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Daily News Roundup: Monday, 11th December 2023

Posted: 11th December 2023

BANKING

Barclays leads on complaints in H1

Official figures show that the Financial Ombudsman Service (FOS) recorded 5,519 complaints about Barclays between January and July, making it the most complained about financial services firm in the first half of 2023. The data shows that Barclays has had more complaints than any rival in each six-month period since H2 2019. While Barclays was the subject of the most complaints in H1 2023, only 35% were upheld by the FOS, which is below average for the sector. Many of the complaints about Barclays were related to branch closures. The bank has closed - or announced plans to close - 73% (787) of its 1,085 branches since 2019.

Nationwide slims down head office operations

Nationwide has launched a redundancy consultation that could see around 200 people leave its head office operations. CEO Debbie Crosby said the “streamlining” will “enable us to increase investment in the value and service we provide our customers.” The building society said customer-facing colleagues will not be affected. The redundancy programme comes after Nationwide scrapped its “work anywhere” policy, telling staff they must return to the office at least twice a week.

Average two-year mortgage rate drops below 6%

Figures from Moneyfacts shows that the average cost of a two-year fixed-rate mortgage in the UK has fallen below 6% for the first time in almost six months. In July, the average cost of a two-year fixed-rate deal went up to 6.86% but on Friday it had fallen to 5.99%. The average cost of a five-year fixed rate has also continued to fall, and stands at 5.6%, according to Moneyfacts. Banks including Nationwide, Santander and Halifax all cut their fixed rates on Friday.

UK small businesses call on regulator to intervene over ‘harsh’ banking practices

The Federation of Small Businesses has urged the Financial Conduct Authority to intervene over “harsh” banking practices that see lenders “excessively” demand personal guarantees for business loans.

INTERNATIONAL

SEC probes investment advisers’ use of AI

The US Securities and Exchange Commission (SEC) is reportedly asking investment advisers how they use and oversee artificial intelligence. Vigilant Compliance, a regulatory compliance consulting firm, says the SEC is asking for details on topics including AI-related marketing documents, algorithmic models used to manage client portfolios, third-party providers and compliance training. Karen Barr, head of the Investment Advisers Association, said this could be “extremely helpful as the commission considers policy issues relating to these emerging technologies.”

Danske Bank raises profit forecast

Danske Bank has raised its full-year net profit forecast due to more favourable macroeconomic conditions and "negligible" impairments in the fourth quarter. The bank now expects net profit this year in the range of 20.5bn-21.5bn Danish crowns ($2.96bn-$3.11bn), compared with its previous guidance of 19.5-20.5 billion. Chief Financial Officer Stephan Engels stated that the robust financial position among customers has underpinned the bank's strong credit quality, leading to the revised profit outlook.

UBS hit with $400m of Credit Suisse-linked property costs

UBS has suffered a $400m expense on real estate costs tied to its takeover of Credit Suisse after having to break leases on offices occupied by its collapsed rival.

AVIATION

Ryanair chief: Air traffic control boss should quit

Ryanair chief Michael O’Leary believes that the head of the UK’s National Air Traffic Service (NATS) should step down after an outage at Gatwick caused significant disruption. After a system failure saw flights grounded and passengers hit by hours of delays on Saturday, Mr O’Leary said: “It’s time for Martin Rolfe to go. At an annual package of over £1.5m this clown has repeatedly shown he is incompetent.” Voicing concern over “repeated UK NATS system failures,” Mr O’Leary added: “If he won’t quit, then Transport Minister Mark Harper should fire him.”

CONSTRUCTION

Berkeley Group delivers strong performance

An update from Berkeley revealed the company sold roughly a third fewer homes than last year over the six months to the end of October - in line with many of its peers. Berkeley reported a 4.6% rise in profit before tax to £298m in the six month period, and extended its profit guidance by one year. CEO Bob Perrins pointed out that costs had come down with a drop in demand for construction materials and contractors deflating build costs to near zero or below. The shift comes after developers cut their output as higher borrowing costs hit prospective buyers.

