Chancellor set to cut bank tax surcharge
Rishi Sunak will reportedly cut the bank surcharge in his upcoming Budget, with the Chancellor set to reduce the additional 8% of corporation tax levied on banks to 3%. The Chancellor has previously signalled that the decision to cancel a proposed reduction in corporation tax to 17% meant the tax regime was uncompetitive for banks, who under the current levy would face a rate of 33% as of 2023. With a 3% surcharge, banks will face an overall levy of 28% as the basic rate for all taxpaying entities will increase to 25% in 2023. The FT notes that the financial sector has lobbied against the surcharge on profits over £25m since its introduction in 2015. It is noted that the City claims the financial services sector, including staff and customers, contributes £75.6bn a year in tax.
Banks pull cheapest mortgage deals off market
Banks look set to pull their cheapest mortgage deals off the market as interest rates rise. The Bank of England is expected to raise rates from historic lows of 0.1% either next month or the month after, with base rates expected to hit 1% by August. Analysis has indicated that this would increase the annual cost of the nation's mortgages by a total of £14bn. While two-thirds of the UK's £1.6trn of mortgages are on fixed rates, meaning those borrowers won't immediately be affected, those on variable deals or trackers will be hit straight away. Laura Suter, head of personal finance at AJ Bell, said: "Mortgages rates have been at rock-bottom lows for a long time and many homeowners have never known an environment of higher interest rates, so any rise will be a nasty shock for them."
Halifax increases mortgage limit
Halifax has eased its borrowing rules for wealthier homebuyers and will now offer borrowers who earn more than £75,000 a loan of up to five-and-a-half times their annual income, up from a previous limit of five times. Analysts said the decision was a sign that Halifax is not expecting house prices to fall if the Bank of England opts to increase interest rates. Lenders have also started to pull the cheapest mortgage deals off the market in an effort to get ahead of a rate increase. Andrew Wishart, an analyst at Capital Economics, said that although the moves might seem contradictory, they in fact showed that lenders were not concerned about the market.
FCA fines Credit Suisse over Mozambique loan failures
Credit Suisse has been fined over £147m by the Financial Conduct Authority (FCA), with the penalty stemming from due diligence failings involving two loans worth over $1.3bn and a bond exchange arranged for the Republic of Mozambique. The watchdog believes that between 2012 and 2016, Credit Suisse failed to properly manage the risk of financial crime within the country. Alongside the fine, Credit Suisse has agreed to forgive $200m of debt owed by the Republic of Mozambique as a result of the tainted loans. The FCA said the fine would have been higher if Credit Suisse had failed to provide the debt write-off.
Handelsbanken to exit Denmark and Finland
Sweden's Handelsbanken is to exit Denmark and Finland, saying the markets offer little growth opportunity without major investment. Together, Denmark and Finland account for 10% of the income, 13% of the costs, and 8% of Handelsbanken's operating profit.
Bellway doubles profits
Bellway has managed to double its profits despite supply chain issues hampering the construction industry. The group posted a 102.4% jump in pre-tax profits to £479m for the year to July 31 as revenues surged by two-fifths to £3.12bn as lower stamp duty during the pandemic propelled the housing market.
FCA calls for prevention measures to tackle scam ads
The Financial Conduct Authority (FCA) has said social media firms should be forced to stop financial adverts by implementing regulated systems and controls. Speaking at a joint committee hearing on the draft Online Safety Bill, FCA executive director of enforcement and market oversight Mark Steward said officials at the watchdog “are very strong supporters of an approach that would obligate social media firms to create systems and controls,” with the regulator’s financial services experience showing how valuable such measures can be in preventing harm. It is noted that the proposed legislation targeting online harms does not cover paid-for advertising, despite this being one of the main sources of online investment scams. Mr Steward, who likened efforts to tackle scam adverts to a game of whack-a-mole, said prevention may be key. Michael Grenfell, executive director for enforcement at the Competition and Markets Authority, agreed with the whack-a-mole analogy, saying that when targeting fake online reviews, the competition watchdog “went after individual perpetrators, but then others pop up”.
