Record numbers borrow more than three times their income
Record numbers of house buyers are taking out mortgages of more than three times their annual income. An average property now costs £231,000 while the typical worker earns just £27,500 a year. Homes are even farther out of reach in London and the South East, where average prices are £474,000 and £327,000 respectively. About 40% of borrowers who took out a mortgage in 2017 will be over 65 when their debt matures, according to data published by the Financial Conduct Authority last week. Meanwhile, homeowners have been warned they face paying more for their mortgages as specialist lenders are hit by higher funding costs due to investors’ fears about Brexit and the global economy. Fleet Mortgages last week withdrew all of its products to new customers and said it was seeking funding, while Secure Trust Bank is planning to pause residential mortgage lending because profit margins have been squeezed.
Open Banking fails to inspire much switching
The launch of Open Banking has resulted in just 15,000 extra banking customers switching their current accounts over the past year. Analysis of industry switching data by the Telegraph has revealed that switching activity increased by just 1.5% in 2018. However, a spokesman for the Competition and Markets Authority, which ordered the shake-up, said Open Banking would eventually "revolutionise" how people manage their money. They added: "It has made huge strides over the past 12 months, though it is still in the fairly early stages of the roll-out."
Culture minister to discuss gambling concerns with bank bosses
Banks and bookmakers are to meet Culture Secretary Jeremy Wright to discuss concerns about gambling on credit cards. It comes ahead of a Gambling Commission call for evidence on the issue of gambling on credit cards, both online and offline, which is due to be launched next month.
Barclays facing legal fees bill of £30m
Barclays has agreed to cover the legal fees of four ex-bosses charged with fraud in relation to the bank’s bailout deal with Qatari investors, in a move that will cost the bank £30m. Barclays is reportedly paying the bill because the former executives faced legal proceedings during the course of their jobs. Separately, corporate raider Edward Bramson has stepped up his interest in Barclays and is reportedly planning to table a shareholder vote on “the composition of the board” at the lender’s annual meeting in May.
More bank scam victims could get money back
Thousands of fraud victims tricked into handing over their life savings have been given hope that they could recover their money, after the Financial Ombudsman ordered Santander to refund a customer who lost £12,000. The Ombudsman said the customer, who thought he was speaking to the bank's fraud department, was “a victim of a sophisticated scam with social engineering at the very heart of it” and had not authorised the transaction or acted with gross negligence.
Banks make more from wealthier savers
Analysis of Britain's 73m current accounts suggests banks are making a profit from eight out of 10 of their customers, with wealthier savers generating the most profit for banks. The findings, uncovered by the Financial Conduct Authority, show that the most lucrative customer for banks is typically 61 years old and has £33,000 in their current account and £17,000 in a savings account.
Tandem plans flotation
Tandem Bank has unveiled plans to float on the stock market within the next three to five years. The digital bank said an initial public offering would "make sense" and that there was "potential for multiple unicorn valuations in the digital banking space, as evidenced by recent capital raises".
MPs call for action to protect SMEs
MPs have accused the Government of failing to understand the challenges facing business people who have been mistreated by banks. The All Party Parliamentary Group on Fair Business Banking criticised the Government's lack of support for plans for a new tribunal to protect SMEs from banking misconduct.
Lloyds Banking Group accused of ‘gaming’ overdraft charges
Lloyds Banking Group has been accused of making its overdrafts more expensive and complicated for most of its customers, ahead of a Financial Conduct Authority crackdown on overdraft fees.
Challenger banks struggle to smash glass ceiling
The FT says post-financial crisis reform of UK retail banking has been modest, with claims of a "glass ceiling" that challenger banks struggle to grow beyond.
Kim departure places World Bank at a crossroads
Following the shock news that Jim Yong Kim, president of the World Bank, is stepping down three years early, the Times’ Philip Aldrick says the organisation is in need of reform, being unwieldy, bureaucratic and grossly expensive. Elsewhere the FT says Mr Kim’s departure raises questions about its future amid the Trump administration’s suspicions of international institutions. Meanwhile, several publications claim Donald Trump's daughter Ivanka is one of a handful of people being considered as the new head of the World Bank.
France to put Danske Bank back under investigation
Danske Bank has been told it will be formally investigated by a French judge examining its €200bn money laundering scandal, following a complaint from a prominent campaigner against Russian corruption.
