At his end of campaign party at the Cafe Royal this week, Sir Rocco
Forte bravely insisted that Forte had won the argument if not the
battle. But the argument did not convince the people that really
Above all, this bid revealed the power wielded by institutional
investors. But it once again highlighted the crucial role played by
financial PR and investor relations practitioners in influencing the
This demonstration of ‘PR power’ comes at a time when there are renewed
calls for the regulation of financial communication. But it is a
famously difficult task. Even an apparently simple thing - like defining
price sensitive information - is tricky. It depends as much on the
circumstances as the content of the message. And even then the ‘price
sensitivity’ of some information may only become clear with hindsight.
Nor are the rules, such as they are, easy to police. In the absence of
any proper regulatory framework, the City authorities simply burn the
occasional miscreant as an example to others. Building up a body of
‘case law’ in this way might help establish clearer definitions of
acceptable practice. But it is still deeply unsatisfactory. For one
thing, the penalties amount to little more than a ticking off -
although, given the muddiness of the waters, it would be difficult to
argue for harsher measures.
But there must be an attempt made to introduce a regulatory framework
which will make it easier to prevent deliberate, rather than accidental
abuses. Statutory regulation would be unwieldy, and possibly
unenforceable. A form of self-regulation must be the way forward,
although none of the existing industry bodies seem ideally positioned to
make it work.
But it should be possible, with the backing of the City authorities, to
set up a register of financial PR and IR advisers. Banks, brokers and
fund managers - and clients - would then be encouraged not to deal with
consultancies which are not registered.
The members of such a register would have to abide by a code of
practice, vigorously policed by a commission of their peers, and
representatives of key City bodies. Its status would be somewhat like
the Press Complaints Commission, and its ultimate sanction would be
removal from the register.
Trying to regulate financial communication is like trying to scoop water
in a sieve. But try we must. For one thing is certain, the current
situation is intolerable. The absence of clear rules and enforcement is
to no one’s advantage, and leaves financial PR and IR practitioners
dangling in the wind.