Viewpoint: Brexit: The Result of Zero Political Accountability

By Richard Steggall, Urban FT

The recent decision of U.K. voters to leave the EU demonstrates how easy it is for a society to be misled into making a regrettable decision because it didn’t have access to the reasonable information it needed to make an informed decision. During the run-up to the June 23 Brexit referendum, voters were fed a continuous stream of distorted information that preyed on their emotions and avoided the pesky details of the economic, social and political fallout of a pro-Brexit decision. The voters’ decision was only as good as the information provided to them, and the result, I fear, leaves the U.K. divided, marginalized and all the poorer for acting out on its frustrations.

And for this, I place the blame squarely at the feet of politicians who fanned the flames of discontent—particularly among alienated English men and women (older, less educated and less urban)—who feel their jobs and culture have been usurped as a result of the free flow of peoples within the EU. Yes, others bear culpability—like the 28 percent of eligible voters who didn’t vote, the press for focusing on headlines and emotions vs. education and substance, and schools that leave voters without the interest or tools to address difficult issues—but, at least in the Brexit matter, politicians deserve a special call out for their disservice.

But, what if—just what if—politicians were held to the same requirements of truthfulness and full disclosure required by law of the business community? In these populist times, it may seem foolhardy to hold up business as an example for politicians. Nevertheless, as businesspeople, we understand that it’s our legal responsibility to provide full and timely disclosure of material facts to our shareholders; provide complete and transparent communications to our customers, particularly consumers; and ensure we do not intentionally or unintentionally partake in any deceptive or misleading conduct. The terrible irony is these requirements on businesspeople are set into law by the politicians who, themselves, lack any similar set of rules or standards by which they campaign or even govern our nations.

The Politicizing of Politicians

Citizens of democracies—like the U.S., Canada, the U.K. and Australia—have the incredible privilege of the vote. And, from time to time we’re called on to exercise this privilege, either to elect an individual to office or to express our opinions on issues of the day. Where it gets messy is how we choose to vote is shaped largely by statements, claims and assertions by elected officials or candidates—in other words, politicians.

Politicians are elected to represent the diverse opinions, needs and welfare of their constituents and thoughtfully to consider and recommend the best way of processing an agenda that benefits those constituents. Herein lies the rub: The latter opens itself to politicizing issues and skewing debate based on parochial self-interest, including—for politicians—re-election.

It may not be the goal of politicians to mislead constituents by failing to disclose relevant information on particular matters, but, in reality, that’s exactly what politicians do. And, constituents have become so conditioned to being manipulated that this behavior, in politicians’ eyes, has become an acceptable practice—say anything (or hide anything) to get the outcome you want.

It’s clear that pro-Brexit politicians were guilty of just such manipulative behavior. And, now that reality has hit the fan, those politicians are backpedaling like crazy on their issue-defining promises and inferences. How many of the 17.4 million U.K. citizens who voted “Leave” would have done so if they could have looked ahead just a week in time?

• False Claim: More funding for the NHS. U.K. Independence Party’s Nigel Farage calls the campaign inference that the £350 million (US$456 million) a week that currently goes to the EU would be redirected to Britain’s National Health Service “a mistake.”
• False Claim: Lower net immigration. During a BBC radio interview, Leave campaigner Nigel Evans would only say that the U.K. would now be able to “control immigration.” He wouldn’t or couldn’t commit to the core promise of the Leave movement—that immigration would decrease significantly.
• False Claim: The economy will be fine. Pro-Brexiters derided the almost universal warnings (by the likes of International Monetary Fund) that a Leave vote would launch economic turmoil as “Project Fear.” Politicians don’t even have to backpedal on this one; the facts are doing it for them. Since the vote, the pound is down 12 percent against the U.S. dollar, businesses are announcing plans to relocate from the U.K. and U.K. economic growth forecasts have been slashed.

I dare say that if a businessperson had spoken so recklessly, he or she would soon be sitting in jail for false disclosure and failure to disclose relevant information. In the U.S., for example, the number of financial reporting and disclosure actions filed in FY 2015 more than doubled compared with the number in 2013. And, the SEC clearly is focused on bringing cases against individuals, like corporate officers, directors and auditors.

