Sustainable Finance Lab – Financial professionals, caretaker of the customer?
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- Published on Monday, 10 October 2011 23:53
- Written by Bram Meulenbeld
This evening I visited a gathering of the Sustainable Finance Lab. The subject of this specific gathering was as explained in the title. I was amazed about what was being presented by the people holding the introductory talks. All of whom are supposed to be professors at different Dutch universities. The most sensible thing I heard was at the beginning saying that most consumers behave on bounded rationality. From thereon my belief in our educational system which wasn't already very high plunged a little further.
One of the professors gave the audience four theses to which they replied whether they agreed on the specific action or not. The first was whether it's morally justified to sell a holiday insurance to an old lady who never leaves town and who just came to withdraw some money. The second was whether it was morally justified to sell short on Greek government bonds. The third was whether we should agree on ABN AMRO taking over Deutsche Bank. The fourth was whether to agree on Deutsche Bank taking over ABN AMRO. From the answers this clever man could make a distinction between whether you are a supporter of the free market or whether you are a supporter of a regulated market. Since I didn't raise my hand on any of the thesis (not because I had a strong opinion on any of the thesis but because they were impossible to answer with a simple yes or no with so little information) I was apparently an extreme supporter of the free market.
Is it morally justified to sell a holiday insurance to an old woman who never leaves town and just comes to the bank to withdraw money?
Is it morally justified to sell a holiday insurance to anyone at all? Is it more or less morally justified to sell a holiday insurance to a young woman? Do bank employees know travel habits of all their customers? Don't consumers have any kind of responsibility? How on earth am I supposed to judge the morality of other human beings at all?
Same goes for someone who bought put options on Greek government bonds. In my opinion the problem lies with the latter three words instead of someone who traded in them. What is Greek or Greece or a Greek? It's just a human concept. I can explain here and make this very long, but I think my friends at http://www.ardvanderlinden.com have already explained it very nicely. Who offered those bonds? Why did people buy call options in the first place? Why do governments offer bonds at all?
Would you agree if ABN AMRO would buy Deutsche Bank once it has been returned to the stock market and 'recreased' it's size to it's original size? Do I have to have an opinion on this? What size? What bank wants to buy what bank? Is it different with any other bank(s)? Does size matter with take-overs? How the hell am I supposed to think about an unlikely event with an even more unsure outcome?
So, I didn't raise my hand and from this I am clearly a supporter of the free market, whatever that is, and by some logical deduction I couldn't follow, I also support bonusses...
Another professor answered, in reply to a question in the room, that she also didn't like negative outcomes from researches but that she always continues searching for positive outcomes. Are negative outcomes bad? She for instance found out that female investors made 65% better results before the crisis. What are better results? We're talking about investors and I am a man, so I suspect she means net profit (of course it can also be a completely different kind of better result) but is more profit better? Why this focus on gender, she made a few other differences between gender as well, anyway?
To be frank, I didn't understand why the series about sustainable finance started from a customer perspective. It seems to me that you have first have to discuss from a holistic point of view, like what the role of a financial institution actually should be. It seems that this topics will be covered, so I am looking forward to the next conference.