BANKING
PSR will make banks reimburse fraud victims
Banks will be forced to reimburse anyone who loses more than £100 to bank transfer or payment fraud, under new plans outlined by the Payment Systems Regulator (PSR). As of next year, victims will get their money back in all but “exceptional cases.” The regulator said the policy change will “incentivise banks and building societies to prevent scams.” The PSR says banks must settle all fraud claims within 13 months. It also proposes that liability for refunds should be split between the sending and receiving bank, with current rules stating that only the bank where the money is sent from is liable. Chris Hemsley, managing director at the PSR, said: “We want to see all banks, building societies and other payment providers doing more to prevent these scams from occurring in the first place.” He added: “We’ve seen progress over the last few years. Some firms have even gone much further with fraud guarantees, so we know people can be protected effectively. Our proposed rules will see everyone benefiting from strong protections, regardless of who they bank with.” Data from UK Finance shows that while almost £500 is lost to bank transfer fraud every minute, only half of the money is reimbursed to victims.
Record decline in mortgage deals
Lenders yesterday pulled a record number of mortgages in a single day, with data from Moneyfacts showing that there were 935 fewer mortgage products than 24 hours earlier. This is the steepest one-day decline since the firm began collating the data in November 2011 and is more than double the previous record of 462 seen in April 2020. The analysis shows there were 2,661 mortgage products available on Wednesday, down from 3,596 on Tuesday and 3,880 on Monday. The number of home loan deals available has been steadily declining since the Chancellor announced massive, debt-funded tax cuts and billions of spending in last week’s mini-Budget. Before Kwasi Kwarteng’s announcement on Friday, there were 3,961 mortgage products to choose from.
British Business Bank warns on small firm defaults
The British Business Bank (BBB), which helps small businesses access finance, has warned that smaller firms face a challenging few years on the back of the economic downturn. It said lending to start-ups and the smallest businesses could be particularly vulnerable to the impact of economic uncertainty as they often do not have collateral. This, it added, could lead to an increase in credit losses if more businesses default on their loans. The state-owned BBB said: “There is a danger that credit and investment losses, including a large write-down of individual investments, could have a material impact on the bank’s ability to meet its return target in 2022/23.”
JPMorgan set to double Chase’s UK headcount
JPMorgan is planning to double the headcount at its British digital bank Chase in the next two years. Chase, which launched in the UK 12 months ago, yesterday revealed it had passed 1m customers and now holds deposits of over £10bn. The digital bank’s UK chief executive Sanjiv Somani commented: “We want to be international, starting with the UK.”
AUTOMOTIVE
Costs could put the brakes on automotive sector recovery
Data from the Society of Motor Manufacturers and Traders (SMMT) shows that the UK’s automotive sector has seen its fourth consecutive month of growth. The figures show 49,901 units were built in August, with this a 34% year-on-year increase. Despite this, experts have warned that inflation and a weakened pound could threaten businesses. Lisa Watson from Close Brothers Motor Finance said: “In the new vehicle market, the weakness of the pound will step up pressure on importers and manufacturers reliant on stock and parts from overseas.” A survey from the SMMT shows that 70% of members are worried about the impact of soaring energy costs on operations, making this the single biggest concern for UK automotive makers.
FINANCIAL SERVICES
Industry welcomes FCA advice-guidance review
Sarah Pritchard, the Financial Conduct Authority’s (FCA) executive director, says the City watchdog is looking at transforming advice and guidance rules. She said: “Mifid was introduced 15 years ago and had a clear distinction between advice and guidance,” noting that offering advice on what to invest in “carries with it a heavy regulatory burden.” Saying that the costs involved mean only the relatively well-off can access advice on investing, Ms Pritchard warned that mass market consumers “are often left to navigate a bewilderingly large choice with little support.” Tom Selby, head of retirement policy at AJ Bell, said that while those who are willing and able to pay for regulated advice are “well served” by the market, “those who do not take advice need better, more personal guidance so they can make financial decisions which are more likely to lead to ‘good outcomes’, in line with the FCA’s consumer duty.” He added: “We welcome the FCA’s acknowledgment of this issue and urge the regulator to push forward its review at pace.” Pimfa head of public affairs, Simon Harrington, said it welcomed the regulator’s view that current suitability requirements represent a “significant regulatory burden to providing stripped down, simplified services.”
