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The Financial Conduct Authority (FCA) has enlisted FTI Consulting to provide internal communications support as the watchdog faces a staff revolt over pay reforms. FCA bosses are overhauling pay structures, and staff claim that the changes will lead to three in four employees facing pay cuts of 10%. The Telegraph’s Simon Foy notes that the FCA already has a “sizable communications” team, and paying more than £460,000 to bring in PR experts to handle internal messaging “suggests it is struggling to effectively communicate with its 4,000 employees.” Dominic Hook, Unite national officer, said: “While the FCA is ignoring the union and planning to make cuts to staff pay, it's outrageous that they're also spending nearly half a million pounds on communication consultants.”

 

The Daily Telegraph

Shell has pulled out of the controversial Cambo oil field development off the coast of Scotland. The company, which had a 30% stake in the field, said the economic case for investment in the North Atlantic project was "not strong enough." The development has faced sustained criticism from environmental activists. The environmental group Greenpeace UK said letting Cambo go ahead “would be a disaster for our climate and would leave the UK consumer vulnerable to volatile fossil fuel markets.” Shell's decision to withdraw from Cambo is a serious blow to the project, but Siccar Point Energy, a private equity-backed firm that is Cambo's main owner and developer, said it remained “confident about the qualities” of the project and would continue talks with the UK government over the future of the field. Shell said it had carried out "comprehensive screening" before reaching a decision to "ensure the best returns for the business."

 

BBC News

New York Times

Writing for Bloomberg, Ben Ashby says big financial institutions “have the wrong strategy, the wrong structure and usually too much legacy baggage” to develop the new technology that would benefit their businesses, and are instead spending huge sums of money on their core infrastructure. He says the world’s banks risk becoming so-called “dumb pipes” and more nimble entrants to the sector are poised to take advantage of this strategic wrongheadedness. He wonders whether a good alternative is to almost start over and build a new core banking platform within the organisation and then migrate the bank onto it. The author cites Lloyds Banking Group’s partnership with Thought Machine as a good example of such a strategy, but cautions that this still only addresses issues with core infrastructure and the final integration carries its own risks.

 

Bloomberg

Growing numbers of corporate leaders are leaving their jobs as pressure intensifies from multiple directions and as conditions in both the markets and the real economy get tougher.

 

Financial Times

A report from Alvarez & Marsal indicates that a third of FTSE 250 bosses must now hit ESG targets or see their pay and bonuses cut. Thirty per cent of firms now use ESG measures on executive pay, up from 19% in 2020. Nicolas Stratford of Alvarez & Marsal said: "ESG performance measures have been spreading fast throughout the FTSE 100, but we're now seeing them becoming increasingly prevalent within the FTSE 250," adding “We expect this trend to continue to accelerate as UK firms respond to increasing stakeholder demands to ensure long-term strategic ESG goals are reflected in incentive targets. "

 

Evening Standard

Investor activism is poised to enter a “golden age” across Europe next year, while low valuations and heightened ESG concerns mean that British companies are the most vulnerable targets.

 

Financial Times

The Financial Conduct Authority (FCA) has announced proposals to make changes to its appointed representative (AR) regime. The AR regime, which allowed the now collapsed supply chain financing firm Greensill to conduct business in the UK, lets an unauthorised company conduct some regulated activities without a licence so long as it is supervised by an authorised firm. The City watchdog has proposed that principals provide the FCA with far more detailed information on an AR's regulated and unregulated activities, revenue, and history of complaints. Sheldon Mills, the FCA’s executive director for consumers and competition, said that while the AR model helps bring choices to consumers, “the level of harm we are currently seeing is too high. There are real risks of consumers being misled and mis-sold with little scope for recourse.” Analysis shows that 60% of complaints handled by the Financial Services Compensation Scheme involve principals and ARs.

 

Reuters

The Times

City A.M.

Financial experts have urged ministers to grant the Financial Conduct Authority (FCA) powers to control adverts for high-risk cryptocurrencies, arguing that a wave of ads across billboards, the sides of buses and Tube platforms are luring people into buying what is often an untested, unregulated and volatile product. Former MP Oonagh McDonald, who has just written a book on cryptocurrencies and regulation, said: “If the Government is serious about robust consumer protection, then it needs to act quickly on this issue.” She added that crypto adverts “must be more transparent” and they “must also categorically state – in words people can easily read – that they are not FCA authorised if that is indeed the case.” Susannah Streeter, an analyst at wealth platform Hargreaves Lansdown, commented: “Most firms advertising and selling investments in the crypto Wild West are not regulated. This means that if you invest you will not have the protection of the Financial Services Compensation Scheme if things go wrong.”

