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Daily News Roundup: Tuesday, 15th February 2022

Posted: 15th February 2022

BANKING

Challenger banks lead customer service rankings

Analysis by Which? has revealed the best and worst banks for customer service and handling complaints. Challenger banks Starling, Monzo, and Triodos came out on top, receiving five stars for how they treat customers, with Starling and Monzo also scoring the maximum for their mobile apps. Overall, Starling’s customer score came in at 85%, while both Monzo and Triodos each received a score of 83%. Starling Bank scored high enough to be named a Which? recommended provider, joining First Direct and Nationwide Building Society. Which? said Monzo and Triodos missed out on the accolade as they have not signed up to an industry code for reimbursing scam victims. Meanwhile, at the foot of the table, Royal Bank of Scotland, HSBC and TSB scored 56%, 57% and 59% respectively. The study by Which? saw more than 4,400 members of the public polled on their opinions of their current account providers. When asked what they like about their current accounts, most respondents cited online banking facilities (47%), positive past experiences (34%) and mobile banking facilities (32%). Reflecting on the findings, Which? money editor Jenny Ross commented: “While many current account holders stick with their banks over many years, we found leading challenger banks are ahead of the traditional high street names in terms of customer satisfaction."

NatWest and RBS branch closures announced

NatWest is to close 21 branches and RBS is to shut 11 amid a customer shift to mobile banking. While most staff will be relocated to other branches, 12 jobs will be put at risk by the closures. All of the branches are located in England aside from a single RBS site in Cardiff. NatWest said in a statement: “As with many industries, most of our customers are shifting to mobile and online banking, because it's faster and easier for people to manage their financial lives. We understand and recognise that digital solutions aren't right for everyone or every situation, and that when we close branches we have to make sure that no-one is left behind.” Research carried out by Which? last year showed that nearly half of Britain's bank branches have either closed, or are closing imminently, since 2015. A total of 4,735 branches were earmarked for closure during the period, including 736 in 2021.

PRIVATE EQUITY

1,206 UK firms bought by private equity since 2020

Since the pandemic started in 2020, 1,206 British firms worth £92bn have been snapped up by private equity, according to Refinitiv data. In 2021, 773 UK private equity deals worth a total of £63bn were completed, up from 461 in 2019. Globally, 2021 marked private equity’s first ever trillion-dollar-year, with the total value of acquisitions reaching $1.2trn (£890bn), with this up 96% from 2020.

INTERNATIONAL

HSBC hands Lim top Hong Kong role

HSBC has appointed Luanne Lim as the chief executive of its Hong Kong business. She was named interim chief executive in September and was previously chief operating officer of the Hong Kong business since 2017. Ms Lim, who chairs the Hong Kong Banking Association, said: “This is an exceptional time to be part of HSBC as we accelerate our investment in Asia,” with the bank having committed to investing more than £4.4bn in Asia over the next five years, with a focus on expanding its wealth management arm.

Intesa Sanpaolo plots digital push

Italy's biggest lender, Intesa Sanpaolo, is to launch Isybank, a digital-only service targeting 4m customers who are under 40 and do not go into branches. The digital push will allow it to close 1,050 branches in the next four years and save around €800m a year from 2026. Isybank will be powered through Thought Machine's Vault core banking engine, Intesa said, adding that it was investing £40m into the British fintech firm.

HSBC scales back Swiss private bank

HSBC is cutting 110 support staff in Switzerland, with this following a year in which the Swiss private bank saw wealthy clients withdraw a net $1bn of their money. It is also scaling back its office space in Geneva, closing two floors of its office building in the city to reduce building costs by 20%.

CONSTRUCTION

Over £5bn wiped off value of UK housebuilders since start of year

More than £5bn has been wiped off the value of UK housebuilders since the start of the year. Big players Taylor Wimpey, Persimmon, Barratt Developments and Berkeley have lost £4.1bn in total – the worst fall since the market crash of March 2020. Mid-cap firms Bellway, Crest Nicholson, Redrow and Vistry Group lost another £1.1bn. With the stamp duty holiday over, interest rates rising and the cost of living squeezed by inflation and soaring energy prices, investors fear housing demand could be about to slow. The pressure looks set to increase this year, with markets predicting that the Bank of England could raise interest rates to 2% by May, and builders facing the cost of removing unsafe cladding.

FINANCIAL SERVICES

BNPL firms change ‘potentially unfair terms’

Buy now, pay later companies Clearpay, Klarna, Laybuy and Openpay have agreed to change “potentially unfair and unclear” terms and conditions. The Financial Conduct Authority (FCA) made the firms change contract terms on cancellations and continuous payment authority to make them “fairer and easier to understand”. Clearpay, Laybuy and Openpay will also refund late payment fees they had wrongly charged after customers cancelled orders. The FCA said it was able to use consumer law to enforce the changes – although it acknowledged that it is unable to regulate the sector to the same standard as other consumer credit companies. With ministers considering bringing in new rules for the sector, Labour MP Stella Creasy has criticised the FCA’s “whack-a-mole approach” to targeting BNPL companies, saying there is an urgent need for regulation that is “on a par with the regulation that every other consumer credit company has to abide by.” Noting that buy now, pay later has grown “exponentially”, Sheldon Mills, the FCA’s executive director of consumers and competition, said that while the City watchdog does not yet have powers to regulate these firms, it is able to review the terms and conditions of consumer contracts for fairness, “and have acted proactively to ensure that the BNPL industry adopts high standards in their terms and conditions.” He added that he hopes the rest of the industry will follow the four firms’ voluntary changes to conditions.

