City bosses could face fines for failing to prioritise consumers
The Financial Conduct Authority (FCA) has said it will press ahead with new rules requiring financial services companies to focus on delivering “good outcomes” for customers. The new consumer duty rules will aim to reduce call wait times, end rip-off charges and fees through clearer promotions, and make it easier to cancel or switch investments. The duty will be woven into the senior managers’ regime, with bonuses at risk if the rules are breached while fines could also be imposed. Sheldon Mills, the FCA's executive director of consumers and competition, said: "Selling suitable products at a fair price, providing good standards of customer services and communications that people can understand shouldn't really be a controversial thing. Too many firms are still not delivering this as they should." The regulator outlined its plan for the duty in December last year but industry called for more time to prepare. The FCA has now agreed to give firms 12 months to implement the rules for new and existing products, and 24 months to apply the reforms to closed-book products.
Monzo told to review processes after breaking rules
The Competition & Markets Authority has rebuked the digital bank Monzo for failing to provide thousands of customers who were closing accounts with copies of their transaction histories. Monzo broke the same rules between 2020 and 2021, when 143,437 customers were affected. Adam Land, a senior director at the Competition & Markets Authority, said: “It's simply not good enough for a major bank like Monzo to repeatedly fail its customers by not following clear rules. Having a record of your financial transactions can act as important evidence needed to secure a loan or mortgage, so Monzo's failure to provide these put an unnecessary obstacle in the way of thousands of customers.” Monzo blamed a processing error and said the data “was always available to these customers at their request.”
Virgin Money to launch BNPL credit card
Virgin Money has announced plans to enter the new buy now, pay later (BNPL) market later this year with a credit card product called Slyce. Any spend over £30 can be spread across three, six, nine or 12-month repayment plans. Paying back in three or six months will be fee-free, but charges will be applied for payments over longer periods, the bank explained. Virgin Money said the product will be fully regulated and it will carry out credit and affordability checks before any spending starts. Hugh Chater, chief commercial officer, said: "It's clear that consumers now expect to be able to pay via buy now, pay later plans."
BlackRock pulls back support for climate and social resolutions
In a report released on Tuesday, Blackrock explained why its support for US shareholder proposals on ESG issues fell by nearly half in this year’s annual meeting season. Many proposals "were unduly constraining on management or were overly prescriptive,” Blackrock’s stewardship group said. “Many climate-related shareholder proposals sought to dictate the pace of companies’ energy transition plans with little regard to the disruption caused to their financial performance, given continued demand from consumers. Others failed to recognise the progress made,” the report added.
Credit Suisse set to lose second chief in three years
Crisis-hit Credit Suisse is set to announce the departure of its chief executive Thomas Gottstein after two and a half years in the role. Mr Gottstein was brought in to try and steady the ship after his predecessor Tidjane Thiam left in February 2020 over a spying scandal. However, Mr Gottstein has struggled to convince investors that Credit Suisse is on solid footing. Shares have plummeted by nearly 48% in the year to date and are 62% lower than pre-pandemic levels. Ulrich Körner, the head of the bank’s asset management division, is expected to take over from Gottstein.
UBS profit falls short as slumping markets hit clients
A poor performance in Q2 sent pre-tax profit at UBS down 11% with the wealth manager warning that further turmoil in markets will prompt clients to retreat further. Investment banking revenue fell 14%, advisory revenue was down 30% and capital markets revenue fell by 71%. Its wealth management division saw revenue shrink from $4.8bn to $4.7bn. Shares fell more than 5% on the news.
Supply chain problems slow GM profits
Shares in General Motors fell on Tuesday following news of a 40% drop in quarterly net income. The slump was driven by supply-chain problems, including a global semiconductor chip shortage. Revenue rose nearly 5% to $35.8bn.
