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Daily News Roundup: Thursday, 30th June 2022

Posted: 30th June 2022

BANKING

Bank fraud hits a record £1.3bn

Banks have revealed how a record £1.3bn was stolen by fraudsters last year. Scams where victims were manipulated into divulging personal details or transferring money made up the bulk of cases, with 195,996 examples of authorised or push payment scams, with savers tricked into handing over £583.2m in 2021. The total marks a 27% increase in cases on the previous year and a 39% spike in the amount of money stolen. UK Finance data show savers lost £171.7m to criminals offering fraudulent investment opportunities alone – a 57% increase on 2020. Analysis shows that banks blocked 65.3p of every £1 scammers attempted to steal, down from 67.3p and 68.8p in 2020 and 2019 respectively. UK Finance said this was down to a drop in the number of high-value cheque fraud cases, which previously boosted the figure. It also stressed it had still stopped £1.4bn from falling into the hands of criminals.

Lloyds reshuffles bankers as part of chief’s new strategy

Lloyds Banking Group is reportedly restructuring the business. Transformation director Stephen Noakes is set to leave the lender while Vim Maru, group director of the retail bank, has already left.

INTERNATIONAL

Australian lender Volt collapses

Volt, the first online-only bank to gain an Australian banking licence, is shutting down. It is returning deposits and selling its mortgage book as it has been unable to raise sufficient funds to support the business. Volt founder and CEO Steve Weston said: “We have considered all options but ultimately we have made this call in the best interest of our customers.”

Credit Suisse scraps negative rates for private clients

Credit Suisse is scrapping the negative interest rates it has charged wealthy Swiss clients since 2020.  It said in a statement: “Despite the continued negative interest-rate environment, Credit Suisse will repeal the account balance fee and thus move away from using negative interest rates in Swiss francs as of July 1 for the private client business.”

FINANCIAL SERVICES

City watchdog supports ESG regulation

The Financial Conduct Authority (FCA) has backed regulation of environment, social and governance data and ratings agencies, saying it supports Government proposals that would bring oversight of these products and services under the regulatory umbrella. “We see a clear rationale for regulatory oversight of certain ESG data and rating providers – and for a globally consistent regulatory approach informed by the recommendations on ESG data and ratings developed by the International Organization of Securities Commission in 2021,” the City watchdog said. In a clampdown on greenwashing, the FCA said it would consider the case for enforcement action against bond issuers making inaccurate environmental claims in prospectuses or other advertising. In a feedback document, the FCA said it was taking “a measured approach to ESG-labelled debt instruments, with the aim of setting clear guard-rails as the market continues to develop.” Richard Stone, chief executive of the Association of Investment Companies, welcomed the FCA’s stance, saying “ESG is an increasingly important investment consideration for investors, but too many claims still do not stand up to scrutiny.”

FCA increases adviser fees by 5.6%

The Financial Conduct Authority (FCA) is increasing its annual funding requirement (AFR) for advisers by 5.6% from July, with the AFR for advisers to go up from the proposed amount of £86.5m in April to £86.8m from 2022/23. The regulator said minimum fees for advice firms will increase to £1,500 for 2022/23, from £1,151 in 2021/22, and increase further to £1,750 in 2023/24. These rises will continue with the fee set at £2,000 in 2024/25 and £2,200 in 2025/26. In response to a consultation, the FCA said it received a significant amount of feedback that it should not increase fees, especially minimum fees for small firms. The watchdog said it froze the minimum and flat-rate fees for two years during the pandemic. It added that despite the hike for advisers, since consulting it has reduced the overall AFR from the proposed £640m to £630.9m. The FCA said it was able to reduce the total amount of fees payable by retaining sufficient revenues from financial penalties to cover its 2021/22 enforcement costs. The regulator noted that the number of advice firms has fallen, with an estimated 11,651 firms in 2022/23, compared to 11,901 in 2021/22.

Entrepreneur First lands $158m

Scale-up investor Entrepreneur First has raised $158m from a funding round it says will help spur on the next generation of tech talent. Backers in the latest funding round include Stripe co-founders John and Patrick Collison and co-founder of Wise Taavet Hinrikus. Matt Clifford, CEO and co-founder of Entrepreneur First, commented: “The idea of taking strangers and helping them start robust and ambitious companies is no longer radical but essential to power the next stage of innovation.”

LEISURE & HOSPITALITY

Whitbread CEO to leave

Alison Brittain is set to leave her role as CEO of Premier Inn owner Whitbread in February, which will see the number of female CEOs in the FTSE 100 fall to nine. She will be replaced by Domino's Pizza boss Dominic Paul. The news comes just weeks after more than 38% of shareholders voted against her £2.16m payout at Whitbread's AGM. 

