Published: 12 January 2023
By Suzanne Evans, Director, Political Insight
Royal Mail is facing severe disruption to its international export servicesfollowing what it described as "a cyber incident". "We are temporarily unable to despatch items to overseas destinations," it said in a service update on its website, and advised customers not to send mail overseas while it works to resolve the issue. Royal Mail, part of International Distributions Services Plc, said it was working with external experts to investigate the incident, and that it had reported it to regulators and security authorities. Britain's data protection watchdog, the Information Commissioner's Office, said it would be making enquiries, while the National Cyber Security Centre said it was working with the company alongside the National Crime Agency to "fully understand the impact". Royal Mail said its import services remained operational, although with minor delays.
The Public and Commercial Services (PCS) union said yesterday that 100,000 of its members across 124 government departments would take strike action on 1st February in a dispute over pay, pensions and job security. The announcement escalates a rolling programme of strikes across different government departments and other public sector bodies in the past month or so, and has included driving test examiners, border force staff and Highways Agency officers. "We warned the government our dispute would escalate if they did not listen, and we’re as good as our word," PCS general secretary Mark Serwotka said. He added that he was meeting with a government minister on Thursday and the dispute could be resolved if more money was offered then. Next week, the PCS will also ballot a further 33,000 members in five more departments, including in HM Revenue and Customs,over whether to join the national strike action.
Reuters claims that the Financial Conduct Authority (FCA) is blocking the restart of London Metal Exchange (LME) nickel trade in Asian hours due to doubts about the LME's ability to run an orderly market in that time zone, citing three sources with knowledge of the matter. The world's largest metals trading exchange was forced to suspend all nickel activity for eight days in March 2022, after prices spiked more than 50% during Asian trading hours to hit a record above $100,000 a tonne. Since then, volumes and liquidity on the LME have collapsed since then, partly due to the continued suspension of nickel trade in the Asian time zone. The LME had hoped to resume trading during Asian hours in mid-December, but the sources said the FCA had told the exchange it does not yet have adequate supervisory controls to do so. "The regulator wants the LME to monitor nickel trading and make sure volatility is contained. There's no certainty it can do that when London is asleep," one of the sources said. Both the LME and FCA declined to comment on the Reuters story. On Tuesday, the LME said it would set out by the end of March how it will implement recommendations to prevent market distortions and improve risk monitoring after last year’s review into the nickel crisis.
Data from the Financial Conduct Authority (FCA) has revealed that some insurers reject almost half of all home insurance claims, with nearly one in four thrown out on average. In contrast, around 99% of car insurance claims are accepted by insurers, the FCA says. The Daily Mail says the research also highlights a huge variation among insurers when it comes to paying home insurance claims. Some, such as Ageas Insurance, QIC Europe and Qmetric, pay out 55-60% of home claims, while others such as Haven Insurance and Hiscox, pay out almost 100%. However, insurers are questioning the data, saying that while some claims are genuinely rejected, the FCA data also includes customers who contact them to ask if something is covered under their insurance, but end up not claiming, what is known in the trade as a ‘claims walkout.’ This in itself highlights a second problem: that customers often are unsure about what cover they are actually buying, the newspaper says. James Daley, of campaign group Fairer Finance, said: “This is a perennial issue in home insurance, which can have 20,000 pages in a policy document.” That is around 16 times longer than the epic novel War and Peace, which has around 1,200 pages, the Mail noted.
Meanwhile, the FCA has launched a consultation over how insurance companies support struggling customers. Having introduced guidance during the Covid-19 pandemic to ensure customers in financial difficulties received appropriate support, the financial watchdog now wants to update that guidance to extend it beyond those facing problems due to the pandemic. Measures include not undervaluing insured items, not charging for unnecessary add-ons and not imposing unfair penalties. Firms must also ensure information they provide customers with is "fair, clear and not misleading". Sheldon Mills, the FCA's executive director, consumers and competition, said: "Access to insurance is vital, providing peace of mind and security in case things go wrong. By extending our guidance, we are helping consumers keep that safety net and ensure they're properly supported when they claim, even as the cost of living increases."
Today’s Telegraph front page also prints a further warning from the FCA: that more than 750,000 households are at risk of defaulting on their mortgagesover the next two years as soaring borrowing costs make payments unaffordable. Over 200,000 households have already fallen behind on payments by the end of June 2022, with bills overdue on around one in 40 home loans, the FCA says. CEO Nikhil Rathi suggests that many of these are already thousands of pounds behind, with 117,000 borrowers failing to pay a sum equal to more than 1.5% of the balance of their mortgage. A further 570,000 households were “at risk of payment shortfall” within the next two years, meaning their mortgage costs are set to climb to more than 30% of their income, he said in a letter to MPs on the Treasury Select Committee. He also noted that borrowers who used the Help to Buy scheme, which allowed first-time buyers to get a property with just a 5% deposit, may be at greater risk of default as they start to pay interest on the interest-free component of their purchase, as well as being forced to fork out thousands of pounds more every year as they switch deals. "That is a part of the market that we will need to watch very closely indeed," he wrote. However, Rathi also said that repossession numbers are currently "extremely low". While the most recent data have been distorted by a backlog in the courts owing to covid restrictions, the FCA said there were 835 repossessions in the three months to June, as compared to repossession rates averaging between 1,100 and 1,400 each quarter before the pandemic.