China’s central bank delays market entry for Visa and Mastercard
China’s central bank has refused to acknowledge applications submitted by Visa and Mastercard to process renminbi payments, despite new rules intended to allow foreign access.
Ford to scrap 1,150 UK jobs
Ford is set to lay off 1,000 workers at its engine plant in Bridgend, along with 150 jobs at its transportation operations in Dagenham, east London, and Daventry, in the Midlands.
Virgin and Stobart swoop for Flybe
Flybe is being bought for £2.2m by a consortium including Virgin Atlantic and Stobart Group. It will operate under the Virgin Atlantic brand. Shareholders in Flybe will receive just 1p a share and the consortium, which also includes Cyrus Capital Partners, will inject £100m.
Task force to tackle illicit finance
The chancellor and the home secretary are launching a cross-departmental board to fight economic crime. The Economic Crime Strategic Board - to be co-chaired by Philip Hammond and Sajid Javid - is the latest effort by Government to address the estimated £14.4bn worth of illegal activity within the UK's financial sector each year. Its members also include bank chiefs and representatives from the legal, accountancy and property sectors. Separately, Labour is said to be considering plans to scrap Britain's "multiplicity of overlapping regulators", including the Financial Conduct Authority, as part of a wide-ranging overhaul.
Drop in demand for financial services
Research by the CBI reveals business volumes in the financial services sector shrank in the final three months of 2018 for the first time in five years. The sector also expects volumes to fall again in the three months to March - the first time growth expectations have turned negative since December 2009. The survey of 84 firms indicated that business was "flat or falling" for banks, building societies and specialist lenders, but holding up among insurers.
Fund managers predict Britain will stay in EU
Fund managers Peter Hargreaves and Crispin Odey, who both donated to the Brexit campaign, have said they are now expecting the UK to stay in the European Union. Mr Odey said he was positioning Odey Asset Management for the pound to strengthen if Brexit is cancelled, while Mr Hargreaves, co-founder of Hargreaves Lansdown, said he believed the government would extend Article 50 then call for a second referendum.
Scotland’s fintech community grows threefold
The number of Scottish businesses focused on fintech has grown threefold in the last year, with more than 80 fintech-focused SMEs now based north of the border. The news comes on the first anniversary since the formation of FinTech Scotland - a joint initiative by a number of financial services firms, the University of Edinburgh and the Scottish Government.
Payments venture raises millions to expand
AccessPay, a start-up which provides back-end payments and treasury technology that connect businesses to their banking providers, has raised £9m to drive expansion. Backers include transatlantic fund Beringea and US venture capital firms True Ventures and Route 66.
FCA probes RBC
A major investigation into the Royal Bank of Canada has reportedly been launched by the Financial Conduct Authority. Dozens of former employees are said to have complained about their treatment by RBC.
Lloyd’s of London urged to focus growth plans on US
Andrew Brooks, incoming chair of the Lloyd’s Market Association, has said the UK insurance market should spend less effort on emerging economies and more time focusing on the US.
Singapore hedge fund bets on Brexit Britain with move to London
Orchard Global Asset Management is moving its headquarters from Singapore to London, to be near the City’s banking sector and to tap its “innovation” in debt markets.
MEDIA AND ENTERTAINMENT
Slack plans direct move to market
Slack, the developer of a popular workplace instant messaging app, is considering listing its shares directly on an exchange in the second half of this year. Goldman Sachs, Morgan Stanley and Allen & Co are working with Slack on the float plans.
Debenhams closures could cost 10,000 jobs
Debenhams plans to push ahead with its three-stage restructuring program despite last week’s boardroom coup. The Telegraph says the plans could involve as many as 90 store closures, putting more than 10,000 jobs at risk.
UK economy posts slowest growth in six months
The British economy slowed in the three months to November, the ONS has said, as car manufacturing went into reverse amid the broadest drop in industrial production since 2012. GDP grew 0.2% compared to October, and by 0.3% in the 12 weeks to the end of the month, the weakest since a 0.1% increase between March and May. Month on month, production as a whole contracted 0.4% in November; construction growth was 0.6%, manufacturing contracted 0.3%, while services activity rose 0.3%.