BANKING
BBRS criticised for excluding complainants and lack of pay-outs
The Business Banking Resolution Service (BBRS), the banking industry’s small business compensation scheme, has been criticised after it concluded just eight cases, with only one company receiving a pay-out. The BBRS, which was formed in 2019 with the aim of compensating victims of banking scandals, launched in February but has looked at cases since early last year. Data shows 626 cases had been registered with the service by the end of August. Of these, 338 are “going through” the process while 247 were closed for “administrative reasons”, such as complainants walking away, and 33 have been flagged as potentially ineligible. The All-Party Parliamentary Group (APPG) on fair business banking has urged the Chancellor to change the scheme’s rules, with Kevin Hollinrake, the MP who co-chairs the parliamentary group, saying: “Quite frankly, the scheme is currently a complete embarrassment to UK Finance.” He notes that the APPG warned the banking trade body and the seven member banks who designed the BBRS in 2018 that the eligibility criteria would exclude at least 85% of complainants, “and that’s proven to be the case.” SME Alliance, which helped to design the scheme, has said that it is withdrawing its support after concluding that the BBRS had excluded “most if not all of those seeking redress”.
Customers want lower contactless limit
The Times reports that large numbers of consumers do not want their contactless payment limit to be the full £100 introduced by the Treasury this month. While Starling gave its customers the option of setting a contactless payment limit of up to £100 on a sliding scale and saw the most popular self-imposed limit being £50, a poll of Times readers found that 45% wanted a contactless limit of £50 of less. During a Financial Conduct Authority consultation on raising the limit in February, UK Finance said 20% of people surveyed thought the existing £45 limit was too low, and 62% said it was about right. UK Finance data shows there were about 1.22bn tap-and-pay transactions made in July, with these worth £14.9bn. This made the average contactless payment value £12.19. It is noted that Barclays, HSBC, NatWest and Santander allow customers to request a non-contactless card or turn off the tap-and-pay function.
Experts expect slow rise from ultra-low mortgage rates
Mortgage experts are expecting a slow increase in the cost of home loans, despite some lenders increasing rates after a period of ultra-low costs for borrowers. Barclays, Halifax, HSBC, NatWest and Virgin Money have all increased rates since Wednesday's Budget was announced on. These increases come ahead of a Bank of England meeting which will see policymakers consider whether to raise the base rate. Mark Harris, chief executive of mortgage broker SPF Private Clients, comments: “Whether base rate rises or not, mortgage rates have started edging upwards as the markets have already priced in a rate rise, and possibly two or three more by the end of next year." Rachel Springall of financial information service Moneyfacts says that rates remain competitive despite "murmurings of a base rate rise", while Andrew Montlake, managing director of mortgage broker Coreco, said: "It does now look like the era of ridiculously low rates is coming to an end.”
NatWest's earnings surge...
NatWest's earnings jumped to £744m in the three months to the end of September, up from £355m in Q3 2020. The boost enabled the bank to release £242m it had set aside for bad loans during the pandemic. Overall income rose by 1% to £2.77bn, with higher mortgage lending and strong growth in customer deposits driving the total up. Chief executive Alison Rose said: “Although we are seeing challenges in the economy and for our customers - especially around supply chains and the cost of living - a number of key indicators remain positive; growth is good, unemployment is low, and there are limited signs of default across our book.”
... as it banks on a reduced fine
NatWest has set aside £254m in Q3 to cover litigation costs, despite the Financial Conduct Authority (FCA) calling for the bank to be handed a £340m fine in a money laundering case. The bank has pleaded guilty to failures in its anti-money-laundering controls and is hoping the fine called for by the FCA will be reduced by at least a third because it did so. NatWest pleaded guilty to failing to monitor or prevent suspect activity by one of its clients, gold dealership Fowler Oldfield, between 2012 and 2016. A judge will decide the penalty in a sentencing hearing on December 13.
Nationwide eye TSB boss
TSB boss Debbie Crosbie has reportedly been shortlisted for the chief executive job at Nationwide Building Society, with Joe Garner set to step down after five years at the helm. Sources say other leading external candidates include Vim Maru, head of Lloyds Banking Group's retail bank.
Digital banks make insurance moves
The Sunday Times’ George Nixon says that while Britain’s biggest banks have often “sought to persuade customers to pay for current accounts by cramming them full of add-ons”, such as insurance and breakdown cover, app-based banks are trying the same thing. He notes that Monese and Revolut have added a range of insurance products to their paid-for packages. Revolut launched its offer last December, while Monese rolled out its offer last month.
Cable: Banks must do more to combat fraud
With MPs on the Treasury Select Committee investigating the problem of economic crime, former Business Secretary Vince Cable says he hopes the Government will “consider putting banks on the hook to compensate all fraud victims, both citizens and businesses, let down by their anti-money laundering controls.” Such a move, he argues, could “finally spur banks to invest properly to fight the fraudsters.”
INTERNATIONAL
Nomura profit plunges
Nomura Holdings said Q2 net profit fell due to a one-off loss from a transaction completed more than a decade ago. Profit for July-September came in at 3.2bn yen, compared with 67.6bn yen a year earlier. Nomura said it booked a charge of about 39bn yen in the quarter related to "legacy transactions in the Americas from before the global financial crisis in 2007 and 2008." Pre-tax income for Nomura's wholesale business, which houses its trading and investment banking division, dropped to 25bn yen from 65.5bn yen for the same period a year earlier.
