BANKING
Fintech challengers outdo high street rivals in CMA ranking
Challenger banks Starling and Monzo have beaten high street rivals in an official ranking of UK lenders by the Competition and Markets Authority (CMA). Starling and Monzo came out on joint top for personal current account holders, while Starling was just ahead of Monzo in the business banking rankings. At the opposite end of the league tables, the Co-operative Bank, Virgin Money and HSBC polled bottom for business banking, while Royal Bank of Scotland, Virgin Money and TSB fell to the bottom of the list for personal current accounts. Starling Bank founder and CEO Anne Boden said the results showed that banks did not need to “rip off customers” to deliver good service. She said: “You can be fair … It all starts with identifying customer needs and working back from there.” Adam Land, senior director at the CMA, said the results “show how banks are treating their customers at a time when many are feeling the pinch.” He added: “When times are tough you find out who’s fighting your corner and if your bank doesn’t match up to the competition – you can vote with your feet and make a switch.”
PRIVATE EQUITY
US private equity firm eyes British tech company
US private equity firm Thoma Bravo has launched a multibillion-pound takeover bid for the cybersecurity company Darktrace. It marks the latest American raid on British tech, with it noted that Thoma Bravo bought UK cyber company Sophos for £3.1bn in 2019.
AVIATION
Heathrow extends cap on passengers
Heathrow is to extend a cap on the number of passengers flying from the airport until the end of October due to staff shortages. After consulting with airlines, a daily limit of 100,000 departing passengers will now apply until October 29, extending the cap until after school half-term holidays. The airport will keep the cap under regular review and could lift it early if staffing levels improve. When the cap was first announced in July it was initially in place until September 11.
FINANCIAL SERVICES
1m trusts yet to register with HMRC
Research by Canada Life shows that around 1m trusts are yet to be registered with HMRC, despite an increase in registrations this year. HMRC received over 36,000 registrations in May and June, with this almost twice as many as was received for the whole of 2021. Data shows 61,692 trusts were registered within the first six months of 2022, taking the total number of registrations since the Trustee Registration Service began in 2017 to 211,381. Stacey Love of Canada Life said that while the increase is positive, the “clock is ticking” and there remains a long way to go to ensure all trusts that are required to register do so before the September 1 deadline. Elsewhere, a survey from HSBC Life reveals that 63% of advisers are worried about their clients failing to register their trusts. The poll saw 27% of advisers say they do not think their clients know their responsibilities as trustees, while 8$ of advisers were unaware of the new rules requiring trustees of any UK express trust to register key information.
Concerns raised over FCA redress proposals
Carla Langley, founder of the Langley Consultancy, has voiced concern over the Financial Conduct Authority’s (FCA) proposals around pension transfer redress, warning that there is a “significant lack of putting the clients' best interests first.” She asks how in a scenario where a defined benefit to defined contribution case is assessed as unsuitable - and by default a DC arrangement is unsuitable for a client – “why would it be the right thing to add to that unsuitable DC solution by way of compensation?” Ms Langley goes on to suggest “current redress guidance, and the proposed redress guidance, does nothing but create client detriment” and accuses the City watchdog of “running roughshod” with its new proposals. Noting that it might be difficult for the FCA to make changes that deliver a better outcome, she argues that “when it comes to protecting consumers, nothing should be too much.”
Crypto poses serious challenges for regulators
Laura Noonan in the FT says the world of crypto is moving at such a pace that regulators are struggling to keep up with the changing landscape. Separately, Eswar Prasad considers how regulators might facilitate innovation while keeping risks contained.
MEDIA & ENTERTAINMENT
Activist investor calls for changes at Disney
Activist investor Dan Loeb, head of hedge fund Third Point, has suggested sweeping changes at Disney, writing to CEO Bob Chapek to call for cost-cutting measures and a shake-up of the board. While he praised Mr Chapek, Mr Loeb also proposed a list of initiatives he and the board should pursue to boost growth. He said Disney's board needs to be refreshed, finding "gaps in talent and experience as a group that must be addressed." He added that he has identified potential directors but declined to elaborate. He also said a sale of ESPN would bring down Disney's $46bn debt pile, adding that the Hulu streaming service should be integrated with Disney+.
REAL ESTATE
House prices drop for the first time this year
Data from Rightmove shows that asking prices have dropped for the first time this year. The typical asking price fell by 1.3% between July and August, slipping £4,795 to £365,173. The property portal said the 1.3% month-on-month drop was in line with the average drop seen in August over the past 10 years, attributing the decline more to a seasonal lull than to issues such as rising interest rates, the cost of living squeeze and slowing economic growth. The analysis also shows that prices were up 8.2% year-on-year in August. Tim Bannister, Rightmove’s director of property science, said: “It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year, but right now the data shows that they are not having a significant impact on the number of people wanting to move.” Rightmove expects annual house price growth of about 7% over 2022.
New UK lender plans 50-year fixed rate mortgages
Financial regulators have granted specialist lender Perenna a licence to offer mortgages with fixed rates of up to 50 years. It will initially provide loans locking in rates for 30 years.
RETAIL
Ted Baker ‘close to agreeing' £200m takeover offer
Ted Baker is close to agreeing a reduced takeover bid worth about £200m from the American company behind Reebok. Authentic Brands is said to have withdrawn a higher proposal, worth about 160p a share, in June amid worries about the state of the British high street and falling consumer confidence. It has now come back with a 110p-a-share proposal, with a deal possibly announced to the stock market as early as today, Sky News reports. The revised price, although lower, is still at about a 20% premium to Ted Baker’s closing share price last night of just above 93p.
ECONOMY
Economists say a 0.5% rate hike is on the cards
Experts believe that the Bank of England will deliver another 0.5 percentage point increase in interest rates next month. A Reuters poll found that 30 of 51 economists expect rates to jump from 1.75% to 2.25% in September, with the remainder forecasting a 0.25 percentage point rise to 2%. The predictions come as the Bank looks to tackle soaring inflation. Efforts to rein in price increases have seen officials increase rates from record lows of 0.1% in December to the current 1.75%. Inflation hit a 40-year high of 9.4% in June and official figures tomorrow are likely to show it closer to 10% in July. Elizabeth Martins, an economist at HSBC, said: “With growth slowing, it is tempting to assume the Bank will be thinking of hitting the brakes, and could even be cutting rates within the next year. But for now at least, the problems are supply and inflation driven – allowing inflation to rise even further risks only making the situation worse.”
Inflation set to wipe out pay increases
With official figures on inflation, jobs and earnings due this week, the Evening Standard’s Jonathan Prynn says that while data published today is expected to show that wages rose strongly in Q2, official inflation figures due tomorrow are set to see this “more than wiped out” by the surging cost of living. Consumer Prices Index inflation is forecast to have risen by around 9.8% in the year to July, although some City analysts believe it may hit the 10% milestone in the latest reading. The alternative measure of inflation, the Retail Prices Index - which includes property costs, is set go even higher and could come in at around 13%.
OTHER
More than 90 new firms an hour in H1
Analysis of Companies House data by small business lender iwoca shows that more than 90 new businesses were created every hour in the UK in the first half of 2022. Despite a challenging economic climate, more than 402,000 businesses were registered between January and June. This marks an increase of 18% on H1 2021. London led the way with 1,587 new firms set up per 100,000 people. All ten local authorities with the highest number of businesses per head were in the capital. Scotland was at the bottom of the list for start-ups, with only 338 businesses opening per 100,000.