BANKING
FCA urges lenders to support consumers
The Financial Conduct Authority has written to more than 3,500 lenders, issuing a Dear CEO letter reminding them of the standards they should meet amid the cost of living crisis. The City watchdog wrote: “We want to ensure that our expectations of you are clear and to urge you all to support your customers.” The letter said there is a “need to engage and work effectively as an industry to understand the changing pressures on consumers – now and in the uncertain months ahead.” An FCA review of 400 retail lenders found that some provided help for their customers but concluded that most failed to adequately support struggling borrowers. Lenders did not consistently tailor their services to meet individual needs, identify vulnerable borrowers, or help people access money guidance and free debt advice. Sheldon Mills, the FCA’s executive director of consumer and competition, said that with many consumers feeling the impact of the rising cost of living in their personal finances, “we need all firms to get the basics right and provide good quality support.” He noted that where it sees “more serious wrongdoing,” the FCA is “already acting to ensure these firms improve.” “The financial services industry has a significant role in helping consumers manage their finances – and it should expect us to pay close attention to how they do that over the next few months,” Mr Mills added.
How the interest rate increase will affect mortgages
More than 2m households face increased mortgage payments after the latest Bank of England interest rate rise. The Bank rate has been increased from 1% to 1.25% as officials look to tackle rising inflation and borrowers who have variable mortgage rates will see their monthly repayments go up. Analysis by industry body UK Finance shows that those on standard variable rates will see an average annual increase of £191, while for tracker deals the figure is £303. The increase affects a quarter of mortgage borrowers, which translates to about 2.25m households. The average monthly mortgage payment for those on standard variable rates has gone up by £90 – or £1,080 a year - since the Bank started increasing its interest rate from 0.1% in December. For more than 800,000 borrowers on tracker deals, the increase has been an average of £57 a month, or £684 a year.
Monzo to push on with crypto plans
Monzo is likely to press ahead with its crypto investment plans despite the current crash in the market, co-founder Jonas Templestein has said. He also flagged the need for regulation in the sector, saying that a lack of oversight had caused “suffering” among unsophisticated consumers. “It seems now that building an entire financial industry, without any regulators, is not such a great idea,” he added.
INTERNATIONAL
SEC mulls tougher rules for index providers
The US Securities and Exchange Commission (SEC) could impose stricter rules on providers of financial indices by treating them as investment advisers and holding them to the same standards as fund managers. Index providers are currently treated as data publishers by the watchdog. SEC chair Gary Gensler said: “The role of these information providers today raises important questions under the securities laws as to when they are providing investment advice rather than merely information.”
India central bank lifts curbs on Mastercard over new cards
The Reserve Bank of India has lifted restrictions imposed last year on Mastercard over issuing debit and credit cards to new domestic customers. The decision follows satisfactory compliance on rules regarding storage of payment system data, the central bank said.
Credit Suisse to pay almost 10% on bonds
Credit Suisse is set to pay 9.75% interest rates for its latest bond offering and will raise at least $1.5bn.
AUTOMOTIVE
Axa calls for clarity on self-driving cars
Axa has urged the Government to offer greater clarity around autonomous vehicles to support the rollout of self-driving cars. The insurer is calling for laws that enable the deployment of self-driving vehicles, as it said lawmakers should work with the insurance sector to “pave the way” for driverless cars. Axa said ministers should use the upcoming Transport Bill to offer clarity on questions around “liability, accountability and responsibility” for incidents involving such vehicles.
FINANCIAL SERVICES
Reform of Consumer Credit Act announced
The Government has announced a major reform of the Consumer Credit Act, with this marking an effort to modernise the framework for credit firms. Ministers are looking to give more power to the Financial Conduct Authority as part of the changes, which the Government said would enable the regulator to “quickly respond” to developments in the consumer credit market, rather than having to amend existing legislation.
AJ Bell CEO to step down in October
AJ Bell chief executive Andy Bell will step down in October. He will remain on the board and take on the role of non-executive deputy chair. Mr Bell – who co-founded the investment group – will be succeeded by deputy chief executive Michael Summersgill in October as part of what the firm said was a “long-established succession plan.”
