BANKING
PSR reveals fraudulent payment rates
Data from the Payment Systems Regulator (PSR) reveals that Metro Bank, Starling, TSB and Monzo received the highest rates of fraudulent payments last year. Figures outlining the rate of authorised push payment (APP) fraud show that Metro and Starling received the highest number of APP fraud payments for every one million transactions last year, at 180 and 119 respectively. TSB, with a rate of 93, saw the third most, followed by Monzo, with 67. These banks also received the highest value of APP fraud payments among the nation’s bigger lenders. For every £1m received into Metro consumer accounts last year, £696 came from APP fraud. At TSB, the rate was £605, followed by Starling (£307) and Monzo (£227). At smaller payments firms, Dzing Finance received 187,695 APP fraud payments per 1m transactions. By value, Clear Junction had the highest rate of £10,355 per £1m received. The PSR report also shows that TSB refunded 91% of customers' total losses in 2022, followed by Nationwide (78%) – while HSBC and Barclays each refunded more than 70%. Monzo was the worst-performing big-name bank in this regard, refunding 22% of its customers' actual losses. Metro Bank (42%), Starling (37%) and Virgin Money (38%) also performed poorly when it came to refunding losses. APP fraud accounted for 40% of fraud losses in 2022.
Banks urged to link bonuses to customer outcomes
The Financial Conduct Authority (FCA) is urging banks to cut bonuses for staff who fail to prioritise customers. In a letter to the chairs of remuneration committees at banks, building societies and investment firms, the City watchdog has called on banks to embed the Consumer Duty to ensure fair value and appropriate products and services for customers. The regulator, which has emphasised that senior managers and boards are accountable for complying with the duty, has also encouraged banks to use risk metrics and performance criteria to inform remuneration decisions and make adjustments if progress in embedding the duty falls short. The FCA aims to make the remuneration regime more effective by increasing the proportion of compensation at risk and subject to the incentive-setting tools in the remuneration framework. Banks, the FCA says, should establish a clear link between behaviours and overall pay, with timely and transparent adjustments when necessary.
TUC: ‘Greed is good’ fear over bankers' bonuses
With the Prudential Regulation Authority and the Financial Conduct Authority removing a cap on bankers’ bonuses, the TUC has voiced concern that the move will fuel a "greed is good" culture in the City. TUC general secretary Paul Nowak said that City financiers “are already raking it in," and “don't need another leg-up” from the Government. Banking sector body UK Finance has defended the move, saying that scrapping the cap will make the UK "more attractive to international professionals,” noting that regulators had identified the bonus cap as one factor "limiting labour mobility" in the financial sector. Anne Sammon, a partner at law firm Pinsent Masons, said rules requiring a portion of the bonus to be deferred, as well as those making it easier to claw back payments in the event of wrongdoing, will have an impact on the scale of bonus season. Ruksana Uddin of recruitment firm Robert Half expects it will be “at least a year” before bigger bonus payouts “start filtering through” and bankers are “going out, spending their money and doing those lavish things.”
Scottish Widows pulls mortgages for new customers
Scottish Widows has decided to stop offering mortgages for new customers as the number of mortgage approvals continues to decline. The lender, owned by Lloyds Bank, is simplifying its offerings and will instead focus on the lifetime mortgage market. Mortgages for new customers will be removed from sale, but applications submitted before November 16 will proceed as normal. Experts suggest that Scottish Widows' specialism in later life products and the increasingly competitive market may have influenced the decision.
Halifax ends paper statements
Halifax has informed its online banking customers that it will no longer send paper statements. Customers who already bank online will now only receive digital statements, although these customers can still request a paper statement. Customers who do not use online banking will continue to receive paper statements.
INTERNATIONAL
SNB reports $13.36bn loss
The Swiss National Bank (SNB) reported a loss of $13.36bn in the third quarter. The SNB lost $9.16bn from its foreign currency positions, $132m from its gold holdings, and $2.66bn from Swiss franc positions. Additionally, the SNB paid $5.4bn in interest to commercial banks for money they lodged with the central bank overnight. As a result, the SNB's nine-month profit decreased to $1.7bn from $13.7bn in the first half of the year.
mBank reports bigger than expected Q3 loss
Poland's mBank has reported a bigger than expected loss in Q3 due to provisions related to mortgages tied to Swiss francs. Commerzbank's Polish unit said its quarterly net loss narrowed to 83m zlotys from 2.28bn last year, but missed analysts' forecast for a loss of 78m zlotys.
