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Daily News Roundup: Wednesday, 1st September 2021

Posted: 1st September 2021


Cable concerned over banks’ 'creaky' fraud protection systems

Former Business Secretary Vince Cable says banks must improve their “creaky” fraud protection systems and properly compensate small businesses who fall victim to criminals. While the UK’s biggest banks have a voluntary code which requires them to compensate individual victims, Sir Vince said: “Banks urgently need to update their creaky anti-money-laundering (AML) technology. Because the compensation they pay to fraud victims is limited, they are not properly incentivised to invest in this tech, which means that fraud is increasing as tech-savvy fraudsters get further ahead.” He added that banks should face a legal requirement to pay compensation whenever failures in their controls cause losses. Calling on the House of Commons Treasury Committee to make recommendations to the Government, he added: “These are the big-data demands that society is rightly placing on corporations, and banks should not be exempt from that.” Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking, said: “Banks want businesses to make payments online, because that brings their costs down, but they're not training people, which means checks and balances are lost.” A UK Finance spokesperson said the industry is “tackling fraud on every front”, investing in technology to protect customers and working with law enforcement to stop criminal gangs.

Revolut leads fintech funds ranking

The Times looks at the top ten UK fintechs, ranked by the amount of money they have raised according to data provided by Beauhurst. Revolut, which hit a record-breaking valuation of $33bn in July, ranks top, with it noted that the valuation puts the digital banking and payments company on par with NatWest, which has a $34bn market value. The analysis shows that Revolut has raised £1,267,651,458. Digital-only challenger bank OakNorth places second, with rival challenger bank Starling fourth. Monzo and Atom Bank also make the top ten, ranking 7th and 8th respectively.


Blue Prism in takeover talks

Blue Prism is in talks with two rival US private equity firms over possible takeover offers, with the tech firm confirming it was in discussions with TPG Capital and Vista Equity Partners. Blue Prism, which operates in the field of robotic process automation, said "there can be no certainty that any offer will be made, nor as to the terms on which any offer would be made". The Times notes that the company's services include invoice processing and due diligence checks for banks, with Barclays among its more than 2,000 customers.


Morgan Stanley boosts junior banker pay again

Morgan Stanley has raised base salaries for entry-level bankers for the second time in a month, increasing the base salary for its junior bankers to $110,000 having only recently upped the rate from $85,000 to $100,000. The move comes amid a battle for new talent that has seen Goldman Sachs, Citigroup, JPMorgan Chase, Bank of America, Barclays, Nomura and UBS all boost pay for younger workers. The sector has sought to strengthen incentives after analysis found that up to 70% of junior bankers quit their roles due to burnout from severe workloads since the onset of the pandemic.


Shell plans to roll out 50k on-street EV chargers

Energy company Shell, which acquired electric vehicle (EV) charging point supplier Ubitricity earlier this year, has said it plans to install 50,000 on-street chargers over the next four years - around a third of the total needed across the country to meet national emissions targets. Shell has said it will offer to meet the up-front costs of installation that are not covered by government grants. David Bunch from Shell says the firm wants "to give drivers across the UK accessible EV charging options, so that more drivers can switch to electric".


FCA warns banks of Afghanistan risks

The Financial Conduct Authority (FCA) has warned banks to review their potential exposure to financial crime in Afghanistan. The watchdog has issued a notice reminding financial firms to guard against money-laundering risks after the Taliban took control of the country. It said banks and other financial firms were expected to monitor and assess transactions to “mitigate the risks [of] their firm being exploited to launder money or finance terrorism”. The FCA said developments in Afghanistan have “highlighted the continuing need for robust systems and controls that respond to changing risks”, adding that it expects firms to “establish and maintain systems and controls to counter the risk they might be used to further financial crime.”

Non-Standard Finance chief resigns

John van Kuffeler is stepping down as chief executive and ceasing to be a director of Non-Standard Finance with immediate effect. Jono Gillespie, the finance director, will succeed him. The Times says Mr van Kuffeler’s departure was regarded as a necessary step as the firm tries to raise about £80m from investors to help stabilise the business and pay the redress bill to customers who were mis-sold guarantor loans. Chairman Charles Gregson said: “Given the pending recapitalisation of the company, we have agreed with John van Kuffeler that we should accelerate the long-planned leadership change.”

Blackstone co-founder to attend foreign investment summit

Stephen Schwarzman, co-founder of Blackstone, is among 200 investor luminaries due to attend a foreign investment summit led by Boris Johnson and the Royal Family, the Times reports. It is understood that Mr Schwarzman will be joined by investment leaders including Larry Fink, the chairman and CEO of Blackrock, and Jes Staley, the global chief executive of Barclays Bank, which is sponsoring the summit. The Government hopes that the summit will “galvanise foreign investment in the UK’s green industries of the future” ahead of COP26 in Glasgow in November.