LEISURE & HOSPITALITY
Punch Pubs considering takeover of smaller rival
Punch Pubs, which is owned by Fortress Investment Group, is among a number of parties which have requested access to information about smaller rival Amber Taverns from advisers handling a sale. Sapient Corporate Finance is leading the auction, which could bring in a price of around £200m.
McDonald’s pays record fine over tax evasion inquiry
McDonald’s has agreed to pay a record €1.25bn to the French authorities to avoid prosecution for tax evasion. The fast-food chain will pay a fine of €508m and settle a bill of €737m for unpaid tax dating from between 2009 and 2020.
REAL ESTATE
Pandemic may have a lasting impact on housing market
The Resolution Foundation has suggested the pandemic will have a lasting impact on the housing market. Researchers said house prices grew nearly twice as fast in villages and small towns as they did in major cities between February 2020 and February 2022, by 22% and 12% respectively. This has led to some balancing out of regional house price gaps as cheaper homes increased in cost at a faster rate than higher-value properties. However the report warned low-paid households risk being “priced out” of homes in areas traditionally overlooked by commuters but now more in demand, amid the rise of flexible working.
RETAIL
Asos and Boohoo see weaker sales
Asos has warned that profits could fall to between £20m and £60m this year, compared to analyst predictions of £92m and last year's £190m figure. In addition, weak sales means Asos now expects growth of between 4% and 7% this year, down from its previous 10% to 15% guidance. Meanwhile, Boohoo reported its largest quarterly sales fall. In the three months to May 31, sales at Boohoo fall by 8% to £445.7m. Although UK sales were up 5% year-on-year last month, US sales were down 28% year-on-year for the quarter.
New CEO for New Look
High street fashion chain New Look has appointed Helen Connolly to the role of CEO, replacing Nigel Oddy who left the retailer earlier this month. Ms Connolly, joined New Look in 2020 as chief commercial officer.
Revlon files for bankruptcy
US cosmetics group Revlon, which owns the Elizabeth Arden, Almay and Cutex brands, has filed for bankruptcy protection amid supply chain disruption, mounting debts and strong competition from celebrity and online brands.
ECONOMY
Interest rates up to 1.25% in fifth consecutive hike
The Bank of England has raised interest rates by 0.25 percentage points from 1% to 1.25%, with this the fifth consecutive rise as officials attempt to ease soaring inflation. The increase to 1.25% means rates are now at their highest point in 13 years. Data shows inflation climbed to a 40-year high of 9% in the 12 months to April, a rise of 2% from March. The Bank expects to see a peak of 11% in October when the energy price cap rises again, with this far exceeding its 2% target. Six of the nine members of the Bank's Monetary Policy Committee voted to raise rates to 1.25%, but three backed a bigger increase to 1.5%. It was also revealed that the Bank expects the UK economy to shrink by 0.3% in Q2. Karen Ward, chief market strategist at JPMorgan Asset Management, said the Bank could have sent a stronger signal that it “hasn’t gone soft on inflation” by raising rates more quickly, while Paul Dales from Capital Economics said the Bank is “putting too much weight on the softening economy and not enough on surging inflation.” Michael Hewson, chief market analyst at CMC Markets, commented: “It is quickly becoming apparent that more radical action is needed for the Bank of England to establish some sense of stability, because tinkering around the edges simply isn’t cutting it.”
Food prices set to rise by 15%
Food prices are expected to soar this summer, according to a report from the Institute of Grocery Distribution (IGD). The analysis suggests that items that rely on wheat could see the most rapid price rises, with these the worst affected because of Russia’s invasion of Ukraine as both countries are major global grain producers, between them accounting for nearly a third of global wheat exports. Alongside the conflict, Brexit and supply chain disruption linked to the pandemic are said to be affecting prices. The IGD report predicts that the average monthly groceries bill for a family of four could reach £439 in January next year, up from £396 in the same month this year.