MANUFACTURING

Manufacturers in tariff plea

Manufacturers have urged ministers to allow them to import more steel products without paying tariffs because domestic suppliers have failed to meet demand, leaving them facing 25% duties on a key raw material. Since Britain left the EU, imports of a type of steel face a 25% tariff if they exceed a certain quota level, with this designed as a safeguarding measure to encourage domestic steel production. The quota currently covers about a third of British manufacturers' usage, and the Government has proposed doubling it in size. However, manufacturers say this will still leave them short and Steve Morley, president of the Confederation of British Metalformers (CBM), said that while increasing the quota “is a step in the right direction”, it is not enough to protect members. The CBM says the 25% tariffs on imports over the quota "raises the very real prospect of lost orders and production being moved away from the UK."

REAL ESTATE

Remortgage sales hit highest level since early 2020

Remortgage sales hit 92,558 in Q4 2021, marking the highest level of activity since before the pandemic. Analysis from digital lender Freedom Finance shows remortgage sales outnumbered all other types of home loans for the first time since the third quarter of 2020. Meanwhile, sales of mortgages for first-time buyers (112,005) and house mover mortgages (133,890) – which both reached a five-year peak in Q2 2021 - slumped in the fourth quarter to 89,542 and 75,726, respectively. Andrew Fisher, chief commercial officer at Freedom Finance, said: “The gloomy economic environment and the consecutive rate rises from the Bank of England are only likely to drive further demand in the remortgage market as borrowers look to lock in to fixed-rate loans either from variable rate mortgages or as their existing deals come to a close.”

RETAIL

B&M reports drop in sales

B&M has reported a 9.1% decline in like-for-like UK sales in the quarter to June 25, compared to a year earlier. There was a 2% decline in group revenue over the quarter to £1.16bn. The discount retailer reiterated its full-year guidance for underlying profits of between £550m and £600m, down from £619m in the year to March 26.

Mulberry boss in tax-free shopping warning

Thierry Andretta, CEO of luxury brand Mulberry, has called for the return of tax-free shopping, saying the end of the VAT retail export scheme has hurt London and the wider retail sector. The change, which came into effect in January 2021, means tourists can no longer reclaim tax.

ECONOMY

Bailey: BoE can’t rule out August rate rise

Bank of England governor Andrew Bailey has not ruled out raising rates by 50 basis points at the next meeting. He told the European Central Bank’s (ECB) conference that policymakers “have the option” of acting more forcefully to rein in inflation if needed. He said: “There will be circumstances in which we will have to do more … We’re not there yet in terms of next meeting. But that’s on the table. But you shouldn’t assume it’s the only thing on the table.” Mr Bailey also warned: “I think the UK economy is probably weakening rather earlier and somewhat more than others.” With the Bank expecting inflation to surpass 11%, markets say there is an 80% chance that it will raise rates by 50 basis points in August. Meanwhile, Federal Reserve chair Jerome Powell warned it was important to avoid persistent inflation. He said: “The clock is kind of running on how long you will remain in a low inflation regime.”

MPC appointee backs 'very gradual' moves on rates

Incoming Bank of England policymaker Swati Dhingra believes the Bank should tighten monetary policy gradually because the economy appears to be slowing faster than previously thought. Dr Dhingra, who joins the Monetary Policy Committee as an external member in August, said that while she might have leaned towards a half-point rise at this month's meeting, she now feels this would have been a mistake, due to a sharp fall in consumer sentiment. She told the Treasury Select Committee: “In hindsight now I think that maybe there is some room for a very gradual approach here,” adding: “Newer data is starting to show that possibly a slowdown has become much more imminent than we thought before.” Dr Dhingra also noted that the impact of Covid and that of Brexit are still difficult to differentiate, saying there is a need for “much more granular assessments of how things are panning out.”

World Bank economist sceptical global recession can be avoided

World Bank chief economist Carmen Reinhart is sceptical that global economies can avoid a recession amid a climate of surging inflation and higher interest rates. She told Reuters: “What worries everybody is that all the risks are stacked on the downside.” The World Bank earlier this month cut its global growth forecast by nearly a third to 2.9% for 2022. It added that global growth could fall to 2.1% in 2022 and 1.5% in 2023 if downside risks materialised.

OTHER

Market turbulence hits IPO plans

A new poll shows that fast growing UK firms are shelving plans for initial public offerings due to concerns over a recession and inflationary pressures which are hitting public markets. The survey by Coupa Software saw 87% of pre-IPO firms say they were now looking to delay plans for a shift onto the public markets. Business leaders surveyed said that delays were driven by the turbulent economic backdrop, with 31% pointing to rising interest rates as the key reason for the delay and the same proportion citing turmoil on equity markets. Only one in five of those surveyed said they are confident they have the financial stability to meet growth plans laid out prior to the economic downturn. Meanwhile, data shows a steep decline in London’s IPO market in Q1. Flotations on the London Stock Exchange raised £308m between January and March, compared to £5.6bn last year.

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