100 days to go

27/01/2015

Charlie Ansdell

Today marks 100 days until the general election – arguably the hardest to call in a generation. But what will this mean for communications professionals in the run up to, and after, the election?

Apolitical, apolitical, apolitical

While firms like Goldman Sachs have already pinned their mast to one party, it’s not something we’d necessarily advise.  There is the old adage of “always backing the winner”.  In such a tight election, that’s going to be tough to do.

Companies should be seen to be apolitical – financial services reform is still an agenda issue for most political parties -and riling any party in campaign mood is unwise.  There’s a significant risk of financial institutions – and particularly banks – becoming political footballs.

While many companies may want to keep their head below the parapet, that doesn’t mean they shouldn’t ensure their voice is heard.  Companies should carefully craft their public responses, and keep engaging politicians on a cross party basis.

Don’t forget about regulation

While the winning party may be hard to call, arguably whoever ends up in number 10 will be limited in how much they can really change.  A significant debt and deficit overhang, coupled with existing spending commitments and the scrutiny of capital markets, makes radical change unlikely.

Arguably the greater focus for financial services communicators should be on ensuring their views are represented in consultations for a raft of potential regulation–both at a national, European and global level.

Global regulators are still working out how to effectively manage systemic risk and "too big to fail" institutions.  Proposed reforms could radically impact financial services companies– increased capital and liquidity requirements, special resolution mechanisms in crises, stability fees, caps on concentration and the separation of retail and investment banking.

As we saw in 2014, significant changes on product regulations – such as the removal of obligatory annuity purchase – can materially impact companies.  With “baby boomer” pensioners the largest demographic voting block, further pension promises may also threaten financial institutions.

When regulation and politics meet

Sanctions may be an issue, as central banks seek to recoup the costs of the financial crisis, and politicians seek to distance themselves from claims of cronyism with financial institutions.

Bonus pay season, so close to a general election, may also provide a great degree of scrutiny – especially in the context of bonus caps and remuneration reform.

Finally, ongoing regulatory investigations into former sales practices and sector competition will present challenges for communicators – a factor that may be exacerbated by a feverish pre-election political environment.

Market uncertainty

One final important factor for banks, wealth managers and asset managers is market uncertainty.  We have seen from yesterday’s Greek election results the impact of political uncertainty on currency and market volatility.

If political uncertainty translates into market volatility, this may present the greatest communications challenge of all in the closest general election in a generation.