BANKING
Banks must act fairly over account closures
Amid reports that some people have been denied banking services due to their political beliefs, the Telegraph’s James Fitzgerald looks at account closures, noting that a bank can take this measure if it suspects the account holder has committed, or been involved in, fraudulent or illegal activity. Accounts can also be closed if the holder violates the terms of the account or leave it dormant, but lenders can also shut down accounts for no specified reason. The Financial Ombudsman Service says banks can close accounts whenever they want, but they still have to treat their customers fairly. Guidelines on its website say: “Businesses that provide bank accounts are generally entitled to close them – just as their customers are. But you should treat your customers fairly. You shouldn’t close an account because of unfair bias or unlawful discrimination.” Mr Fitzgerald notes that many banks use third-party databases and credit reference groups to gather information on people they suspect of illegal activities. These services also detail those who could be under sanctions, or “politically exposed” people who are vulnerable to bribery.
Banks rethink credit card terms as concerns rise over bad debts
Amid concern over bad debts, banks are reining in the terms on their 0% balance transfer credit cards, cutting interest-free periods and hiking fees. Halifax has cut its longest balance transfer term from 29 months to 25 months, Tesco Bank has reduced its deal from 30 to 27 months and Virgin Money has reduced the term on its longest deal from 31 to 29 months. Moneyfacts data shows that the average 0% balance transfer term on credit cards has fallen from a high of 613 days in June last year to the current 554 days. Meanwhile, the average balance transfer fee has risen from 1.89% a year ago to 2.28%. The average purchase APR on a balance transfer card has also risen, from 26.7% to 31.2%. Andrew Hagger, a personal finance expert at MoneyComms, says this “could be part of a tightening up of credit strategy from lenders,” adding: “They will no doubt have one eye on rising bad debts on the horizon as the credit crisis impacts customers' ability to keep their finances in order.”
Average five-year fix rises above 6%
The average rate for a five-year fixed mortgage has climbed to 6.01%, according to financial information service Moneyfacts, while the average two-year fixed deal is now 6.47%. The increase follows the Bank of England’s decision to increase the base rate to a 15-year high of 5% as it looks to bring down inflation. The Moneyfacts analysis also highlights how savings rates have not matched the rapid increase in mortgage charges. While the average rates for two and five year fixed mortgages are both above 6%, the average easy access savings rate is 2.45%.
Bank of England considers forcing foreign banks to replace branches with subsidiaries
The Bank of England is considering rules that would force more international banks to set up UK subsidiaries, a move that could help British regulators manage the failure of international lenders.
Farage lost account over wealth limit
It has been claimed that former Ukip and Brexit Party leader Nigel Farage saw his Coutts account closed as he fell below the financial threshold required to hold an account at the private bank, rather than due to his political views. Mr Farage had claimed that that the matter was “serious political persecution” as he was a “politically exposed person", adding that he did not believe the explanation that it was a “commercial decision.” Mr Farage, who said that seven other high street lenders had also refused his custom, has since said he had been offered a standard account at NatWest, which owns Coutts.
INTERNATIONAL
Credit Suisse investor group joins claim against takeover price
Ethos Foundation, which represents institutional investors that own more than 3% of Credit Suisse, has backed a class-action lawsuit seeking a better price from UBS for its takeover of its rival. The deal offered to Credit Suisse shareholders when UBS agreed a takeover valued the bank at 3bn Swiss francs. Ethos says Credit Suisse was worth 7bn francs just 48 hours before the deal was struck.
FINANCIAL SERVICES
Takeover activity set to flatline
Analysts at investment bank Peel Hunt expect takeover activity in the UK to flatline in the second half of the year. While they said dealmaking had “rebounded to an extent” in the first half of 2023, with private equity’s interest in listed firms having returned, the experts noted that this was “not with the conviction that many anticipated.” The report shows that £12bn worth of deals were tabled by buyers in the six months to the end of June. This marks a 45% decline on H2 2022. Michael Nicholson, Peel Hunt’s head of M&A, said expectations of a “material acceleration” in Q3 have softened, with pessimism over the UK economy keeping demand flat. Elsewhere, data from LSEG Deals Intelligence shows that globally, M&A deals worth $1.3trn have been agreed in 2023 so far, a 38% dip on the same period in 2022. M&A deals with any UK involvement, including both public and private firms, totalled $111.8bn in the period, with this down 51% on last year.