FINANCIAL SERVICES
OKX wants tighter regulation of crypto exchanges
Crypto bourse OKX says crypto exchanges should be made to prove they can cope with a surge of customer withdrawals. Calling on regulators to increase their focus on the sector, the digital assets exchange says watchdogs have already started to act following the collapse of crypto exchange FTX. While a number of exchanges have adopted proof of reserves after FTX was forced to halt withdrawals, OKX commercial chief Lennix Lai says the publication of proof of reserves “should absolutely be mandatory for any exchange that wants to build genuine trust among its users.” Pointing to surveys conducted by OKX, he added that monthly proof of reserves are important “to the vast majority of crypto users.”
FCA calls for clearer terms in BNPL contracts
The Financial Conduct Authority (FCA) has called for clearer terms in buy now pay later (BNPL) contracts as its research shows a significant increase in the number of people using this payment method. According to the FCA, 14m adults in the UK, more than a quarter of the population, used BNPL in the six months to January 2023. The FCA's research also revealed that frequent users of BNPL are more likely to be in financial difficulty, with higher levels of debt and missed payments. The FCA does not have regulatory oversight over BNPL products but is pushing for more protection for consumers.
IG Group to cut 300 jobs
Online trading firm IG Group plans to cut around 300 jobs as part of a £50m overhaul. The job cuts represent a reduction of approximately 10% of IG Group's workforce. The move comes as the company faces tougher trading conditions in financial markets. Acting chief executive Charlie Rozes said: “Full support will be provided to our people throughout this process and, while these decisions are not easy to take, they will ensure the business is well positioned for continued long-term success.”
REAL ESTATE
Home sales down 17% year-on-year in September
The number of home sales in September was 17% lower than the same month in 2022, according to HMRC figures. September saw an estimated 85,610 home sales, with this 1% lower than the total recorded in August. From April to September, there were an estimated 507,670 home sales, compared to 632,520 during the same period last year. Iain McKenzie, chief executive of the Guild of Property Professionals, said: “Although there are signs that the economy is recovering, the reality for many households is that they are still not able to afford to buy in the current climate," while Charlotte Nixon of wealth manager Quilter said that if the number of property deals continues to drop “prices will drop with them.” Jason Tebb, chief executive of property platform OnTheMarket, said: “Numerous interest rate rises have undoubtedly had an impact on activity, fuelling borrower concerns around affordability." He added that if the Bank of England opts against increasing rates this week, it will "give buyer confidence a much-needed boost, particularly as mortgage rates continue to edge downwards.”
RETAIL
West End calls for VAT-free shopping
West End leaders are calling for the reinstatement of VAT-free shopping for international shoppers as projections forecast a £1.6bn spending boom this festive season. City officials are concerned that without VAT-free shopping, London could lose its appeal to international shoppers who may choose to spend their money in Paris or New York instead. The tax break which allowed international shoppers to claim 20% back on their purchases was scrapped in 2020.
ECONOMY
ECB rate hikes ease inflation but hit growth
The European Central Bank’s (ECB) interest rates hikes have helped to bring down inflation across the bloc, with the annual rate of price increases falling from 4.3% to 2.9% in September. However, growth has also been hit, with Eurostat data showing that GDP fell by 0.1% between July and September. Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said “the big picture is that the eurozone is struggling,” noting that it has grown just 0.1% over the past year. He added: “Whether or not the eurozone suffers a technical recession, we expect the economy to remain sluggish in the fourth quarter and beyond.”
Expert urges BoE to reduce rates
Ben Ramanauskas, a research fellow at Oxford University and an associate fellow at think-tank Bright Blue, argues that the Bank of England should lower interest rates when the Monetary Policy Committee (MPC) meets on Thursday. He says that while inflation remains “way above” the Bank’s 2% target, it is much lower than where the Bank had expected it to be at this point, while also noting that money and credit growth has slowed significantly. Warning that the Bank’s more restrictive monetary policy is beginning to damage the economy, Mr Ramanauskas says the MPC “needs to be bold” and vote to lower interest rates to 5% while also cooling off on quantitative tightening.