Housebuilders Persimmon and Barratt Developments are warning about slowdowns in the housing market. Yesterday, Barratt CEO David Thomasconceded that the outlook for the rest of the year was "uncertain", as the company has a total forward order book of only 10,511 homes, against 14,818 a year previously, a value of £2.54bn compared to £3.79bn at 31st December 2021. Then this morning, Persimmon said its forward sales have fallen by 36% to £1bn, and warned the weaker economy would have an adverse impact on the outlook for 2023. "Taking together the absence of Help to Buy and the increase in mortgage rates, we estimate that the monthly cash cost of mortgage payments for some first time buyers has approximately doubled over the past year, compounded by limited availability of high loan to value mortgages," Persimmon said in a trading update.
NatWest bank said yesterday it is giving struggling customers another six months to repay unsecured loans or overdrafts, because of the cost-of-living crisis. “Whilst we are not yet seeing significant increases in defaults or people in arrears, this new package of funding and measures is designed to provide on-the-ground support to communities," NatWest CEO Alison Rosesaid. The move means customers who have missed several payments on unsecured debts will have 24 months to repay from early February, up from 18 months. The lender is also increasing funding to charities that provide debt advice and access to affordable credit to £5.7m.
Passenger numbers at Heathrow airport surged in 2022 after all Covid-19 travel restrictions were scrapped in March. The west London airport said 61.6 million passengers travelled through in 2022, up from 42.2 million from 2021. In December alone, Heathrow said passenger numbers surged 90% year on year to 5.9 million. Despite the increase however, demand is still only 76% of pre-covid restriction levels.
A slate mine in Wales is seeking new young staff, having been given a licence to increase production following huge demand. The BBC says Welsh Slate is expanding operations at the Penrhyn quarry near Bethesda, Gwynedd, and reopening two quarries in Blaenau Ffestiniog. It will mean 29 new jobs in a part of Wales where slate has been a big employer since the 13th Century, and in the longer term the company will need even more staff. Mike Ford, operations manager at Penrhyn quarry said: "There's a huge demand for slate here in the UK and all over the world. We currently export 40% of our roofing slate to Australia, we need to expand to keep up with the market demand."
A Freedom of Information (FOI) request made by the Investing Reviews website to Action Fraud has revealed that one British investor told the fraud hotline they had been scammed out of £1m by failed cryptocurrency exchange FTX. The unnamed individual was one of 13 in the UK who complained to Action Fraud about FTX during November, although more complaints have come in since. Eight were male, three female, with the gender of two listed as "unknown". One was aged 10-19, another was in their 70s. In total, victims claimed losses of £1,162,334, the FOI reveals. FTX owes money to more than a million individuals and companies globally, bankruptcy-court filings suggest. Of those, about 80,000 are thought to be in the UK, the BBC says. The founder and former head of FTX Sam Bankman-Fried was arrested in December, and has pleaded not guilty in the US to charges of orchestrating an "epic" fraud that may have cost investors, customers and lenders billions of dollars.
Meanwhile, an attorney for FTX told a US bankruptcy court yesterday that the failed company has recovered more than $5bn in liquid assets, but the extent of customer losses in the collapse of the company is still unknown. "We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities," Andy Dietderich said at the hearing before Bankruptcy Judge John Dorsey in Delaware. Dietderich also said the company plans to sell nonstrategic investments that had a book value of $4.6 billion. The US Commodities Futures Trading Commission has estimated missing customer funds at more than $8 billion. FTX was valued at $32bn just over a year ago, but filed for bankruptcy protection in November.
Finnish central bank chief Olli Rehn has said that The European Central Bank (ECB) needs to raise interest rates "significantly" over its coming meetings to restrict growth and dampen inflation, which has been far too high. Rehn, who sits on the ECB's rate-setting Governing Council, told a webinar with the Peterson Institute for International Economics that: "Policy rates will still have to rise significantly. This means significant rate hikes at this winter's remaining meetings." The ECB has raised rates by a combined 2.5 percentage points since July and promised "a steady pace" of hikes over the coming months.
More than 8,600 flights in and out of the US were delayed and more than 1,200 were cancelled yesterday afternoon because of technical issues. The disruption was due to "irregularities" in the system that alerts pilots to potential hazards on flight routes, officials said, and affected airports nationwide. Normal air traffic operations have now resumed. The technical issues marked the first time in nearly two decades that flights across the US were grounded, the BBC says.
Airbus has retained its position as the world’s largest aircraft manufacturer for the fourth year running, delivering 661 commercial aircraft to 84 customers and winning 1,078 new orders in 2022. Although Boeing reported a sharp jump in airplane orders and deliveries last year, its European rival trounced the US manufacturer more than tenfold in the Chinese market, Reuters reports, noting that in total, Boeing delivered 480 airplanes and won 774 net new orders. Last year, Airbus announced it is set to invest £100 million and create more than 500 jobs at its Broughton wing factory in Milton Keynes.
Uniqlo parent company Fast Retailing Co Ltd says it will raise wages in Japan by as much as 40%, an indication, Reuters says, that Japan's ‘rock-bottom salaries’ may be starting to budge after decades of deflation and cost-cutting. Prime Minister Fumio Kishida has repeatedly called for companies to increase wages, a plea that has gained urgency as prices have surged, leading to once-unthinkable increases in the cost of everything from food to fuel. The poor state of pay has become arguably the greatest problem for the world's third-largest economy. In dollar terms, average annual pay in Japan was $39,711 (£32,743) in 2021, well below the OECD average of $51,607 (£42,550) and little changed from the early 1990s.
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