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Daily News Roundup: Tuesday, 27th August 2019

Posted: 27th August 2019


CMA: RBS and Santander breached PPI reminder rules

The Competition and Markets Authority (CMA) has rapped Santander and the Royal Bank of Scotland for not properly reminding payment protection insurance (PPI) customers how much they had paid and that they were able to cancel their plan. In 2011 the CMA’s predecessor, the Competition Commission, ordered all banks to send annual reminders to customers but RBS forgot to remind nearly 11,000 customers of their rights for up to six years, while Santander’s reminders to more than 3,400 mortgage customers included incorrect information between 2012 and 2017. The CMA’s Adam Land commented: “It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force.” The watchdog will force the two banks to appoint independent auditors to look into their PPI processes. The Sunday Telegraph reports that analysts predict that banks will have to top up their compensation pot by £1bn after the Aug 29 deadline for complaints, bringing the total bill for PPI to almost £50bn.

Rapid online lending boost demand for Esme

Esme Loans says that it will have lent £100m to small businesses before Christmas. The lender, which is a division of NatWest, says that its loan book has grown by 40% over the past four months as NatWest’s owner, Royal Bank of Scotland, indicated that it was making progress in responding to online competition from non-bank rivals. Veronika Lovett, Esme’s chief marketing officer, has said that the service is aiming to be lending £1bn a year to small companies within a few years. Richard Kerton, chief executive of Esme Loans, said that the service’s “digital process and fast approval times” were resulting in increased demand.

Emerson to chair new challenger bank

The Telegraph talks to banking veteran Ron Emerson who is lined up to chair a new small business lender. B-North, which will be called Bank-North when it has its licence, is backed by the Greater Manchester Combined Authority and is set for launch late next year with a series of “lending pods” across the UK. Emerson, who is the founding chairman of the British Business Bank, says B-North will be highly flexible and able to take advantage if big banks shrink back further from SME lending.

Refund scheme at risk over funding

The Telegraph reports that banks cannot agree how to fund compensation payments for victims of fraud where nobody is to blame. A voluntary code introduced in May sees victims reimbursed if the bank was at fault and also says customers who took reasonable steps to protect themselves would be repaid, even without fault from the bank. UK Finance suggested a 2.5p levy on bank transfers to cover the cost of the no-blame payouts but backing for such a move is said to be unlikely. The Telegraph notes that failure to agree how to fund it could put the initiative at risk.

Banks to keep phone lines open over PPI

A number of banks have extended their phone lines until midnight on Thursday to cope with demand from customers making a last-minute PPI compensation claim. Lloyds, Nationwide, HSBC, Barclays and Santander will all stay open until midnight or just after, while NatWest's lines are open until 8pm as usual. Meanwhile, a Welcome Financial Services customer has won a case against the loan provider claiming it had been paid excessive levels of commission for selling her the insurance and this constituted an unfair relationship. Lawyers for the claimant said that in cases where an unfair relationship existed, as in this instance, banks could be challenged in court after the FCA's deadline.

Revolut adds to top team

Challenger bank Revolut has named a new treasurer, deputy chief financial officer and director of financial crime risk. Wolfgang Bardorf, a former executive director at Goldman Sachs who is currently global head of liquidity models and methodologies at Deutsche Bank, will become its new treasurer. Stefan Wille becomes deputy CFO, having been a corporate finance manager at Credit Suisse, while Philip Doyle, previously head of financial crime at ClearBank, becomes director of financial crime risk.

Britons who left US as children risk having UK bank accounts frozen

Thousands of so-called accidental Americans, who were born in the US but left when only a few months or years old, are being chased by UK banks for an American tax identification number that they never had, the Guardian reports. The 2010 Foreign Account Tax Compliance Act (Fatca) requires foreign financial firms with US operations – including UK banks – to report information about US taxpayers to the Internal Revenue Service via HMRC. Britons born in the US face having their accounts frozen by British banks fearful of large fines if they fail to hand over details to US tax authorities.

Bramson told to 'give up' his siege

Activist investor Ed Bramson is being urged by Barclays shareholders to “give up” his battle against the bank. Mr Bramson, who runs Sherborne Investors, lost his battle to get a seat on the bank’s board in May after winning over less than 4% of investors. Last week he said he planned to continue fighting for an overhaul but investors say it is evident shareholders do not want him to pursue his campaign. Separately, the Financial Conduct Authority has said Barclays was the bank worst-hit by internet glitches, recording 21 major incidents in the year to July.

Judge backs bank but questions approach

Student Aniekan Boyo took legal action against Lloyds after her account was frozen when she went nearly £1,000 overdrawn. Judge Anthony Metzer concluded that the bank acted lawfully and ruled in their favour but said Lloyds had operated with a "regrettable amount of lack of empathy" and taken an "inflexible approach".


Investors and boards must not raise the white flag too early

David Cumming, the chief investment officer for equities at Aviva Investors, writes in the Sunday Times on how investors must do more to hold bosses to account and persuade boards to defend themselves more robustly from unsolicited bids. He laments the ease with which some companies have succumbed to private equity advances of late, “with companies selling out too cheaply — either because of boards being driven by the personal agendas of executive managements who have tired of public markets, a general tendency for boards to raise the white flag too early, or shareholders being too happy to sell out too soon.”

Fears over Cobham sale unfounded

Cobham boss David Lockwood has denied the company’s sale to US group Advent would risk Britain’s national security or threaten the country’s industrial base saying there was “no logic” to such arguments.