FINANCIAL SERVICES

Santander boss: Tech giants should reimburse fraud victims

The chief executive of Santander UK says social media firms should take more responsibility for reimbursing victims of fraud. Amid a surge in online scams, Mike Reigner warned that the UK’s faster payments systems make customers “a boon to the unscrupulous.” With new rules from the Payment Systems Regulator set to hold sending and receiving firms equally liable for reimbursing victims in most fraud cases, Mr Reigner has criticised the “blanket mandatory reimbursement approach.” He flagged that while 70% of authorised push payment fraud originates via social media and phoner calls, these companies are “not on the hook for reimbursement.” He added: “I would like to see other players in the supply chain of fraud pay the bill.” UK Finance has also criticised the new rules for not holding social media companies responsible for crimes that originate on their platforms.

UK proposes simplifying financial advice rules

The Government has proposed simplifying rules on financial advice to allow banks, insurers, and investment firms to provide information to less wealthy customers without stringent safeguards. The aim is to create a regulatory system that enables consumers to access better support. Regulators want to bridge the gap between expensive holistic financial advice and free but impersonal guidance. The Financial Conduct Authority (FCA) and the finance ministry have proposed clarifying when firms can provide support without it being considered regulated financial advice. The proposals have been welcomed by industry experts and aim to ensure that people can access targeted financial advice. 

MANUFACTURING

Manufacturers see signs of recovery

The UK's struggling factories are showing signs of recovery, trade body Make UK has said, with a pickup in export orders and an increase in restocking. Make UK reported that factories raised output at three times the pace of growth in orders in the final three months of 2023. The share of firms seeing a rise in export orders rose to a balance of +10%, the first time that export orders have exceeded UK orders since the pandemic. Expectations for export and UK orders in the first quarter of 2024 were positive at +7% and +8% respectively while recruitment expectations for early 2024 hit +19%. It was also found that investment intentions slowed but remain positive. Make UK has increased its forecast for manufacturing growth in 2023 to +0.8% from -0.5%, but growth is expected to slow in 2024. "After the economic and political shocks of the last few years there is some semblance of stability returning for manufacturers," said Fhaheen Khan, senior economist at Make UK.

MEDIA & ENTERTAINMENT

Spotify CFO to step down as company cuts costs

Spotify's finance chief, Paul Vogel, will be stepping down at the end of March as the company aims to reduce costs. This move comes as part of Spotify's efforts to cut expenses and improve profitability. The streaming service recently announced plans to cut 1,500 jobs, which accounts for 17% of its workforce. Spotify founder, Daniel Ek, stated that the company needs a CFO with a different set of experiences to balance spending and growth opportunities. Mr Vogel, who has been the finance chief since 2020, sold £7.2m worth of shares following the announcement of job cuts.

REAL ESTATE

Demand for 3 and 4 bedroom homes climbs 9%

Data from Rightmove shows that demand for three and four-bedroom properties is 9% higher than this time last year. Demand for top of the ladder properties, including five-bedroom properties and bigger, rose by 7% over the year, while the first-time buyer sector, which includes all two-bedroom properties and smaller, saw an increase of just 3%. The mid-market, or "second stepper" category for those looking to move out of their first homes, grew 6% year-on-year in November. Across all properties, new seller average asking prices were 1.1% below a year ago, at £355,177, with the number of sales agreed 13% lower than this time last year.

ECONOMY

MPC expected to hold interest rates

Economists say the Bank of England is likely to hold interest rates steady when the Monetary Policy Committee (MPC) meets on December 15. This would mark the third consecutive meeting where the MPC opted to keep rates at 5.25%. Looking ahead, James Smith, developed markets economist at ING, said: “Markets are pricing three rate cuts in 2024 and we doubt the Bank will be too happy about that.” He added: “Expect policymakers to reiterate that rates need to stay restrictive for some time.”

OTHER

Claims managers face threat of Ombudsman fees

With more than half of cases raised with the Financial Services Ombudsman by claims management companies dismissed, the ombudsman is considering plans to charge up to £650 per case to weed out spurious applications.

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