 

Mail on Sunday

The Financial Reporting Council (FRC) has closed its investigation into the collapse of Conviviality with no action being brought against an accountant who prepared and approved financial statements at the retail business. The watchdog was examining financial statements and other financial information filed by the company before it fell into administration in 2018. “After a detailed review of the evidence, the Executive Counsel has decided that the test for bringing enforcement action against that member of the ICAEW is not met,” the FRC said, adding: “Accordingly, the case has been closed.” The Times says it is believed that the person at the centre of the investigation was Andrew Humphreys, the company's chief financial officer. While this probe has come to an end, the FRC has confirmed that it is still investigating KPMG's audit of Conviviality.

 

The Times

HMRC believes large companies in the UK may have underpaid £35.8bn in tax last year. Analysis from law firm Pinsent Masons calculates that this is an increase of £1bn on the previous year. It also marks the sixth consecutive year that the amount underpaid has risen. The Mail notes that methods multinationals use to artificially lower their UK tax bill include transfer pricing, which involves shifting costs and income across countries. They also use base erosion – shifting profits from UK sales to lower-tax countries. It is estimated that transfer pricing and base erosion account for more £9bn in lost tax income, with transfer pricing alone accounting for £8.1bn. Steven Porter of Pinsent Masons said multinationals underpaying tax “is one of the biggest areas of concern for HMRC.”

 

Daily Mail

The I

HMRC is closing phone lines for three days this month to deal with a backlog of post built up during the pandemic. VAT and corporation tax lines were closed on Friday and will be shut again for the next two Fridays as call centre staff are switched to mail-opening duty. The tax office aims to be back to pre-pandemic service levels by April. Tim Stovold of Moore Kingston Smith believes that phone lines might have to close again in the run-up to the self-assessment deadline at the end of January if HMRC is to hit the target. Suggesting that HMRC is expecting fewer people to call their business tax helplines on the Fridays in Christmas party season, Mr Stovold said: “This should give the tax office the scope to reallocate people to deal with a year's backlog of post and will be welcome news for businesses that have waited months for replies to letters."

 

The Times

Data from the Financial Conduct Authority (FCA) show that 25 firms issuing mini-bonds have collapsed since 2018. Because the FCA does not routinely collect data from firms which issue mini-bonds as it is not a regulated activity, the total number of mini-bond issuers that have entered liquidation could be higher. The FCA noted that a firm which has gone into administration or liquidation may not have done so as a direct result of their involvement in the distribution of mini-bonds, saying: “there are many other factors, like the global pandemic, that could have been why a firm has failed.”

 

Money Marketing

The Financial Conduct Authority (FCA) has been urged to safeguard LV members in the wake of a £530m takeover by Bain Capital, with the City watchdog being called on to ensure members' funds are properly protected. The UK Shareholders’ Association has written to FCA chairman Charles Randell, voicing fears that a “with-profits” fund could be used to prop up the insurer if a Bain-owned business ran into financial difficulty. Two LV policyholders have hired legal firm Leigh Day to ask the FCA to postpone a vote on the deal while concerns are addressed. The FCA would not comment on the approaches by UKSA or the policyholders but said: “Our role, under law, is to ensure that customers are treated fairly and that there is no material adverse impact on them should the transaction go ahead. We have challenged the firm to make sure this happens.”

 

The Sunday Times

New BT chairman Adam Crozier says the business is “prepared for anything” amid suggestions that the telecoms company could soon be a takeover target. The speculation comes as rules preventing its largest shareholder from launching a takeover bid expire next weekend. Patrick Drahi's company Altice UK took a 12.1% stake in BT in June and a six-month period preventing him from launching a takeover under City rules expires on December 11th. Asked whether BT was ready for the bar on an Altice takeover bid coming to an end, Mr Crozier said: “Our job is to be very much focused offensively on what we can do to make BT more successful – and then be prepared for anything that happens at any stage.”

 

Mail on Sunday

Volkswagen misled British car buyers by falsifying emissions test data, lawyers will argue this week, as group action linked to the German firm’s “dieselgate” emissions scandal reaches the High Court. More than 90,000 claimants are seeking compensation after buying cars from Volkswagen Group – including Audis, Seats and Skodas – only to find they emitted more of the air pollutant nitrogen dioxide than the company claimed. The group action, which was launched in 2019, is the latest to stem from the scandal, which emerged in 2015 when the carmaker was found to have installed defeat devices to rig emissions data. The company has already spent £25bn globally on legal costs, compensation and vehicle buybacks since the scandal broke. During the five-day hearing, lawyers for the claimants will argue that customers were deceived because VW did not tell them about the defeat devices. Claimants are being represented by three law firms: Leigh Day, Slater & Gordon and PGMBM.

 

The Guardian

Santander customers have accused the bank of age discrimination after being told they must own a mobile phone to verify certain transactions. This has raised concern over access to services among older savers. Just under half of older people do not use a smartphone and many do not have reliable home internet or mobile coverage. Barclays, HSBC, Lloyds, RBS and TSB all allow customers to use other methods to confirm their identity, including receiving a call from the bank.

 

The Daily Telegraph