Financial expert addresses QE students – and the House of Lords

One of the country’s leading financial advisers has presented to Year 12 QE pupils a paper on the causes of economic crises that he previously gave to the House of Lords. Sheetal Radia, CFA FRSA, who has two nephews at the school, Niam in Year 12 and Rohan in Year 9, is regularly called upon to provide top-level advice on financial and economic matters.

He sits on the Advisory Board for the All Party Parliamentary Group for Entrepreneurship and was one of 32 experts invited to submit views to the Treasury Select Committee about the accountability of the Bank of England. Other experts included the Chancellor of the Exchequer and the Chairman of the Federal Reserve (the USA’s central bank).

His speech to the QE Sixth-Formers was based on his paper, Financial Amnesia, which he prepared for the Upper House at Westminster. Mr Radia’s premise is that individuals, firms in financial markets and regulators all fail to learn from past mistakes which have led to financial crises. He identified three key problem areas in which lessons should be learned: 

  • The notion that ‘this time it’s different’ – the result of a combination of innovation (usually a new technology, such as the internet) with the availability of credit and the illusion of safety created by financial firms which play down macro-economic risks.
  • The vulnerability of financial institutions to failure, due to factors including poor information, poor governance, flawed incentives or operational problems.
  • Ineffective market regulation, with regulators often focusing on the symptoms of market failure rather that its root causes and also ignoring or forgetting the reasons for their own inability to act promptly, thus contributing themselves to the risk of systemic governance failure.    

He concluded his talk with recommendations particularly for improved regulation, and discussed with Sixth-Formers the place of behavioural psychology in Economics degree courses.

“This was an ideal opportunity for our boys who hope to follow Economics, Finance or PPE degree courses or work in the financial sector to learn first-hand from someone who operates at the highest level in his field,” said Liane Ryan, Head of Economics. “The talk was directly relevant to Economics A-level students but also allowed all those who attended a fascinating insight into how financial crises occur and what can be done to avoid them in the future.”

Mr Radia advises the Professional Standards and Market Practices Committee (PSMPC) of his professional body, the Chartered Financial Analyst Society of the UK. He runs his own independent financial advisory practice, Financial Architecture, and is a Chartered Financial Analyst (CFA) charterholder.