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Daily News Roundup: Thursday, 17th November 2022

Posted: 17th November 2022


Banks must pay fair rate to savers, says FCA

Financial Conduct Authority chief executive Nikhil Rathi has urged banks to ensure they pass the Bank of England’s interest rate increases on to savers. In a speech to industry bosses at an annual UK Finance dinner in London, Mr Rathi said the way in which financial firms treat consumers during the impending recession “will determine the industry’s reputation for decades ahead.” Mr Rathi also said the introduction of the consumer duty will help firms and consumers during the cost-of-living crisis and raise “the question as to whether savings accounts for loyal customers paying close to zero offer fair value.” He added: “It is more critical than ever that borrowers and savers are offered fair and competitive rates.” The duty, he added, “puts the onus on firms to act to deliver good outcomes for consumers: to act in good faith, avoid causing foreseeable harm and support customers to pursue their financial objectives.” David Postings, the chief executive of UK Finance, voiced concern that the “extremely tight” deadline for the duty was a “real worry” as it was “maybe too tight.” It comes into force at the end of July for new and existing products or services. For closed products or services the deadline is July 2023. Mr Postings warned: “The real problem I foresee is the likelihood of unintended consequences. Faced with a lack of clarity over the definition of ‘good outcomes’ and the real risk of challenge down the line, I worry that firms will take a low-risk approach, withdrawing products and/or tightening the sales criteria.”

Labour looks to protect face-to-face banking

Labour is planning to force a vote on guaranteeing in-person banking. With a surge of branch closures leaving some communities without face-to-face services, Labour has proposed an amendment to the Financial Services and Markets Bill that would give regulators the power to ensure communities have regular access to “essential” in-person services, including opening accounts, applying for loans, making and receiving payments and setting up standing orders. Shadow City Minister Tulip Siddiq said: “We welcome that the Government – after years of delay – has finally announced that it will be bringing forward access to cash legislation, but this bill does nothing to protect face-to-face banking or free access to cash services which the most vulnerable in our society depend on.”

Consumers face more credit checks

Britain's lenders are running more checks on their customers as the surging cost-of-living increases the risk of defaults on repayments, according to Experian. The world’s biggest credit-checking agency said it has seen “increased demand” in the UK and Ireland for its analytics products, which calculate how people will react to economic changes and assess their affordability. It added that some US clients are also tightening lending criteria. Experian said lenders in Britain were now generally focusing more on risk-based analysis and tweaking their criteria for new customer acquisition. “Our UK customers are coming to us more for vulnerability and affordability assessments and they're looking to help consumers with forbearance packages,” Experian spokeswoman Nadia Ridout-Jamieson said.

Lloyds sets out plans to target wealthier customers

Lloyds Banking Group could prioritise wealthier customers, with a proposal suggesting that the top 5% of its most valuable customers could be offered a better service and higher compensation when issues arise.


Lenders agree merger

HSBC Bank Oman and local rival Sohar International Bank have entered into a binding merger agreement. All assets and liabilities of HSBC Oman will be transferred to Sohar. On completion of a merger, HSBC Oman will cease to exist as a legal entity and its shares will be cancelled.


JLR chief executive quits

Jaguar Land Rover (JLR) has announced that chief executive Thierry Bollore will step down at the end of the year, citing undisclosed personal reasons for his departure. Finance director Adrian Mardell will serve as interim chief executive at the car maker. The news of Mr Bollore’s exit comes a week after JLR reported a Q3 loss of £173m.


FCA: Register requires improvements

The Financial Conduct Authority (FCA) has said that its Financial Services Register is in need of “further improvements” to better protect consumers. In a written response to a question put to the watchdog at its annual public meeting, it said work on the register is ongoing and it expects to have an update in 2023. This came after it was suggested that the register “is not fit for purpose,” given concerns previously raised by the Financial Regulators Complaints Commissioner. The FCA noted: “We have steadily increased our investment in the register and made a range of incremental changes. That includes improvements to the data and consumer protection messaging.”

Beazley raises £385m

Lloyd's of London underwriter Beazley has successfully raised around £350m from a share placing. It issued more than 60m shares at £5.75 each, which represented nearly 10% of its share capital. Five company bosses built up their stakes, with chief executive Adrian Cox buying over 26,000 shares, and non-executive directors John Reizenstein and Nicola Hodson acquiring about 6,500 between them. Beazley said the money will go towards funding growth plans, particularly in the cyber and specialty sectors.