Visa rules hampering aviation comeback, says easyJet boss
EasyJet posted a £114m quarterly loss for the three months to the end of June on Tuesday driven by recent turmoil in the aviation industry. Third-quarter revenue increased more than eight-fold to £1.8bn, while traffic rebounded close to pre-COVID levels. EasyJet chief executive Johan Lundgren said the carrier was hit by "short-term disruption issues", but that it was experiencing "the return to flying at scale".
Rolls-Royce names former BP veteran as new boss
Tufan Erginbilgic has been named the new CEO of Rolls-Royce succeeding Warren East in January. Anita Frew, Rolls-Royce’s chairman, said Erginbilgic was “a proven leader of winning teams within complex multinational organisations, with an ability to drive a high-performance culture and deliver results for investors”.
Coinbase faces SEC probe over securities
The U.S. Securities and Exchange Commission (SEC) is investigating whether Coinbase improperly let Americans trade digital assets that should have been registered as securities and had thereby been effectively running an illegal securities exchange. A report from Bloomberg said the regulator’s scrutiny had increased ever since the crypto trading platform expanded the number of tokens in which it offers trading. A Coinbase spokesperson said the company does not list securities on its platform, while the regulator declined to comment.
Glass Lewis backs removal of Trian investment trust chair
Glass Lewis is backing a call from shareholders to remove Chris Sherwell as chairman of the UK investment trust Trian Investors 1 (TI1). Investors in TI1 including Global Value Fund, Invesco, Janus Henderson and Pelham cite concerns about recent changes to TI1's strategy, its share price performance and proposals to turn the trust into a special purpose acquisition company.
MEDIA & ENTERTAINMENT
Google reports slowest quarterly sales growth in two years
Alphabet, the parent company of search giant Google, has posted a 12% rise in Q2 revenue to $69.7bn - its weakest growth in two years but ahead of forecasts. Profits fell 13.6% to $16bn due partly to losses in its cloud business, deferred tax bills and M&A costs. Rival Microsoft saw profits rise 8% in the second quarter, boosted by the strength of its cloud computing business.
JD Sports lines up former B&Q executive as next CEO
JD Sports Fashion is in the process of finalising the appointment of Regis Schultz as its new chief executive. Mr Schultz will replace Peter Cowgill, who stepped down last month amid boardroom disagreements over succession and corporate governance. Cowgill’s departure followed a review of internal governance and controls, with JD Sports deciding it also needed to accelerate the "separation of the roles of chair and chief executive officer". Mr Schultz, a French national who has held several senior positions at B&Q, will join from Al-Futtaim Group, a Dubai-based conglomerate.
THG and SoftBank cancel $1.6bn deal
An agreement for Japanese investment group SoftBank to acquire a potential $1.6bn stake in the technology division of The Hut Group (THG) has been terminated. The option gave SB Management the right to acquire a 19.9% stake in Ingenuity, THG’s technology and logistics platform, at a strike price valuing Ingenuity at more than $6bn. But because shares in THG have slumped 70% so far this year, its entire market value is less than SoftBank had agreed to pay for a fifth of one division of the company.
Alison Brittain appointed Premier League chairwoman
The Premier League has announced that business executive Alison Brittain is to become chairwoman of the organisation from next year. Brittain, who is stepping down as chief executive of Whitbread, will take over from Gary Hoffman early next year.
IMF slashes global growth forecast and raises inflation projections
The International Monetary Fund has warned that the global economy will grow more slowly this year than previously forecast, with the UK set for the slowest growth of the G7 richest economies next year. It is predicting UK growth will fall to just 0.5% in 2023, much lower than its forecast in April of 1.2%. The IMF has cut its 2022 global growth forecast to just 3.2% and warned the slowdown risks being even more severe. "The global economy, still reeling from the pandemic and Russia's invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook," economist Pierre-Olivier Gourinchas said. "The outlook has darkened significantly" since April, the last time the IMF issued forecasts, he added.
Long Covid to leave lasting mark on UK economy, says IFS
Research by the Institute for Fiscal Studies indicates Long Covid is costing UK workers a total of £1.5bn a month in lost earnings - adding up to £1.5bn in aggregate across the economy.