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European Edition
20th October 2021
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City watchdog in crypto warning
The Financial Conduct Authority (FCA) has launched an £11m campaign targeting inexperienced investors who are increasingly putting money into investments which may not be right for them. The City watchdog has warned that "hype" on social media platforms and the wider media is driving new investors to opt for high-risk investments. An FCA poll found that almost 60% of young investors are making investment decisions as a result of repeatedly hearing about specific products online. It was also found that 76% of investors under 40 who have put money into high-risk assets such as cryptocurrencies and foreign exchange were driven to do so by a desire to compete with friends and family. The research also found that the majority of those who bought forex or crypto - 57% and 69% respectively - incorrectly believed they were regulated by the FCA, with this making it likely they did not fully understand the lack of investor protection or the risk of losses.
How to Track and Exceed ESG Goals

Regulatory compliance is the baseline that all companies are expected to meet but priorities are shifting. Effective leaders know that developing ESG-focused policies can help their organisations achieve big picture goals that will not only protect the environment but please savvy investors. So, what should an organisation do to manage the expectations of regulators, customers, investors and the public? Download this report and discover the 3 main environmental and sustainability areas on which organisations are focusing and how you can capture data and report on ESG data.
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Mid-sized firms lack ESG awareness
Analysis by RSM shows that 44% of middle-market business leaders – those from firms where turnover is between £10m and £750m or where assets under management range between £200m and £7.5bn - are unfamiliar with ESG. The analysis also found that among those who were familiar with ESG, close to a quarter are not making any attempt to measure the potential impact of their ESG goals. The report comes as ministers prepare to publish findings from a consultation proposing mandatory ESG reporting in line with the Task Force on Climate-related Financial Disclosure. The rules would make ESG reporting mandatory for private companies and limited liability partnerships with more than 500 employees and turnover greater than £500m, as well as all publicly quoted UK companies. Alex Tait of RSM said ESG awareness is “now a clear business imperative,” and warned that “reticence or inactivity in this space could have very real impacts on future growth, as customers, employees, investors and other key stakeholders increasingly demand strong ESG credentials.”
Foreign investment deals to create 30k UK jobs
Foreign investment deals in low-carbon sectors in the UK announced yesterday will create about 30,000 jobs, the government has said. Prime Minister Boris Johnson announced 18 new deals worth £9.7bn, including investments in sectors such as wind and hydrogen energy, sustainable homes and carbon capture. The prime minister said investors had recognised "the massive potential in the UK for growth and innovation," and such investments would power the economic recovery and help to achieve the government's levelling-up agenda for UK regions. The biggest pledge is from Spanish energy company Iberdrola, which plans to invest £6bn in offshore wind farms as part of a project that will create 7,000 jobs. Logistics firm Prologis is set to invest £1.5bn in the UK over the next three years to develop net zero carbon warehouses, supporting about 14,000 new jobs. "We believe private sector innovation has, and will continue to play, a major role in overcoming the environmental challenges the world faces today," said Prologis CEO Hamid Moghadam. 
Treasury: Taxes may need to rise to support net zero drive
Prime Minister Boris Johnson has unveiled plans for Britain to achieve net zero by 2050 but the Treasury has warned that taxes may have to rise to cover the estimated £1trn bill. The Treasury said the transition to a greener economy will have “material fiscal consequences” and warned: “There will be demands on public spending, but the biggest impact comes from the erosion of tax revenues from fossil fuel-related activity.” It added: “If there is to be additional public spending, the Government may need to consider changes to existing taxes and new sources of revenue throughout the transition to deliver net zero sustainably.” According to the Treasury’s net zero review, higher taxes could discourage foreign companies from operating in the UK, lowering tax revenues further. The Treasury document also suggested: “Seeking to pass the costs onto future taxpayers through borrowing would deviate from the polluter pays principle,” adding that it would also “not be consistent with intergenerational fairness nor fiscal sustainability.” Despite flagging issues around the financial element of achieving net zero, the Treasury acknowledged that the costs of global inaction on the climate were greater than those of action. 
Inflation concern as costs climb
Industry leaders have warned MPs about the soaring cost of eating out, supermarket bills and manufactured goods, saying pressure on the cost-of-living is set to undermine the Prime Minister's levelling-up agenda. The Food and Drink Federation said that café, restaurant and pub prices are rising at 14%-18% a year, and supermarket prices are set to follow. Federation CEO Ian Wright warned ministers on the Business Committee to “think seriously” about the inflation caused by supply chain disruption, describing the level of inflation seen in the sector as “terrifying.” Manufacturers' organisation Make UK said the sector is being hit by a rise of 30% to 40% in material prices, alongside rising energy and shipping costs. CEO Stephen Phipson warned that huge increases in shipping and air freight costs were “not sustainable, and industry leaders expect supply chains to be disrupted for another six to nine months.
UK-EU trade declines again
Figures from the Office for National Statistics show a second consecutive monthly fall in trade between the UK and EU. The total exports of goods, excluding precious metals, fell by £1.3bn (4.6%) in August, with this partly due to a £0.6bn (4.3%) fall in exports to the EU. Trade also slipped on a quarterly basis, with total exports of goods, excluding precious metals, down £1.2bn in the three months to August, marking a 1.5% dip. Reflecting on the data, Lucy Sutcliffe at Azets says a failure to support EU exporters has driven the fall in trade between the UK and EU. She said: “Small UK businesses have been completely overwhelmed by bureaucracy and the additional time and cost it takes to trade across Europe.” She added: “New duties, border delays and transport costs are pushing UK SMEs into rethinking trade with the EU.”
