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Daily News Roundup: Tuesday, 7th February 2023

Posted: 7th February 2023


Banks' online security flaws 'put customers at risk of fraud'

A study by the consumer group Which? has found that banks are putting customers at risk of fraud by sending security codes via text. In an investigation into 13 current account providers, Which? found that many sent a one-time passcode by SMS, even though the consumer group said this was the least secure way to authenticate customers because criminals were increasingly intercepting texts. It awarded top marks to banks that asked customers to use a card-reader or their mobile banking app to log in. The banks were scored across four categories - login, navigation and logout, account management and encryption - for both their online banking security and app security. For logins, which include checks on passwords and passcode processes, HSBC scored five out of five stars; Starling, Lloyds, First Direct, Nationwide and Virgin Money scored four; while TSB, Santander, Barclays and NatWest scored three. Virgin Money got the lowest total scores for online and app banking.

Mortgage rates fall as price war breaks out

Despite the Bank of England raising the base rate by 0.5 percentage points to 4% on Thursday, an escalating price war between banks and building societies has pushed mortgage costs down for borrowers. The average two-year fixed-rate mortgage has dropped from 5.44% to 5.43% since Thursday, and the average five-year fix has fallen from 5.2% to 5.15%, according to analyst Moneyfacts. Craig Fish, of broker Lodestone Mortgages and Protection, said: “When one lender announces a rate reduction, the others tend to follow. The rate war is well and truly on and it's now a race to see who is going to be the first to offer five-year fixed rates below 4%.”

Financial services companies in hiring spree

A study by Vacancysoft, a data and analytics provider, and Morgan McKinley, an employment specialist, reveals financial companies including banks, accountants and financial technology groups tried to hire more than 87,000 new staff last year, an increase of 27.6% compared with 2021. One of the most in-demand roles was for IT professionals. Among those companies leading a strong recruitment drive were the challenger bank Revolut, and Equiniti, the financial outsourcer. Barclays was the busiest bank, advertising 5,800 jobs.


Eurazeo ousts chief Virginie Morgon after shareholder power struggle

Two of the largest shareholders in French private equity group Eurazeo have ousted Virginie Morgon from the helm of the group due to frustrations over the company’s lacklustre share price growth and Morgon’s management style.

New Carlyle CEO Harvey Schwartz in line for $180m pay deal

Carlyle Group’s new chief executive Harvey Schwartz has been offered a five-year $180m pay package - $108m in performance-based stock awards and $72m in restricted stock awards.


Rothschild family plans to take investment bank private

Concordia, the Rothschilds’ family holding company, is in talks with banks and investors to finance an offer of €48 per share to take its investment bank, Rothschild & Co, private, valuing the group at €3.7bn. The financial services firm has three different arms – global advisory, wealth and asset management, and merchant banking. Concordia believes Rothschild & Co does not need access to capital from public equity markets and that private ownership would be “more appropriate”.


New car market grows for sixth month in a row

Some 131,994 new cars were registered last month, up 14.7% on January 2022, according to figures from the Society of Motor Manufacturers and Traders (SMMT). The increase has been driven by electric car sales, with hybrid registrations 40.6% higher in January than during the same month in 2022. However, the market share for pure electrics was 13.1%, down from an average of 16.6% last year. The SMMT forecasts that total registrations across the whole of 2023 will reach 1.79m, up 11.1% on last year. SMMT chief executive Mike Hawes said: “The automotive industry is already delivering growth that bucks the national trend and is poised, with the right framework, to accelerate the decarbonisation of the UK economy.”

Nissan boss issues warning over production costs

Nissan’s Chief Operating Officer has warned that manufacturing costs would need to come down if the UK is to remain competitive as a car making country. Ashwani Gupta also pointed to the need for state support in the transition to electric vehicles and for robust supply chains. Nissan employs more than 6,000 people at its Sunderland manufacturing plant and although the company has committed to producing the successor to its Leaf electric car at the factory, but Mr Gupta said that when it came to allocating production of new Juke and Qashqai models, Nissan "needed to have the economics to justify it".


Housebuilders to hold summit with Chancellor

The Chancellor will today meet with the bosses of Britain’s biggest housebuilders with discussions likely to centre around the upcoming Budget and demands from Levelling-Up Secretary Michael Gove that they spend around £2bn to fix fire safety defects on high-rise buildings. Housebuilders including Barratt Developments, Fairview and Persimmon will meet Jeremy Hunt while the Home Builders Federation (HBF) will also attend the meeting, according to Sky News. In its Budget submission, the HBF called on Mr Hunt to introduce a new home ownership scheme targeting first-time buyers. It also criticised the proposed £3bn Building Safety Levy, saying it was concerned about the fairness of the industry being hit with another levy. "While the Government has committed to a 'polluter must pay' principle, to date no sectors or actors other than UK home builders have made any contribution," it said.


