Published: 14 December 2022
By Suzanne Evans, Director, Political Insight
Chancellor Jeremy Hunt will today launch a major reform of the UK's financial sector to "turbocharge" growth by ripping up red tape and replacing a number of EU regulations. In a speech in Edinburgh, he will say: "This country's financial services sector is the powerhouse of the British economy, driving innovation, growth and prosperity across the country. Leaving the EU gives us a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector." More than 30 regulatory reforms are planned, together with a review of hundreds of pages of EU rules to be reviewed, repealed, or replaced. The reforms will also include a review of short-selling rules, overhauling prospectuses issued by companies when they list, and potentially ditching regulations that require major banks to keep investment and retail banking separate if they do not engage in major investment activity, a rule was brought in during 2019 to increase the stability of the UK financial system and prevent the costs of failing banks falling on taxpayers.
Home Secretary Suella Braverman has said that planned strikes by border force workers at major airports over the Christmas period may cause delays. People should think carefully about their plans to fly abroad in the coming weeks, she said, telling reporters: "They may well be delayed on arrivals as "Ultimately, security at the border is my number one, non-negotiable priority." Border Force workers will go on strike for eight days this month in a dispute over pay, threatening huge disruption to travel plans at one of the busiest times of the year.
TUC General Secretary Frances O'Grady and Unison General Secretary Christina McAnea have claimed ministers have accused ministers of stonewalling requests for meaningful pay talks during the current wave of strike action, saying: “Ignoring the main issue on the table isn't a negotiation." In a joint letter to Chancellor Jeremy Hunt, the trade union leaders insisted that no public sector workers want to take strike action this winter, but that the “government has left them with no choice.” “Good industrial relations require both parties to be willing to negotiate in good faith and to have open conversations," yet "when your cabinet colleagues have met unions, they have repeatedly refused to talk about public sector pay,” the letter added. It said the government could not continue to "hide behind" pay review bodies, adding: "If ministers genuinely want to resolve these disputes, they must address what's causing them. "With CPI inflation over 11% and RPI inflation above 14%, frontline workers are facing another massive real-terms hit to their wages." O’Grady and McAnea called for an urgent meeting with the chancellor, saying: "Now is not the time for smoke and mirrors - now is the time for genuine negotiations."
Ofwat yesterday criticised some of the country's major providers over the size of dividend payments relative to their financial and operational performance. The water regulator named the six worst firms it said displayed shortcomings now virtually embedded in "too many areas" - Northumbrian Water, Southern Water, South West Water, Thames Water, Welsh Water and Yorkshire Water. Ofwat said it was "deeply concerned” that they were all “lagging behind expectations" and presented numerous shortcomings such as leaks, pollution incidents, and a failure to invest in their networks. They must explain their poor performance and present a clear action plan to turn this around, Ofwat said. Most companies had "again failed to clearly explain the link between their dividend decisions and payments with performance delivery for customers", Ofcom added. "In particular, both Northumbrian Water and Portsmouth Water fell short of our expectations when considered in the context of the level of dividend they paid, which was significantly higher than our base expectations, and their relative financial resilience." Ofwat CEO David Black said: "For some companies poor performance has become the norm. This cannot go on. We are requiring the worst performers, including Thames Water and Southern Water, to return around £120m to customers”. “Separate from today's reports, we are taking enforcement action on wastewater treatment works compliance, well as consulting on licence changes that will help us drive through the transformation needed across the water industry,” he added. A report in the Guardian newspaper last week revealed that the nine main water and sewerage companies had paid out £65.9bn in dividends in the last three decades and taken on debts of £54bn.
The Financial Conduct Authority (FCA) has fined Spanish bank Santander £107.7m for "serious and persistent" gaps in anti-money laundering controls for its more than 560,000 UK business customers. The FCA said that between 31st December 2012 and 18th October 2017, Santander's UK arm failed to properly oversee and manage its anti-money laundering systems, which were ineffective in adequately verifying the information provided by customers about the business they would be doing. "In one case, a new customer opened an account as a small translations business with expected monthly deposits of 5,000 pounds. Within six months it was receiving millions in deposits, and swiftly transferring the money to separate accounts," Mark Steward, FCA executive director for enforcement, said in a statement.
The Competition and Markets Authority (CMA) has fined German carmaker BMW £30,000 plus a further daily penalty of £15,000 for non-payment in a disputed information request related to its ongoing auto industry probe over suspected anti-competitive conduct in relation to the recycling of old or written-off vehicles. However, BMW said in an emailed statement to Reuters that the "CMA does not have the legal power to compel foreign companies to produce documents held entirely outside the UK jurisdiction," although it said was cooperating fully with the regulator, and with The European Commission, which has launched a parallel investigation. The CMA, which said it did not accept BMW's argument.