City watchdog in crypto warning
The Financial Conduct Authority (FCA) has launched an £11m campaign targeting inexperienced investors who are increasingly putting money into investments which may not be right for them. The City watchdog has warned that "hype" on social media platforms and the wider media is driving new investors to opt for high-risk investments. An FCA poll found that almost 60% of young investors are making investment decisions as a result of repeatedly hearing about specific products online. It was also found that 76% of investors under 40 who have put money into high-risk assets such as cryptocurrencies and foreign exchange were driven to do so by a desire to compete with friends and family. The research also found that the majority of those who bought forex or crypto - 57% and 69% respectively - incorrectly believed they were regulated by the FCA, with this making it likely they did not fully understand the lack of investor protection or the risk of losses.
Advisers call on FCA to strengthen investor protections
Research from the Association of Investment Companies (AIC) shows that financial advisers want the Financial Conduct Authority to impose stronger investor protections where illiquid assets are held in funds, with 72% saying there are insufficient controls on how funds operate in these circumstances. A poll reflecting on the climate within the sector in the wake of the collapse of Neil Woodford's flagship fund shows that 47% of financial advisers prioritised liquidity considerations, while 41% said the most important takeaway from the scandal was to be less trusting of a fund manager's reputation. Three-quarters of advisers said they have changed their processes in some way as a result of the Woodford affair. Richard Stone, chief executive of the AIC, said advisers “clearly identify the Woodford fund's exposure to unquoted companies as the number one reason behind its suspension and eventual failure.”
CMA clears the way for S&P Global and IHS Markit merger
The Competition and Markets Authority (CMA) has cleared the way for the $44bn tie up between IHS Markit and S&P Global, saying it has uncovered limited competition concerns. The only possible issue it identified was the large position both firms hold in the supply of commodity markets data, saying it would mean they would face “only limited competition” in that specific area after the merger. The CMA said the if this matter was dealt with, the deal could go ahead.
MEDIA & ENTERTAINMENT
Music streaming services face CMA scrutiny
The Competition and Markets Authority (CMA) is to look into the music streaming market to assess the dominance of big record labels and platforms such as Spotify. The market study, which will assess whether there is a need for a full competition investigation and whether ministers need to deliver new legislation. follows a highly critical report by the Culture Select Committee of MPs calling for a “complete reset” of the streaming model, saying it only benefits big labels and the biggest acts.
London sellers overprice their properties by 40%
Analysis by property portal MoveStreets suggests that people selling homes in London are overpricing by as much as 40%. The study found that the average asking price across Zoopla and Rightmove currently sits at £296,950, while homes are actually selling for £258,464. This presents a reality gap of £38,486 – or 13%. However, the gap between the average asking price and sold price of properties in London is 40%, with the average asking price £833,994 while the typical sale price is £494,673. The next biggest gap is the South West (24%), followed by the South East (23%) and Wales (21%). The most realistic home sellers in Britain are those in Scotland, with the typical asking price of £184,149 just 4% higher than the average sale price, which is currently £177,166.
Inflation concern as costs climb
Industry leaders have warned MPs about the soaring cost of eating out, supermarket bills and manufactured goods, saying pressure on the cost-of-living is set to undermine the Prime Minister's levelling up agenda. The Food and Drink Federation said that while café, restaurant and pub prices are rising at 14-18% a year, supermarket prices are set to follow. Federation CEO Ian Wright warned ministers on the Business Committee to “think seriously” about the inflation caused by supply-chain disruption, describing the level of inflation seen in the sector as “terrifying”. Manufacturers' organisation Make UK said the sector is being hit by a rise of 30% to 40% in material price, with this coming alongside rising energy and shipping costs. CEO Stephen Phipson warned that huge increases in shipping and air freight costs were “not sustainable”, yet industry leaders expect supply chains to be disrupted for another six to nine months. These concerns, alongside the fact petrol prices are nearing a record high, have prompted concerns over inflation.
UK-EU trade slips again
Figures from the Office for National Statistics shows a second consecutive monthly fall in trade between the UK and EU. The total exports of goods, excluding precious metals, fell by £1.3bn (4.6%) in August, with this partly due to a £0.6bn (4.3%) fall in exports to the EU. Trade also slipped on a quarterly basis, with total exports of goods, excluding precious metals, down £1.2bn in the three months to August, with this marking a 1.5% dip.