Media organisations have expressed concern that proposed restrictions on financial reporting will lead consumers to go to ‘unregulated’ and less-trusted sources such as blogs.
In a submission to the Treasury Committee’s investigation on the role of the media in the banking crisis, News International described the imposition of restrictions as stepping into “dangerous territory”.
It said: “Regulate the financial press more aggressively and you will simply increase the authority of comparatively unregulated sites, such as financial bulletin boards and chatrooms, which would be disastrous for the investing public.”
The Treasury Committee is examining “the role of the media in financial stability and whether journalists should operate under any form of reporting restrictions during banking crises”.
Incisive Media – which provides specialised business news – said: “Who would [the government] rather became the trusted source of information on a crisis – Robert Peston or whizzyboy36 writing on a blog hosted on a web server in Uzbekistan?”
News International said that the restrictions on what the mainstream media could cover would lead to public uncertainty and that “in the absence of information they will tend to assume the worst case scenario”.
The FT also carried this line in its submission to the Committee.
It said: “By making information available to all members of the public simultaneously, ie: greater transparency, the financial media actually act against the creation of false markets and contribute to the proper functioning of the financial system.”
The NUJ added that his would “do great harm” in preventing the public having the information they needed.
In the PPA’s submission, the group warned that the damaging effects of restrictions would be a “continuing stain” on the freedom of UK society.
Selected extracts from the media responses:
“By making information available to all members of the public simultaneously, ie: greater transparency, the financial media actually act against the creation of false markets and contribute to the proper functioning of the financial system.
“If there is concern regarding the quality or content of financial journalism in the UK, the government should more properly be assessing the degree of public disclosure required by financial institutions – including banks, private equity firms and hedge funds.
“We submit that focusing merely on the role of the media as opposed to addressing the overall sufficiency of disclosure obligations and public access to financial information misses the larger issue altogether.”
National Union of Journalists
“It is always vital that media have the right to inform the public of matters of serious concern. The notion that movements in financial markets have been consequent on media reports is mistaken and misconceived.
“If a bank collapses the day after a BBC economics reporter reports that it is in trouble, that is because the bank is in trouble, not because of the report.
“No restrictions on reporting during financial crises will bring any benefit, since the crisis will continue anyway, and will do great harm in preventing the public having the information about it that they need.”
“You â€¦ have to consider who would be exposed to such regulation and control. It would, inevitably, be mainstream broadcasters and publishers that, on the whole, tend to act responsibly and have a well developed sense of public duty, a duty that cuts both ways: when to publish and when not to publish.
“It is such an ill-thought out suggestion that the Treasury Select Committee would be well advised to drop it very quickly.
“Who would they rather became the trusted source of information on a crisis Robert Peston or whizzyboy36 writing on a blog hosted on a web server in Uzbekistan?”
“For investors to have confidence in the market, they need to be provided with accurate information which is widely disseminated, not restricted to a limited audience.
“[One] reason why reporting restrictions would be counter-productive is that the market hates uncertainty and in the absence of information will tend to assume the worst case scenario.”
Periodical Publishers Association
“The idea that restrictions might be suitable in a time of crisis is the sort of idea that typically emerges when there is a crisis. The damaging effects of such an idea being implemented would continue long after the crisis disappeared, and would be a continuing stain on the freedom of UK society.”
“The media as such has no role in safeguarding financial stability: the role of the media is simply to accurately report news and events.
“The media have not just the right but also the responsibility at times to act as the public’s watchdog and to sound the alarm. There is no regulatory gap to be filled.
“Poor leaders not only hate bad news, but they sometimes blame the deliverer.”
Scottish Daily Newspaper Society
“The SDNS totally and utterly rejects any notion that readers should be deprived of information on financial matters which might assist them in making perfectly rational decisions to secure their investments.”