LEISURE & HOSPITALITY

Burger King UK ramps up IPO plans

Bridgepoint, the private equity owner of Burger King UK, has hired a third investment bank to advise on its planned £600m initial public offering of the fast food chain. Peel Hunt is understood to have joined Bank of America and Investec to advise on the flotation, due for the first half of the year. A City source says Bridgepoint has begun marketing the IPO to investors, adding that the listing is more likely than a secondary buyout. Bridgepoint owns about 75% of the chain, with its management and Restaurant Brands International holding the remaining stake.

MANUFACTURING

Factories face hit from soaring energy costs

UK manufacturing is set to see its overall energy bill exceed £20bn this year, with soaring oil and gas prices set to add an extra £8.7bn on to factories’ energy costs. Manufacturers have been largely unexposed to the surge in oil and gas price as they buy energy supplies 12-to-24 months in advance. However, calculations by Squeaky show that inventories allocated for later this year will have been negotiated at prices that could be as much as five times higher than they were in 2020. Chris Bowden, founder and chief executive of Squeaky, comments: “This is going to start biting during this year and next year, and we’ll see more and more comments coming from financial officers and chief executives saying energy prices are going to impact 2021/22 and 2022/23 results.

PROFESSIONAL SERVICES

Ministers set to reveal shake-up of audit regulations

Ministers will reportedly set out their plans for reform of the auditing industry within the coming weeks, with sources saying proposals are set to be signed off imminently. However, they warn that while details of the overhaul may soon be revealed, implementation may face delays as there is no guarantee the rules will be included in the Government’s next legislative programme. The planned shake-up comes in the wake of a number of corporate collapses and scandals. The FT says the changes are expected to introduce managed shared audits, requiring large companies audited by a Big Four firm to hand part of the work to smaller accounting firms, while an extended definition of ‘public interest entities’ will impose extra governance requirements on more companies.

REAL ESTATE

230k new rental homes needed to meet growing demand

Analysis by consultancy Capital Economics shows that the UK will need 227,000 new rental homes if the current growth in demand continues, with 1.8m new households set to require homes over the next decade. Official figures show that the number of households in the UK private rented sector increased from 2.8m in 2007 to 4.5m in 2017. The Guardian notes that ministers have taken a series of steps to remove tax relief for buy-to-let landlords after a rush to buy second or third properties, adding that as well as tax relief, landlords have benefited from ultra-low interest rates and capital gains from rising house prices.

RETAIL

Retailers fined for breaching CMA order

JD Sports and Footasylum have been fined £4.7m for sharing commercially sensitive information during an investigation by the Competition and Markets Authority (CMA). JD Sports bought trainer retailer Footasylum for £90m in 2019. The deal that was subsequently subjected to an in-depth investigation by the CMA, during which time the companies were ordered to operate as separate businesses. However, the competition watchdog accused the firms of deleting phone records and found evidence that JD Sports’ executive chairman Peter Cowgill and Barry Brown, his counterpart at Footasylum, held a meeting in a car park. Kip Meek, the chair of the CMA inquiry group, said there is a “black hole when it comes to the meetings”, with both CEOs unable to recall crucial details. JD Sports was fined £4.3m for failure to comply with the CMA’s order to operate as a separate business during its investigation, with Footasylum fined £380,000.

ECONOMY

Experts expect inflation to climb

City experts expect inflation to hit 5.5% when Office for National Statistics figures are released tomorrow. Andrew Godwin, chief UK economist at Oxford Economics, said: “The surge in inflation will place the biggest squeeze on household finances in more than a decade.” The Bank of England recently revised down forecasts for GDP growth in 2022 to 3.75% from 5%, with inflation predicted to peak at 7.5% in April.

OTHER

PAC questions HMRC’s Covid fraud stance

A Public Accounts Committee (PAC) report has warned that HMRC’s “unambitious” plans for recovering £6bn in COVID-19 support payments that were paid out through fraud or mistakes could lead to the Government writing off a large sum of taxpayers’ money. This, the report adds, “risks rewarding the unscrupulous and sending a message that HMRC is soft on fraud”. The Association of Accounting Technicians flagged the issue to the PAC in November 2021, highlighting that HMRC estimated £5.8bn has been lost to fraud and error against a spend of over £80bn, while also expressing concerns about HMRC’s approach to recovering the money.

Taxman probes crypto assets

HMRC has opened more than 20 criminal investigations involving crypto assets such as Bitcoin, with tax authorities looking into increasing numbers of tax fraud and tax evasion cases where the use of crypto assets is known or suspected. Staff have been trained to use specialised tools and gather data to help investigations involving crypto assets, with a special technology-focused team assembled amid a surge in money laundering aided by digital currencies.

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