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Daily News Roundup: Monday, 6th February 2023

Posted: 6th February 2023


MPs say plans to reimburse bank transfer scam victims are flawed

Proposals to reimburse victims of bank transfer scams are marred by a conflict of interest, according to the Commons Treasury Committee. The Government has previously said the Payment Systems Regulator (PSR) will be able to require banks to reimburse APP (authorised push payment) scam losses, with a minimum threshold of £100. But MPs said proposals to hand responsibility for implementing mandatory reimbursement to a separate body, Pay UK - which is guaranteed by the financial services industry - are a conflict of interest. Tory MP Harriett Baldwin, the committee chairman, said victims had waited "far too long for a fair and functional scam reimbursement scheme". She said: "While these new proposals are a step in the right direction, the way the regulator plans to implement them is fundamentally flawed. Putting an industry body in charge of reimbursing scam victims is like asking a fox to guard the henhouse. The regulator needs to take back control of the reimbursement process, rather than leave it in the hands of an industry body which is inherently conflicted."

Delaying bank transfers ‘could protect victims from fraud’

A policing chief is calling for bank transfers to be automatically delayed by 24 hours to help combat fraud. Mark Shelford, the national lead for fraud with the Association of Police and Crime Commissioners and PCC for Avon and Somerset, said it would provide a cooling off period for people to rethink a transfer and give banks time to take action. Mr Shelford conceded a two-hour delay was more realistic and his proposal has been backed by Mike Haley, the chief executive of fraud prevention body Cifas. However, Haley believes the delay should be restricted to suspicious payments and vulnerable customers. The proposal comes as the Government considers reclassifying fraud as a national security threat under plans to force police chiefs to devote more officers to solving the crime.

Bank of England and Treasury back 'Britcoin' project

The Bank of England and Treasury are set to throw their support behind a "digital pound" as they set out a roadmap to introduce a new central bank currency by 2030. "On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future," the Bank of England Governor and current Chancellor say in extracts of a consultation paper seen by the Telegraph. "It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified," Jeremy Hunt and Andrew Bailey will say.

Cost of fixed-rate mortgages set to fall as UK inflation outlook brightens

The Bank of England’s suggestion that inflation may come under control sooner than expected should send interest rates on five-year fixed mortgages to below 4% in the near future, experts say. Lloyds and Virgin Money are both offering ten-year fixes at 3.99% while Platform, part of Co-op Bank, launched a five-year fix at 4.09% on Friday, undercutting the previous low rate of 4.17% from Cumberland Building Society.

New retail bond pays 6.25%

A fixed-rate “retail bond” is offering investors 6.25% if they lend money to a company providing care for the elderly for six years. The return compares with an average rate of 1.82% in an easy access Isa, according to Moneyfacts. But experts urge investors to proceed with caution as the war for people’s savings intensifies. Meanwhile, Nationwide Building Society has launched several new savings bonds paying up to 4%.


Morgan Stanley wins permission to fully own Chinese fund venture

The China Securities Regulatory Commission has given Morgan Stanley permission to take full ownership of a China mutual fund venture. Morgan Stanley Investment Management will now boost its stake in Morgan Stanley Huaxin Funds to 100% from 49%, the Wall Street bank said. China has granted a slew of licences to foreign banks and asset managers in recent months as Beijing reopens its economy after three years of strict zero-COVID restrictions.

Swiss authorities open criminal probe into bank data breaches

Prosecutors in Switzerland have launched a criminal investigation into the leaking of information on more than 18,000 Credit Suisse accounts last year - the single biggest leak in Swiss banking history.


IoD rejects regulatory race to the bottom

The Institute of Directors (IoD) has warned the Financial Conduct Authority against waiving market rules to lure Arm to float in London. The Cambridge semiconductor firm is planning to list in New York, but the FCA has hinted that it could relax requirements around ‘related party transactions’ that force listed firms to make declarations on dealings with connected entities. But the IoD asserts this would “undermine the integrity of both the rules themselves and the UK’s wider governance framework.” Roger Barker, director of policy and corporate governance at the IoD, warned “there is a real danger in watering down established governance rules in order to win specific transactions.” Barker adds: “In the long term, good corporate governance is best served by the consistent and fair application of sensible listing rules that protect investors and other stakeholders.”