UK regulators failed to spot threat from pension scheme borrowing, say peers

A report from the House of Lords on last year’s gilt market crisis has found regulators failed to anticipate the dangers of liability driven investments to the stability of the UK’s financial system. Lord Hollick, chairman of the Lords’ industry and regulators committee, has called for an overhaul of the way watchdogs supervise both the pensions industry and potential threats to Britain’s financial stability. A warning about leverage in pension schemes was sounded by the Bank of England’s financial policy committee in 2018, Hollick noted, but none of the regulators that supervise liability-driven investments, the pension schemes that use them and related counterparties failed to heed the warning. Other recommendations by the Lords committee include a review of accounting standards for pension funds, which Hollick said had caused an “artificial problem” that liability-driven investments were created to solve. Unregulated investment consultants who encouraged pension funds to adopt liability-driven investment products should be brought under the purview of regulators “as a matter of urgency”, Hollick added. Separately, leveraged pooled LDI fund ranges run by BlackRockLGIM, and others, have been downgraded by pension consultants XPS and Barnett Waddingham following a review in the wake of last year’s gilt market turmoil.

FCA under fire over efficiency of authorisations

Trade groups have been lobbying the Treasury to intervene with the Financial Conduct Authority’s authorisation process arguing that it has become too slow. Tougher standards were brought in after the FCA was criticised over its authorisation of mismanaged financial firms, particularly London Capital & Finance. But one senior industry source told the Times: “The authorisations process is a toxic combination of inconsistency, delays and uncertainty, which is damaging jobs, growth and investment in innovations.” An FCA spokeswoman said: “We have invested heavily last year in staff and technology, resulting in our pending caseload falling by 50%, even as our workload and level of scrutiny of firms increases.”

FCA issues warning to crypto execs over promo rules

Crypto businesses have been warned by the Financial Conduct Authority (FCA) that breaching new financial promotion regulations could lead to executives facing up to two years in prison. The regulator said that crypto companies which fail to meet its financial promotion rules will breach the Financial Services and Markets Act, “a criminal offence punishable by up to two years imprisonment.” “We will take robust action where we see firms promoting cryptoassets to UK consumers in breach of the requirements of the financial promotions regime,” the FCA confirmed.


Rolls-Royce boss turns to former BP executive to lead overhaul

The new head of Rolls-Royce has brought in former BP executive Nicola Grady-Smith to lead a sweeping overhaul of Britain’s flagship engineering group.


Google launches ChatGPT rival

Google is launching an Artificial Intelligence (AI) powered chatbot called Bard as a rival to ChatGPT, developed by OpenAI and now backed by Microsoft. The technology behind Bard will also be added to the Google search engine to enable complex queries. Bard will be released to specialist product testers on Monday and will then be made more widely available to the public in the coming weeks, Google says.


Sales and spending up, driven by inflation

Total retail sales in Britain rose by 4.2% in January, according to a report from the British Retail Consortium (BRC). That was some way below the 11.9% increase reported in January 2022 and was down from 6.9% in December. The BRC emphasised that “the rise in sales masked a much larger drop in volumes once inflation is accounted for”. Separate research from Barclays shows that, due to inflation, Britons spent more in January than they did in the same month last year. Spending on debit and credit cards rose by 9.7% last month compared with a year ago.


Manchester City accused of financial rule breaking by Premier League

The Premier League has referred Manchester City to an independent commission to review dozens of allegations of financial rule breaking between 2009 and 2018.


Britain must shift to economic “war footing” business leaders say

A letter to the Prime Minister Rishi Sunak from UK business leaders is calling for a serious response to Joe Biden’s US Inflation Reduction Act, arguing that Britain must shift to an economic “war footing” with a wave of reforms of its own or risk being left behind by the US President’s massive programme of subsidies. Members of the Global Britain Commission, a business group chaired by the Tory MP Liam Fox and including the chief executives of Virgin Atlantic, Coutts, Heathrow Airport and Rolls-Royce’s nuclear power project, are calling for tax credits for exporters, formal secondments between the civil service and business and a merger between the Business Department and the Department for International Trade. They also suggest making it easier for pensions to be invested in smaller, high-risk enterprises, enabling £105bn of investments in government bonds and slow-growth large companies to shift into newer enterprises.

Bank of England rate-setter warns of further increases

Catherine Mann, one of the independent members of the Bank of England's Monetary Policy Committee, warned that interest rates will probably need to rise again. Speaking at a conference in Hungary, she said: "We need to stay the course, and in my view the next step in bank rate is still more likely to be another hike than a cut or hold". Ms Mann went on to explain: "If there is uncertainty about the degree of inflation persistence, it is better to assume a high degree, because the costs of making a mistake if the true inflation process is more persistent are larger than if the true inflation process is less persistent."

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