Regulator calls for prevention measures to tackle scam ads
The Financial Conduct Authority (FCA) has said social media firms should be forced to stop financial adverts by implementing regulated systems and controls. Speaking at a joint committee hearing on the draft Online Safety Bill, FCA executive director of enforcement and market oversight Mark Steward said officials at the watchdog “are very strong supporters of an approach that would obligate social media firms to create systems and controls,” with the regulator’s financial services experience showing how valuable such measures can be in preventing harm. It is noted that the proposed legislation targeting online harms does not cover paid-for advertising, despite this being one of the main sources of online investment scams. Mr Steward, who likened efforts to tackle scam adverts to a game of whack-a-mole, said prevention may be key. Michael Grenfell, executive director for enforcement at the Competition and Markets Authority, agreed with the whack-a-mole analogy, saying that when targeting fake online reviews, the competition watchdog “went after individual perpetrators, but then others pop up.”
Advisers call on FCA to strengthen investor protections
Research from the Association of Investment Companies (AIC) shows that financial advisers want the Financial Conduct Authority to impose stronger investor protections where illiquid assets are held in funds, with 72% saying there are insufficient controls on how funds operate in these circumstances. A poll reflecting on the climate within the sector in the wake of the collapse of Neil Woodford's flagship fund shows that 47% of financial advisers prioritised liquidity considerations, while 41% said the most important takeaway from the scandal was to be less trusting of a fund manager's reputation. Three-quarters of advisers said they have changed their processes in some way as a result of the Woodford affair. Richard Stone, chief executive of the AIC, said advisers “clearly identify the Woodford fund's exposure to unquoted companies as the number one reason behind its suspension and eventual failure.”
FCA fines Credit Suisse over Mozambique loan failures
Credit Suisse has been fined over £147m by the Financial Conduct Authority (FCA). The penalty stems from due diligence failings involving two loans worth over $1.3bn and a bond exchange arranged for the Republic of Mozambique. The watchdog believes that between 2012 and 2016, Credit Suisse failed to properly manage the risk of financial crime within the country. Alongside the fine, Credit Suisse has agreed to forgive $200m of debt owed by the Republic of Mozambique as a result of the tainted loans. Mark Steward, executive director of enforcement and market oversight at the FCA, said the fine would have been higher if Credit Suisse had failed to provide the debt write-off.
Drop Chinese investments, MPs and peers tell parliament’s pension fund
A cross-party group of more than 137 parliamentarians, including 117 MPs, has called on Parliament’s pension fund to disinvest from Chinese companies accused of complicity in gross human rights violations or institutions linked to the Chinese state. The letter to the fund’s trustees follows research by the rights group Hong Kong Watch which found the Parliamentary Contributory Pension Fund had £2.9m invested in the Chinese e-commerce company Alibaba and £900,000 in technology group Tencent, as well as investments in China Construction Bank and Sinopec.
CMA clears the way for S&P Global and IHS Markit merger
The Competition and Markets Authority (CMA) has cleared the way for the $44bn tie up between IHS Markit and S&P Global, saying it has uncovered limited competition concerns. The only possible issue it identified was the large position both firms hold in the supply of commodity markets data, saying it would mean they would face “only limited competition” in that specific area after the merger. The CMA said the if this matter was dealt with, the deal could go ahead.
Alphabet CEO says US government should take a more active role on cybersecurity and innovation
Alphabet CEO Sundar Pichai wants the US government to assume a more active role in cybersecurity initiatives and in encouraging innovation. He is urging governments to draft the equivalent of a Geneva Convention for technology to detail international legal standards in an increasingly connected world. “Governments on a multilateral basis . . . need to put it up higher on the agenda,” Mr. Pichai said, adding “If not, you're going to see more [cybersecurity breaches] because countries would resort to those things.” He also petitioned the US government to do more to encourage innovation amid growing competition from China. Alphabet-owned Google’s eponymous search engine doesn't operate in China, but the company is investing in quantum computing and artificial intelligence to stay ahead of Chinese companies that compete to provide services in markets around the world, including Southeast Asia, Mr. Pichai said.
Miss France contest is sued over selection criteria
A French feminist organisation is suing the promoters of the Miss France beauty contest in an employment court. The "Osez le feminisme" (Dare to be a Feminist) group, along with three unsuccessful contestants, claim the promoters use discriminatory criteria to select participants. Endemol Production, which makes the annual TV programme screened on the TF1 channel, is also being sued by the plaintiffs, who say the companies are in breach of French labour law by obliging contestants to be more than 1.70 metres tall, single, and "representative of beauty." France’s labour code forbids companies from discriminating on the basis of "morals, age, family status or physical appearance," observed Violaine De Filippis-Abate, a lawyer for Osez le feminisme. The case, which has been filed in the Paris suburb of Bobigny, will hinge on whether magistrates recognise contestants as being de facto employees of the competition’s organisers and the television company.

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