Watchdogs need more teeth to bite Binance

With the Financial Conduct Authority banning activity by Binance, the FT looks at regulators’ efforts to oversee the crypto market and considers whether watchdogs should be granted greater power over the sector.


Mortgage approvals fall as stamp duty relief tapers

Bank of England data shows that mortgage approvals fell to the lowest level in a year in July, with the tapering of the stamp duty holiday driving the slowdown. The report shows there were 75,152 mortgage approvals in July, down from 80,272 in June. This came after the June 30 cut-off that saw the threshold for stamp duty relief – which had been available on purchases under £500,000 – reduced to £250,000. Meanwhile, consumers repaid £1.4bn in mortgage debt in July. The net repayment followed record borrowing of £17.7bn in June. Reflecting on the climate for the property sector, Sandra Horsfield at Investec said: “There is little to suggest the outlook for the housing market is poor.” She added: “First and foremost, house prices should continue to receive support from the strong recovery in the labour market.”

5% deposit mortgages make up just 1% of loans

Mortgages with 5% deposits made up just 1% of total lending last month according to online broker Trussle – despite their return being hailed by the Government as the way to "turn generation rent into generation buy". In July, just one in 100 mortgage completions on its books were for buyers with 5% deposits. Trussle said it had had a high level of enquiries about 5% deposit mortgages this year, peaking in March when the Government's Mortgage Guarantee Scheme was announced. This suggests that many first-time buyers are not able to qualify for one based on their finances.


Retail footfall rises

Footfall across all retail destinations rose an average of 8.2% over the August bank holiday. Across high streets there was an increase of 7% last week compared to the week before, while coastal towns saw footfall jump by 19.8%. However, in retail parks footfall declined over the weekend. Across all retail destinations, visitor numbers rose by an average of 3.9% from Sunday to Friday compared to the week before.


No increase in consumer credit in July

Outside of mortgage borrowing, people borrowed no additional consumer credit in July, according to Bank of England figures, with the sum households paid back roughly equivalent to what they were loaned. This compares with an average of £1.2bn of consumer credit borrowed per month in the two years to February 2020. Economists had been expecting an increase of around £400m, up from £300m in June. The analysis shows that people borrowed an additional £100m in forms of credit such as car dealership finance and personal loans in July. Consumers repaid £100m on net in credit card debt, continuing a trend seen throughout the pandemic as reduced spending during lockdowns meant more people were in a position to pay off debts. The data also shows that household savings grew by £7.1bn in July, despite interest rates paid on deposits hitting a historic low. The figure falls well short of the record £27.4bn deposited in May 2020. Large businesses borrowed £4.5bn from banks in July, the BoE report noted, while small and medium-sized businesses repaid £1.2bn.

Soaring inflation could add to the national debt burden

Higher-than-expected RPI inflation is set to push debt interest payments above official forecasts produced by the Office for Budget Responsibility (OBR). Forecasts published by the Government’s spending watchdog in March pointed to RPI inflation hitting 3.1% in the three months to June. However, RPI inflation for the period actually came in at 3.9%. Analysts expect RPI inflation to rise even further. With around a quarter of the Government’s stock of debt linked to RPI inflation, further increases would push up the state’s debt burden. Samuel Tombs of Pantheon Macroeconomics believes the rate will hit 4.9% in the closing months of the year, an estimate that means “debt interest payments will overshoot the OBR’s March Budget full-year forecast by about £12bn”.


Business confidence at four-year high

Optimism around the post-pandemic recovery has seen business confidence hit a four-year high in August. A study by Lloyds Bank shows that nine of the UK’s 12 regions and nations reported improving confidence last month. Growth in confidence was sharpest in the services sector, with the removal of lockdown restrictions seeing bars, restaurants and hotels welcome back consumers. The bank’s business barometer showed overall confidence rose by six points to 36% in August, with this representing the highest level since April 2017 and a turnaround after a slight dip in July. On employment, Lloyds’ poll of 1,200 firms found that just 18% expect to increase headcount. It was also found that a third of businesses expect pay to increase by at least 2% over the next 12 months, with around 17% anticipating wage growth of more than 3%. Hann-Ju Ho, a senior economist at Lloyds’ business banking arm, said the figures told “a positive story about the country’s economic recovery”.

Britons facing a multibillion savings shortfall

A new report from the Yorkshire Building Society (YBS) suggests Britons are facing a multibillion savings shortfall, despite many putting away extra cash during the pandemic. The mutual said that the difference between people’s current savings and the amount they would need to feel financially secure totals £371bn. That it despite the UK household savings rate more than doubling to 16% in 2020. YBS's polling of 2,000 people suggests UK adults require a "nest egg" of £17,465 to feel secure financially. An extra £7,220 in savings would be needed per person to reach this goal. 

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