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