Withdrawals halted at crypto trader hit by FTX collapse

Genesis Trading has barred redemptions in its lending division after facing “unprecedented market turmoil” in the wake of FTX’s bankruptcy last week. Gemini, one of Genesis’s key partners, also said it would need to delay withdrawals on one of its financial products as the contagion spread through the industry. BlockFi, another crypto lender, is reported to be halting withdrawals of customer deposits and laying off staff due to a “significant exposure” to FTX.

Medibank defends security amid shareholder anger

Medibank shareholders have expressed anger over a cyber-attack at the health insurance firm, with almost all of the questions put to the board during Medibank’s AGM focused on the breach. Shareholders called for the company to consider adding more IT expertise to the board and questioned why board and executive pay had not been affected by the attack. Chairman Mike Wilkins defended the company’s security processes, describing Medibank’s defences as “robust.”


Musk tells Twitter staff to work long hours or leave

Elon Musk has reportedly told Twitter staff to either commit to working "long hours at high intensity" or leave the company. Mr Musk, who last month snapped up the social media platform in a $44bn deal, emailed staff to declare that Twitter "will need to be extremely hardcore" in order to succeed, writing: “This will mean working long hours at high intensity.” He added: “Only exceptional performance will constitute a passing grade.” The Tesla founder said those who did not commit to the pledge will be given three months' severance pay. Mr Musk has already announced half of Twitter's staff are being let go as he looks to trim costs, while also telling staff that remote working would end, with workers expected to be in the office for at least 40 hours a week.


Property prices up £26k but growth slows

Data from the Office for National Statistics (ONS) shows that the average UK house price was £295,000 in September, with this £26,000 higher than the typical price in the same month last year. While average prices increased by 9.5% over the year to September, this marked a slowdown from the 13.1% annual growth recorded in August. ONS deputy director for prices Matt Corder said the fall in annual house price inflation was largely due to the sharp rise in house prices in September 2021, a month which saw the end of the stamp duty holiday.

London prices dip 0.6%

Property prices in London dipped 0.6% to an average of £544,113 in September, with this the steepest month-on-month decline since July 2021. The Land Registry data shows that year-on-year, growth slowed from 7.3% to 6.9%. Andy Sommerville, director at property data provider Search Acumen, said the figures are “further evidence of a turning tide for house prices, reflecting the same pattern of declining growth we have started to see emerge over the last two months.”


Inflation hits a 41-year high

Office for National Statistics (ONS) figures show that inflation increased to 11.1% in October, with this up from 10.1% in September and marking the highest level since 1981. The jump came with food price inflation rising at the fastest rate for 45 years, hitting 16.2% in the year to October compared to 14.5% in September. However, gas and electricity prices remained the main drivers of inflation, with the costs up by nearly 130% and 66% respectively compared with a year ago. Despite the increase in inflation, some economists believe October's rate could mark a peak, with Paul Dales, chief UK economist at Capital Economics, saying: “There is growing evidence that the upward pressure on core inflation from global factors is now fading.” However, ING economist James Smith warned that inflation is unlikely to fall below double digits until early next year. Ahead of his Autumn Statement, Chancellor Jeremy Hunt said tighter fiscal policy can help bring down inflation, saying this requires “some tough but necessary decisions on tax and spending to help balance the books.” Meanwhile, separate ONS analysis of October’s figures shows that the poorest 10% of households were hit by a 12.5% rise in their living costs last month, while the richest 10% of households experienced a 9.6% increase. Reflecting on the findings, Jack Leslie, senior economist at the Resolution Foundation, warned that Britain now has a “significant cost-of-living gap between rich and poor households.” 


BoE governor would refuse pay rise

Bank of England governor Andrew Bailey has told MPs he will not take a pay rise this year. Mr Bailey, who has an annual pay package of about £575,000, told the Treasury Committee: “It’s not for me to decide but if I was offered one I would not accept it. I would politely decline as I have done before.” Noting that the Bank has not decided its latest pay changes for employees, he added: “We want to ensure that out lower-paid staff get a larger share of the pot that we are offering this year because I think that is the fair way to do it in the context of the situation we find ourselves in.”

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