LEISURE & HOSPITALITY
Pub owner warns of price rises
Shepherd Neame has reported that pre-tax profits recovered to £7.4m for the year to June, compared with a £16.4m loss over the same period last year. However, the pub owner warned that further increases to the price of a pint are "likely" as surging costs continue.
Wetherspoon puts 32 pubs up for sale
Pub chain JD Wetherspoon is selling 32 pubs after previously warning that it could lose £30m due to rising staff wages and a slow post-pandemic recovery. London sees the highest number of losses with nine pubs set to be closed.
REAL ESTATE
Mortgage costs could see house prices slump
Analysts have warned that soaring mortgage costs could force millions of homeowners to sell up, with this potentially leading to a property price crash. Analysts at Credit Suisse said a perfect storm of higher interest rates, inflation and the risk of recession could see house prices fall by up to 15%. The market has been hit as lenders have pulled hundreds of mortgage deals amid fears interest rates could climb to 6% next year. Andrew Garthwaite at Credit Suisse said: “The 8% decline in sterling since August 1 should add a further 1.3% to near-term inflation. On current swap rates, the average mortgage will be 6.3%. House prices could easily fall 10% to 15%.” Elsewhere, Andrew Wishart, a senior property analyst at Capital Economics, said a significant drop in house prices is “inevitable” as rising interest rates push up mortgage rates and reduce the size of loans lenders can offer.
RETAIL
Food inflation hits record high
Food inflation has surged to the highest rate ever recorded on an index launched in 2005. The British Retail Consortium and NielsenIQ shop price index shows that food inflation hit 10.6% in September, up from 9.3% in August. For fresh food, price inflation is at 12.1%, compared to the 10.5% recorded in August. Overall, shop price annual inflation accelerated to 5.7% in September from 5.1% last month. Non-food inflation stood at 3.3% in September, with this just above the three month average of 3.1%.
Morrisons profit hit by ‘unprecedented’ inflation
Morrisons has reported that adjusted profit fell to £177m in the 13 weeks to the end of July, down from £356m in the same quarter last year. Excluding fuel, the retailer reported a 3.1% fall in like-for-like sales, or sales in stores open for a year or more. However, group revenue rose by 4.5% to £4.79bn. The company said that there had been "unprecedented inflationary pressures" in its food production operations.
ECONOMY
No U-turn on Budget despite market turmoil
Treasury Minister Andrew Griffith says the Government will not abandon its mini-Budget, despite Labour calling for a U-turn on the tax-cutting measures which have sparked a fall in the pound and a surge in borrowing costs. Mr Griffith insisted that the Government's proposals are “the right plans,” adding that they will make the UK economy competitive and deliver growth. This comes after the International Monetary Fund warned that the measures announced by Chancellor Kwasi Kwarteng last week were likely to fuel the cost-of-living crisis. The market turmoil seen since the mini-Budget has prompted the Bank of England to announce it will buy government bonds on a temporary basis to help "restore orderly market conditions." Mr Griffith said the Bank had "done their job" by announcing it would buy government debt to stabilise the economy. Elsewhere, MP Mel Stride, chairman of the Treasury Select Committee, has criticised the Government for not publishing a forecast of the UK's economic outlook from the Office for Budget Responsibility, saying it could have been used to reassure the markets and show that the plans are “fiscally credible."
Bank move driven by fears over pension funds
The Bank of England has pledged to buy £65bn of Government bonds after last week’s mini-budget sparked turmoil on financial markets and the pound plunged. The Bank said its decision to buy the bonds at an "urgent pace" was driven by concern over "a material risk to UK financial stability." There had been concern that a collapse in the price of bonds was forcing some pension funds to sell gilts and assets, further forcing down the price, with a risk that the pension funds could have got to a position where they were unable to pay their debts. The Pensions Regulator said it is monitoring financial markets closely for their impact on the funding of defined benefit, or final salary pension schemes, with a spokesperson saying the regulator welcomes the Bank’s efforts to “restore orderly conditions” through temporary purchases of long-dated bonds.
CBI chief urges Government to show it can boost growth
Tony Danker, director-general of the Confederation of British Industry, says ministers must deliver reforms to show that the Government can boost economic growth. With markets shaken after the Government announced huge tax cuts, Mr Danker said the markets' reaction “matters because the markets are lending us the money.” He added: “Every day, every week, every month, the Government will now be critiqued by markets and businesses on how serious they are about growth and about their fiscal responsibility to pay back debt.”