The investment banking community has been criticised for their use of accounting devices to hide national debts; as well as for being motivated by tax avoidance.
The criticism levelled at the investment banking sector came from the FSA chairman, Adair Turner, during his final address at the last annual public meeting of the FSA, before it transforms into the twin-peaked Financial Conduct Authority and Prudential Regulation Authority later this year.
Mr Turner claimed during his speech that too much of what is described in the investment banking world as “creative” or “innovative” is not creative or innovative on behalf of the real economy.
He claimed that it is instead “devoted to tax structures which simply shift money from the generality of taxpayers to the financial sector, to regulatory arbitrage which seeks to gain an improved regulatory treatment of unchanged economic structure or accounting devices which attempt to put a favourable gloss on the underlying situation of firms or their clients, for instance understating the country’s true level of debt.”
The comments from the FSA chairman, during his final speech, come on the back of the inter-bank rate-rigging scandal.
Rob Chedzoy specialises within providing tax planning advice, support and guidance to owner-managed businesses.