Politicians: Reform Thyselves

In the U.S., politicians have spent the best part of the last 10 years implementing new laws, like the Dodd-Frank Wall Street Reform and Consumer Protection Act, to ensure financial services businesses are honest, transparent and accountable. A significant aspect of Dodd-Frank is preventing predatory practices and ensuring consumers receive full and proper disclosures about matters that affect their finances. And, an already relatively compliant industry has upped its focus on giving consumers the tools to make informed decisions on personal financial matters.

In addition, the SEC, the various stock exchanges, and even the private, self-regulatory Financial Industry Regulatory Authority have countless rules requiring full, transparent and timely disclosure about all material matters that affect businesses. Their rules protect individuals and ensure every investor is fully aware of all information (good and bad) before he or she buys or sells stock. There is zero tolerance for incomplete or inaccurate reporting of facts, and breaches of these rules often result in hefty fines, disqualification from being a director, and, in some cases, time in an orange jumpsuit.

Why is it then that I—as a citizen of, actually, multiple democracies—cannot expect a similar level of responsibility from the politicians who affect so much of my life: the economic management of the country I live in, infrastructure, education, health, security and so much more? How different would the world be if politicians were held to the same standards as businesses, such as:

• Abiding by clear rules regarding full and frank disclosure of all relevant matters affecting constituents
• Incurring penalties for omitting relevant information because it doesn’t support their political persuasion or self-interest
• Providing well-considered and sound recommendations on how matters should be addressed

Of course, politicians, like business leaders, will have legitimate differences of opinion on matters and solutions, and these differences should be aired openly in public debate, with each side doing its best to persuade the majority that its position is the right one. And, we should demand that the press do its job, too—providing us with objective and balanced reporting on these debates, not the partisan coverage that positions propaganda as a fact. It’s time for the Fourth Estate to get back to its roots—being the ultimate reality check on government in all forms.

And, if we’re in the mood for contemplating such radical fairness, why shouldn’t the U.S. and the U.K. consider compulsory voting, as in my homeland Australia and 21 additional countries, as a matter of civic responsibility, like paying taxes and serving on juries? (In this age of near-universal Internet access, is there any legitimate reason not to implement compulsory voting?) As Jonathan Levine points out in “The Case for Compulsory Voting,” the system “can confer a high degree of political legitimacy because [it results] in high voter turnout.” With compulsory voting, the winning side represents the majority, not only the most politically motivated or the most disillusioned, including those who are influenced by well-construed and well-executed—but baseless—scare campaigns that incite emotion, while disregarding meaningful economic data.

Had the U.K. had compulsory voting, it’s clear that the Remain vote would have surpassed the Leave vote by a healthy margin.

Do as I Say, Not as I Do  

The Brexit outcome demonstrates how easy it is for 52 percent of a society to make a regrettable decision because it has been misinformed and mislead, without access to reasonable information to make an informed decision.

If society cannot rely on its political leaders to exhibit fair and honest conduct, including full and transparent disclosure, there can be little reasonable expectation that constituents, when asked to vote, can make informed decisions. Instead, their votes are based on the loudest and most compelling propaganda—because, after all, what else is political messaging if not complete, factual and free of omission? Democracy isn’t really democratic if we don’t have the ability to make decisions based on meaningful information.

As CEO of a financial technology firm, I can no longer look at London as the center for European expansion. I no longer can rely on a country with a sound legal system and fair and reasonable regulatory environment that extended throughout Europe. Instead, I must rethink the European plans and relationships we have. Why? Because in politics it seems the old adage strictly applies: “Do as I say, not as I do.”

Urban FT CEO Richard Steggall, a dual citizen of the U.K. and Australia, has lived and worked in New York since 2012. After 17 years running businesses across Asia and the U.K., he relocated to the U.S. to co-found Urban FT, a financial technology company that provides the a white-label digital banking platform, expanding customer engagement and increasing the lifetime value of customer relationships through social engagement features. Richard may be reached at [email protected].

In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.