London listings take a hit
London listings have been hit by combination of high inflation, rising interest rates and geopolitical tensions, with just 18 companies floating on the London Stock Exchange in the first half of the year. A total of £593m was raised, with this in line with the £594m raised in H1 2022 when 26 companies completed initial public offerings. However, it is well below the £9.4bn that was raised in the first half of 2021. Meanwhile, global IPO markets recorded 615 floats in H1, raising $60.9bn - a 36% decline on H1 2022.
FCA to lift fee freeze in 2024
The Financial Conduct Authority is to lift its freeze on fees next year. The regulator, which says it is facing higher costs, held down minimum, flat rate and application fees this year but expects to return to inflationary and staged increases from 2024. The City watchdog said it is "conscious" of the overall cost of regulation and is seeking to manage its resources effectively. The FCA noted that it has an “expanding remit” and requires resources “to manage, among other things, the policy implications of transferring retained EU law into our handbook.” “These increase the resources needed to manage ongoing activity,” it added. The FCA’s overall annual fee requirement for 2023/24 has been reduced by £2.5m to £681.8m. Larger firms saw their fees increase 5.9% due to higher incomes and the number of firms within the sector. Smaller adviser firms will only pay the minimum fee and the FCA has proposed freezing this at last year’s rate of £1,500.
RETAIL
Food inflation starting to fall, says Sainsbury's boss
Sainsbury’s chief executive Simon Roberts says that food inflation is starting to fall but warned it will not return to levels seen before the start of the cost of living crisis. His comments came as Sainsbury’s reported that grocery sales rose 11% in the 16 weeks to June 24, better than the 9% analysts had expected. Across the group sales increased 9.8%, with sales in general merchandise and at Argos increasing 4% and 5.1% respectively. However, cooler weather hit clothing sales, which were down 3.7%.
Naked Wines delays accounts after chair switch
Naked Wines has been forced to delay the publication of its accounts, saying its auditors will need additional time to sign off its accounts for the year to April following an overhaul that has seen founder and former chief executive Rowan Gormley replace David Stead as chairman. Naked Wines said Mr Gormley, who has been working with the firm in an advisory role, is “well placed” to help it win new customers at a faster rate as it looks to achieve “sustainable, profitable growth.”
ECONOMY
NAO: QE has left the UK exposed to higher rates
The National Audit Office (NAO) has warned that taxpayers are at risk of spending billions of pounds more on servicing Government debt due to the Bank of England’s quantitative easing (QE) programme. The NAO said the QE programme “in effect, swapped fixed interest rate gilts with reserves that carry a variable rate of interest, and are therefore more sensitive to interest rate movements.” It added that as the Bank Rate rises, “Government debt interest payments rise faster than they would have done in the absence of the QE programme." Meg Hillier, chairman of the Public Accounts Committee, said ministers should take steps to show the Government is getting good value for money when managing the nation's debt. A Treasury spokesperson said the NAO report “recognises that shocks, including the pandemic, have pushed up borrowing, debt and inflation worldwide. The best way we can deliver sound economic management for the public is to stick firmly to our plan to halve inflation, grow the economy and reduce debt."
UK the only G7 nation where inflation is rising
Analysis shows that Britain is now the only wealthy country where inflation is rising, with data from the Organisation for Economic Co-operation and Development (OECD) showing that the rate of price increases across G7 nations fell to 4.6% in May, from 5.4% in April. The UK was the only G7 country to register an increase, with inflation climbing from 7.8% to 7.9%. The OECD’s measure differs from the UK’s official consumer prices index as it includes owner occupier’s housing costs. The report also shows that price growth slowed in all 38 OECD nations apart from the UK, Norway and the Netherlands.
PM working to tackle 'persistent' inflation
Rishi Sunak has insisted that the Government remains committed to bringing down inflation, which he said is "clearly proving more persistent than people anticipated.” Appearing before the Commons Liaison Committee, the Prime Minister told MPs he has confidence in the Bank of England’s approach to cutting inflation, saying its track record of keeping price growth to target “has been very strong.” On demands for large public sector pay awards and borrowing to fund tax cuts, Mr Sunak said: “Fiscal policy is making sure our borrowing is responsible, our approach to public sector is responsible. If we get those things wrong that makes the inflation situation worse.”