BNP income rises
BNP Paribas reported a 32.2% rise in net income from a year ago, hitting €2.50bn. Revenue at France's biggest listed lender was up 4.7% to €11.40bn, while the cost of risk, reflecting provisions against bad loans, was down 43.3%. Revenue in corporate and investment banking activities rose 79.3% but revenue was down 28% in fixed income, currencies and commodities trading after a 43% drop in Q2.
FINANCIAL SERVICES
Platform complaints double in 24 months
Data released by the Financial Conduct Authority (FCA) has revealed that there were 17,090 complaints made against investment platforms in the first half of 2021, up 103% on the 8,431 made in the second half of 2019, covering a period of 24 months. Pensions meanwhile saw a significant 33 per cent increase in workplace personal pensions complaints to 14,974 complaints in H1 this year. Non-workplace personal pensions, including self-invested personal pensions, were up 21 per cent in the past 12 months, to 42,259 complaints. However despite these increases, the City watchdog said complaints against financial services firms were at their lowest level recorded since 2016.
HMRC overcharges those accessing pensions £44m
Pension Flexibility statistics released by HMRC show that between July and September the tax office refunded £44,659,174 to people who were over-taxed when accessing their pension. Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, described the figure as “eye-watering” and “whopping”, adding: “This isn’t some kind of horrible mistake by the taxman, it’s how the system is intended to work.” She went on to describe the matter as “an administrative nightmare that should have been sorted long ago.” The system, Ms Morrissey suggests, is “ripe for reform.”
MANUFACTURING
Rolls-Royce joins with Qatar to pump billions into green start-ups in UK
Rolls-Royce has teamed up with the state of Qatar to build a science and engineering campus in the UK to develop green technology start-ups.
REAL ESTATE
London leads for real estate investment
A poll of industry executives has seen London become the highest ranked European city for property investment. A report commissioned by the Urban Land Institute saw around 850 property investors, lenders, developers, fund managers and advisers from Europe polled. The study found that confidence in the European real estate market has reached its highest level since 2014, with around half of respondents expecting business confidence, profitability and headcounts to rise in 2022. The survey saw London come out on top thanks to its value for money and ability to “reinvent itself” as a base for the technology and life sciences markets. Berlin placed second, while Paris was third.
House price boom ‘running out of steam'
The housing market in England and Wales is predicted to settle down over the next few months after prices were driven up over the summer and the boom is ‘running out of steam'. In the run up to Christmas, growth is expected to slow down with house prices expected to rise by just 0.1% in the final quarter of 2021, according to Reallymoving's latest forecast. The analysis predicts that house prices will fall by 0.1% in November and 1.1% in December, with the average asking price to drop to £335,924 by the end of the year, compared to £339,860 in October.
RETAIL
Competition watchdog to probe Morrisons takeover
The Competition and Markets Authority (CMA) has launched an initial investigation into the £7bn takeover of supermarket chain Morrisons by US private equity firm Clayton, Dubilier & Rice (CD&R). The competition regulator has served an initial enforcement order and said the parties must remain separate and hold off integration plans until the probe has taken place. It is believed that the CMA will investigate whether there could be competition issues surrounding Motor Fuel, a forecourt operator also owned by CD&R, and Morrisons’ own forecourts. The watchdog has up to four months to decide whether to launch a full inquiry into whether consumers can be harmed by CD&R taking control of more than 1,200 of the UK’s 8,000 petrol stations.
ECONOMY
MPC to weigh rate hike as inflation soars
Analysts believe the Bank of England may opt to increase interest rates this week in an effort to cool rising prices amid continued inflation. This comes with the Office for Budget Responsibility last week forecasting that inflation is likely to average at around 4% in 2022 and potentially hit a peak closer to 5%. The Bank’s Monetary Policy Committee (MPC) will meet later this week and while analysts had predicted that an interest rate rise would come in December, experts at Investec now believe the MPC will vote in favour of increasing interest rates by 0.15 percentage points to 0.25% at Thursday's meeting. Investec said: “In the collective mind of the MPC, we judge that concerns over inflation will outweigh the downside risks from a potential upturn in unemployment following the end of the furlough schemes.” Elsewhere, investment banks have increased their forecasts of an interest rate rise this week. Deutsche Bank, JPMorgan and Morgan Stanley all expect a small climb in the cost of borrowing, saying the MPC is likely to downgrade its forecasts for economic growth and warn of climbing prices.
44% believe Brexit is harming the economy
An Opinium poll for the Observer has found that 44% of people think Brexit is having a bad impact on the UK economy, compared with 25% who think it is having a positive effect. The survey saw 53% say Brexit is having a negative effect on prices in shops, against 13% who think it is having a good effect, while 51% think it is adversely affecting the UK’s ability to import goods from the EU, against 15% who think it is helping. The poll comes in a week that Office for Budget Responsibility (OBR) chairman Richard Hughes said his organisation calculates that the negative impact on GDP caused by Brexit is expected to be twice as great as that resulting from the pandemic. The OBR expects Brexit to reduce the UK’s potential GDP by about 4% in the long term, while the pandemic will cut it “by a further 2%”.