Aviva tells bosses not to hand themselves inflation-busting pay rises

Aviva Investors has warned company bosses against awarding themselves large pay hikes when their staff are losing out in the cost of living crisis. The fund manager also called on companies to disclose how they handle their relations with trade unions as waves of strike action grip the country. Mark Versey, chief executive of Aviva Investors, said: “It would be inappropriate for highly paid executives to be fully insulated from the impacts of inflation. We expect any increases to executive base salaries to be below the average for the wider workforce.” In a letter to investee companies, he said executive pay was a “barometer of corporate culture” and that companies “must engage with trade unions in good faith and seek a balanced outcome, recognising the impact of high inflation on real wages and the...toll the pandemic has had on frontline workers”.

FCA steps up interventions on fin-fluencers

The Financial Conduct Authority has been taking a tougher line on social media influencers who illegally promote investments online. Last year, the watchdog told firms either to amend or withdraw a record 8,582 promotions, up from 573 in 2021 and 207 in 2020. The FCA said that so-called fin-fluencers were a “growing concern” adding that “issuing an illegal financial promotion is potentially a criminal offence.” Sarah Pritchard, the FCA’s executive director for markets, said: “This year, we will continue to put the pressure on people using social media to illegally promote investments, which put people’s hard-earned money at risk.”

Baillie Gifford sheds more than £100bn in assets in 2022

Edinburgh-based asset manager Baillie Gifford saw AUM fall by a third in 2022, from £336bn to £223bn, largely driven by valuation decreases in its portfolio of investments.


Steel output slumps to its lowest since the Great Depression

The UK’s future as an industrial economy has been put into doubt following a record slump in the production of crude steel in Britain, which last year fell to its lowest levels since the Great Depression of the 1930s. The UK produced just 6m tonnes of crude steel in 2022, a 90-year low, leading to concerns over the industry as it faces pressure to undergo a hugely expensive decarbonisation transition. Chrysa Glystra, an analyst at UK Steel, said: “Some of the reduction in steel production is in response to reduced demand, but the exorbitant energy prices faced by industry have clearly taken their toll on industry in the UK.”


Home owners can expect protracted slump

Melissa Lawford details in the Telegraph why Britons can expect a drawn out housing downturn. Figures from Nationwide show house prices have fallen for five months in a row, the longest period of consecutive monthly falls since 2009. Values are down by 5.6% compared to their August peak, but Oxford Economics doesn’t expect prices to drop beyond 12%, peak-to-trough. This is not as severe as the 18% crash recorded from 2008 to 2009, which saw prices fall for 16 consecutive months. But analysts expect the slump to last longer this time, predicting the downward trend to last 24 months. Andrew Goodwin, of Oxford Economics, says: “We think the much higher share of fixed rate mortgages now will limit the fall in prices and make it less steep, but more prolonged.”

Amazon to sublet UK warehouses as growth slows

Amazon is reportedly looking to sublet its unused warehouse sites in the UK following a slump in sales. The news comes after Bloomberg revealed the online retailer was aiming to offload at least 10m square feet of space in the US. A wider review of operations in the UK resulted in the US tech giant announcing earlier this year that it would close three warehouses in the country, putting 1,200 jobs at risk, and shut seven delivery stations in England.


Mike Ashley targets shopping centres

Retail billionaire Mike Ashley is lining up two shopping centre acquisitions - The Mall in Luton and the Overgate centre in Dundee, worth about £70m and £30m, respectively. Ashley’s Frasers Group is hunting for acquisitions following a strong post-pandemic recovery and shopping centres have seen a 67% fall in value since 2018, according to MSCI Real Assets.


Services sector declines to two-year lows, but optimism shines through

The UK’s services sector began 2023 with its weakest performance in two years, according to the latest S&P/CIPS UK services PMI survey. Fears over a looming recession left businesses struggling to place new orders while labour shortages pushed up costs and consumers tightened their belts. The PMI showed a reading of 48.7 in January, down from 49.9 in December, with any reading below 50 considered a decline. Tim Moore, economics director at S&P Global Market Intelligence, which compiles the survey said: “January data pointed to the weakest service sector performance for two years as cutbacks to business and consumer spending resulted in a fourth consecutively monthly reduction in output levels.” However, businesses reported feeling the most optimistic they had been since April last year, amid “tentative signs” of a turnaround in the global economic outlook.

FTSE 100 share index beats 2018 peak to hit all-time high

The FTSE 100 stock index closed at a record high on Friday, lifted by investors betting that a weak pound will help UK firms abroad and that the worst of the cost of living crisis has passed. The FTSE added as much as 1.1% on the day to trade at 7906.58, beating the previous record of 7,903.5 set in May 2018, before closing at 7902. AJ Bell markets analyst Russ Mould said: "A lot of the [economic] news seems bad, but markets are saying that was priced in during 2022's heavy mid-year falls, and the bad news is known."

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