According to the Financial Times, BT Group's pension scheme could require more support from the telecoms group having adopted a more cautious approach in the wake of recent gilt market volatility, including making changes to its liability-driven investing (LDI) strategies. “This will position the scheme to better weather any further volatility in the gilt market but will also reduce the expected returns from our assets," a statement said. Should those returns fall below a certain level, it added, it may need "more support from BT in future valuations than previously anticipated". The £47bn defined scheme has 270,000 members and a £4bn deficit. It is one of the largest in the country.
Unilever is reportedly considering the sale of a portfolio of US ice cream brands that could be valued at as much as $3bn (£2.45bn), according to Bloomberg. However, it is understood that international labels Magnum and Ben & Jerry's are not part of the review and no decisions had been made by the FTSE 100 company.
FTSE 100 advertising giant WPP has announced the acquisition of Canadian commerce agency Diff for an undisclosed sum.
Former FTSE-100 temporary power supplier Aggreko has made a £110m offer for specialist power reliability equipment provider Crestchic, which is listed on the junior AIM exchange, Sky News reports. The 400p-a-share offer represents a roughly 15% premium to yesterday’s closing share price of 356p, and comes 18 months after the Aggreko was delisted from the London stock market following a £2.3bn takeover by I Squared Capital and TDR Capital. Aggreko's business has performed strongly this year amid disruptions to power supplies in many of the markets in which it operates, Sky says.
Dan Olley will become the next CEO and an executive director of investment platform Hargreaves Lansdown once he is released from his current obligations in 2023, and subject to regulatory approval. The FTSE 100 company said he will succeed Chris Hill, who recently announced his intention to retire after six years in the role. He will remain in place until Olley joins after stepping down from his current role as CEO at customer data science company Dunnhumby. The digital services veteran previously he spent 17 years at Relx, where he held a series of senior roles.
Ben Loomes, the CEO of infrastructure investor John Laing, has resigned little more than a year since the company was taken private in a £2bn deal. Sky News says Loomes, who joined John Laing in 2020, will become the company's vice-chair for several months before leaving.
Just 15% of retail transactions took place in cash in 2021, half the level of the year before and down from nearly 40% before the government’s covid-led push to use contactless debit and credit card use, the British Retail Consortium (BRC) says. Debit cards accounted for 67% of transactions last year, up from 54% in 2020, while credit cards made up 15%, up from 14%, said the BRC, which represents major stores who accounted for almost 40% of British retail sales last year. Falling cash usage was making it more costly to handle notes and coins, the BRC said and asked the British government to do more to ensure it remained viable for shoppers. In May, the government told banks to ensure cash remained an accessible payment method, Reuters reports. It said at the time that 5.4 million adults relied heavily on being able to make cash transactions.
European Central Bank (ECB) senior executive Fabio Panetta has proposed a ban on cryptocurrencies that have an "excessive ecological footprint", and in a statement for the Insight Summit at the London Business School, said that "many cryptocurrencies are just a new way of gambling". "On the whole, it is difficult to see a justification for the existence of unbacked crypto-assets in the financial landscape, he said. "Their combined features mean that they are just speculative assets. Investors buy them with the sole objective of selling them on at a higher price. In fact, they are a gamble disguised as an investment asset." He warned investors against allocating capital into crypto "as the house of cards is falling," saying trust in an economic system that relies on intermediaries such as central banks “cannot be replaced by religious faith in an algorithm". Instead, he argued in favour of central banks issuing their own digital currencies, Yahoo Finance UK reports. The European Commission announced earlier this year that it will propose a bill in early 2023 to introduce such a central bank digital currency (CBDC), which the CB has been working on developing such a project since July 2021. Yesterday, the EBC’s Twitter account backed Panetta’s statement, criticising the use of "unbacked" crypto-assets, referring to bitcoin, ethereum and other cryptocurrencies that are not backed by governmental authority through the fiat currency system.
Twitter Inc will roll out new controls as soon as next week to let companies prevent their ads from appearing above or below tweets containing certain keywords, the social media platform told advertisers in an email yesterday. Reuters says the new controls “are part of Twitter's effort to reassure and lure back advertisers that have pulled ads off the platform since it was purchased in October by billionaire Elon Musk, amid reports from civil rights groups that hate speech has risen since the acquisition and after several banned or suspended accounts were reinstated.” Twitter earns nearly 90% of its revenue from selling digital ads and several brands have suspended advertising.
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