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Daily News Roundup: Wednesday, 30th November 2022

Posted: 30th November 2022

BANKING

Banks leaving customers vulnerable to spoofing scams, says Which?

Some banks may be leaving customers vulnerable to fraudulent spoofing attempts, according to an investigation by consumer group Which?. To make it harder for fraudsters to impersonate legitimate companies, firms can sign up to regulator Ofcom’s Do Not Originate (DNO) list – a shared resource with telecoms providers to help identify and block calls likely to be spoofed. To test how effective banks were at protecting their customers, Which? made calls to a test phone, spoofing the prominent numbers of 14 current account providers. It found that at least one phone number from HSBC, Lloyds Bank, Santander, TSB, Nationwide Building Society and Virgin Money was successfully spoofed. A spokesperson for UK Finance said: “Protecting customers from fraud is a top priority for the finance industry which is why we are actively working with the regulator Ofcom to help crack down on number spoofing.”

Mortgage approvals slip as property demand cools

Bank of England (BoE) data shows that UK mortgage approvals fell by 10% in October, from 66,000 in September to just under 59,000. This was the lowest number of mortgages approved by UK lenders since June 2020. The total was also down on the 69,489 recorded in October 2021. The decline in approvals comes amid a slip in demand that has been driven by higher interest rates, the cost-of-living crisis, soaring inflation, and ongoing economic uncertainty. The market was also hit by September’s controversial mini-Budget which saw some banks pull mortgage deals and others hike the rates on deals. The BoE figures show that new borrowing of mortgage debt by individuals decreased from £5.9bn to below £4bn in October, the lowest reading since November 2021. The average rate on new mortgage loans increased by 25 basis points in October, hitting 3.09%.

HSBC sells Canadian business to RBC

HSBC has agreed a deal that will see it sell its Canadian business to Royal Bank of Canada for £8.4bn. The sale of its Canadian operation, which has more than 130 branches and 780,000 customers, follows plans to exit retail banking in the US and France, where HSBC’s operations had been loss making. The sale of the Canadian unit comes despite it bringing HSBC £301m before tax in the first half of the year. HSBC’s chief executive Noel Quinn said the decision to sell the business to RBC followed a thorough review on its “strategic fit” within the wider HSBC portfolio. He said: “Our group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders.”

INTERNATIONAL

Ireland set to end ban on bank bonuses

Irish officials are set to allow domestic banks to pay bonuses of up to €20,000 for the first time since the 2008 global financial crisis. Executive pay was capped at €500,000 a year after the crisis which resulted in the eurozone's costliest bank sector bailout. Dublin also banned all variable pay and fringe benefits for all staff. Lenders argue that these restrictions hamper efforts to attract and retain talent. Finance Minister Paschal Donohoe, who began an independent review of Ireland's retail banking system a year ago, is set to ask colleagues to accept its recommendations, including lifting a pay cap at Bank of Ireland, which has returned to private ownership. The review also suggests scrapping the cap at AIB and Permanent TSB when the state's shareholding reaches an "appropriate" level.

AUTOMOTIVE

Automotive sector calls for government support

The automotive industry has called on the Government to “take rapid action” to secure its long-term future, saying it could contribute an additional £14bn to the economy. Analysis by the Society of Motor Manufacturers and Traders (SMMT) suggests that after two years of pandemic-driven disruption and supply chain shortages, the sector’s recovery will gain momentum next year. The new car and van market is expected to grow by 15% to £10bn in 2023, with an additional £15bn a year later. SMMT chief executive Mike Hawes said there is a need for a “framework that enhances competitiveness, enables investment and promotes UK automotive’s strengths: innovation, productivity and a highly skilled workforce.” He called for “swift and decisive action that addresses the immediate challenges and gives us a fighting chance of winning the global competition,” adding: “That window of opportunity is open but is closing fast.”

AVIATION

EasyJet losses hit £2bn

EasyJet is to increase fares by more than 20% as it looks to claw back losses totalling more than £2bn. While the airline expects to return to profitability next year, forecasts are for about £250m - less than half that reported before the pandemic.