Deutsche Bank to pay $16m SEC settlement

Deutsche Bank has agreed to pay a $16m (£13m) fine to the US Securities and Exchange Commission (SEC) over allegations that it hired unqualified relatives of government officials to win business between 2006 and 2014. The SEC said the bank used false books to record the hiring of people related to powerful officials in China and Russia, meaning they did not have to go through rigorous interview processes. A Deutsche Bank spokesman said the bank, which did not admit wrongdoing, has taken action to improve its hiring practices. Other lenders have already had to settle over similar allegations, with Credit Suisse paying £63m to US authorities last year, while JP Morgan paid £215m in 2016.

UBS appoints BoE adviser

UBS has appointed Bank of England adviser Huw van Steenis to chair its new sustainable finance committee. Mr van Steenis, former global head of strategy at Schroders and head of banking research at Morgan Stanley, will report to UBS group chief executive Sergio Ermotti and chief financial officer Kirt Gardner

ING takes on Australia’s big four banks in wake of scandals

Dutch lender ING has enjoyed significant growth in Australia driven by an expansion of its digital-only products and the reputational hit to the big four domestic lenders from a misconduct scandal.

Farkas lined up to head banking lobbying group AFME

Adam Farkas is in talks to replace Simon Lewis as CEO of the Association for Financial Markets in Europe (AFME), according to reports. Mr Farkas has been the executive director of the European Banking Authority (EBA) since 2011.

SMTAM looks to US market

Sumitomo Mitsui Trust Asset Management, Japan's biggest asset manager, is to expand into the United States. Chief executive Yoshio Hishida has confirmed plans to open a New York office, possibly in 2020, with an initial staff of around 10 people.

World’s top wealth manager urges clients to sell stocks

UBS Wealth Management has trimmed its core equity recommendation to an “underweight” position for the first time since the height of the eurozone crisis in 2012.


Customers vent fury over British Airways handling of pilots’ strike

British Airways has infuriated passengers forced to rebook flights in the wake of a planned pilots’ strike next month. Customers say it has been impossible to contact the airline to rebook while others had bought new flights after being mistakenly emailed about cancellations on days strike action was not planned for. The British Airline Pilots’ Association has confirmed plans to walk out on September 9, 10 and 27 after pay talks broke down.


Carney in secret Libra talks with Facebook

MPs are calling for details of conversations between Mark Carney and Facebook chief Mark Zuckerberg to be released after it emerged the Bank of England Governor visited California in April reportedly to discuss Facebook’s plans for a digital currency. G7 finance ministers recently said Libra threatens global financial stability and may help criminals launder money.

Lloyds-Schroders wealth management staff hit out at IT problems

The FT reports that the launch of Schroders Personal Wealth has been hampered by IT problems, including concerns about the Schroders-owned Benchmark technology platform.

Push to raise proportion of women in top roles hits ceiling

Despite efforts to increase the number of women in the most senior roles in the City, the rise in male applicants for the FCA’s Senior Managers Regime has outstripped that of female applicants.

Azimo plans £100m float

Cross-border payments start-up Azimo plans to float in the next two years, outgoing chief Michael Kent has said. Mr Kent is due to hand over to Azimo's operations chief Richard Ambrose, a former PayPal executive.

Peer-to-peer industry faces harsh reality when winter comes

Robert Armstrong says in the FT that P2P lenders striving for high returns and with high marketing costs will be the ones that suffer in the event of a downturn.


Babcock set to build new cut-price frigates

Babcock is set to build a new fleet of cut-price frigates for the Royal Navy with a consortium led by the defence supplier expected to be announced as the winner of a £1.25bn Government contract next month. Giving the Type 31e contract to Babcock would break BAE Systems’ virtual monopoly over Britain’s warship industry and comes amid fears the Navy has too few ships.

Britain trails behind in key technology battle

Analysts say Britain risks seeing carmakers with UK operations shift production elsewhere as it falls behind in terms of battery manufacturing.


Consultants earn £46m for FTSE 100 pay advice

Research by the Times shows that consultancy firms advising the remuneration committees of current FTSE 100 companies saw the fees they received increase by 18.4% to £9.9m last year from £8.4m five years ago. In total, such firms have earned £46m for advice on pay for directors at Britain’s biggest public companies in the past five years.


L&G signs major office deal in Leeds

Legal & General will develop a 377,730 sq ft project at 7-8 Wellington Place in Leeds after buying the Government hub from Hermes Investment Management and Canada Pension Plan Investment Board (CPPIB) for £211m.

IWG mulls US listing

Shared offices group IWG is in talks with investment banks about spinning off its US business to take advantage of the co-working boom fuelled by rival WeWork.


Apollo targets distressed retailers

US investment firm Apollo is set to capitalise on further high street woes after doubling the size of its investment in a new fund with Alteri Investors. Alteri was set up in 2014 to focus on struggling retailers and invest between £10m and £50m. A second, larger fund will allow it to target distressed and underperforming European retailers with sales above £100m.


BoE may be forced to loosen policy, says Carney

The Governor of the Bank of England has warned that monetary policy may have to be loosened to help the economy in the event of a no-deal Brexit. However, Mark Carney, speaking at the Federal Reserve Symposium, added that there were limits as to how much the economy could tolerate a rise in inflation caused by a falling pound. While the Monetary Policy Committee’s reaction would depend on how demand, supply and the exchange rate were hit, “the appropriate policy path would be more likely to ease than not”, he stated.


Johnson: Next BoE chief must be independent and "first class"

Speaking in Biarritz over the weekend, Boris Johnson said the next Governor of the Bank of England had to be someone who was independent and "first class in every respect". Incumbent Mark Carney is due to stand down at the end of January 2020.

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