FINANCIAL SERVICES

City watchdog proposes £5k fee for financial promotions products

The Financial Conduct Authority (FCA) has proposed a £5,000 application fee as an appropriate contribution towards the costs of processing applications to add new financial promotions products. The regulator said the fee will not be treated as a 'variation of permission' so the full charge will be payable whether or not the applicant is already authorised by the FCA. Applicants will be charged separately for each new application, without taking account of the number of product types within a single application. The City watchdog said: “In 2021/22, the cost of our authorisations division was £33.9m. This excludes associated costs such as legal advice and systems.” It added: “The revenue from application fees in 2021/22 was £6.8m, or about 20% of the cost our authorisations division incurred.” For 2022/23, the FCA expects the revenue to be about £9m under the new pricing structure.

MEDIA & ENTERTAINMENT

Music streaming services not making excessive profits, CMA rules

Leading record labels and streaming services are not making excessive profits, an investigation by the Competition and Markets Authority (CMA) has concluded. The CMA found that a surge in streaming has benefited music fans, who have seen the cost of paying for services such as Spotify, Apple Music and Amazon Music fall by a fifth between 2009 and 2021. It also said streaming platforms and the world’s biggest music businesses – Universal Music, Warner Music and Sony Music, which control about three-quarters of the UK recorded music industry – were not “likely to be making significant excess profits that could be shared with creators.” Sarah Cardell, interim chief executive at the CMA, said there are “understandable concerns” over claims that many artists and songwriters struggle to make a decent living from these services, however, the CMA has found that these are not the result of ineffective competition. “Intervention by the CMA would not release more money into the system that would help artists or songwriters,” she added.

RETAIL

Shop price inflation reaches record high

Food inflation has risen to 12.4% to reach a new record amid predictions of dampened Christmas cheer and an “increasingly bleak” winter. Fresh foods led the increase in prices – with inflation rising to 14.3% from 13.3% in October – with rises expected to continue into next year according to the latest data from the British Retail Consortium. Overall shop price inflation rose to 7.4% in November from 6.6% in the previous month, a level not seen since at least 2005.

Wilko owners took £3m in dividends despite £37m losses

The owners of retailer Wilko took £3m in dividends this past year, despite the chain seeing almost £37m of losses before seeking emergency funding. The retailer is understood to be trying to secure a £30m debt facility with alternative lenders. Wilko paid its owners £2.25m in the year to the end of January and a further £750,000 in February despite a near 3% fall in sales to £1.3bn and a £36.8m pre-tax loss which followed a £2.5m profit a year before.

ECONOMY

Bank of England ‘blindsided’ by mini-Budget

Bank of England governor Andrew Bailey says the Bank was left blindsided by September’s mini-Budget, describing an “extraordinary process” in which there was “no formal communication” before former Chancellor Kwasi Kwarteng unveiled his fiscal measures. Mr Bailey told the Lords Economic Affairs Committee that Mr Kwarteng had broken with tradition by failing to brief the central bank, saying: “I’m afraid there was parts of it we had no idea what was in it.” He added: “There was no formal communication of the sort we normally have. It was a quite extraordinary process in that sense.” Mr Bailey also suggested that Treasury officials “were clear what was going to be in it.”

BoE policymaker: Medium-term inflation can guide rate moves

Bank of England policymaker Catherine Mann says medium-term inflation is a useful gauge for how much further the Bank will need to raise interest rates, and when they can start to be reduced. She said: “Looking at medium-term expectations is a very important ingredient to my assessment of what the appropriate Bank Rate at the next vote might be.” Addressing an online event hosted by The Conference Board, a US business organisation, Ms Mann argued that rapid increases in interest rates were an effective way to tame inflation expectations, and that rates could be cut once these had eased. She also warned of a “dramatic change in the underlying pace of inflation," saying that it is “this embeddedness that is a concern for the central banker."

Brits sit on savings

People are holding onto savings they built up during the lockdowns brought about by the pandemic, with Bank of England data showing that households set aside £6.4bn in savings last month. This is £1.6bn higher than the monthly average recorded before the pandemic. Amid a cost-of-living crisis that has seen inflation hit 11.1%, people are seemingly pulling back on debt fuelled spending, with just £400m spent on credit cards in October. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Households have remained unwilling to draw on savings or take on more debt in order to support their level of real expenditure.” He added that people are “clearly not spending to their fullest. In addition, the muted level of consumer borrowing in October shows that households without savings are not flexing their credit cards.”

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