Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

Banks in the EU will collectively need a further €1.2bn to meet a set of global capital rules in full by 2028, the bloc's banking watchdog has said. The European Banking Authority said implementing the Basel III global accord in full would result in an average increase of 15% in current core 'Tier 1' capital buffers, with much of the shortfall among smaller, domestic-focused lenders. Requirements under Basel III have largely been rolled out, but some remaining elements are due to be fully implemented by 2028 in the EU, Britain, the US and other jurisdictions. The EU plans to delay when banks should start to implement the remaining Basel III rules until January 2025.

 

Reuters

What the new ISO 27001 Updates Mean For You

ISO/IEC 27002:2022 (ISO 27002) has finally arrived after a long waiting period (it was initially announced several years ago). Wondering what the main changes were and what your organization needs to do to transition? In this on-demand webinar, Danny Manimbo – Principal / ISO Practice Director at Schellman, will help you understand what to expect and what you’ll need to be prepared for.

Watch Now

 

Chancellor Kwasi Kwarteng has U-turned this morning and ditched the planned axing of the 45p top rate of income tax. Mr Kwarteng tweeted: “It’s clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country. As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it and we have listened.” Mr Kwarteng makes his keynote speech to the Conservatives’ annual rally in Birmingham this morning.

 

Evening Standard

EU ministers have agreed a windfall tax that will target the record profits of energy firms. The plan includes levies on fossil fuel firms' surplus profits and excess revenues made from surging electricity costs. EU ministers estimate that they can raise €140bn from the charges on non-gas electricity producers and suppliers that are making bigger-than-usual profits from the current demand. European Commission vice-president Frans Timmermans has previously said that fossil fuel extractors will be told to give back 33% of their surplus profits for this year.

 

EUobserver

BBC News

France 24

City AM

Tax investigations into British football clubs have yielded £59m for HMRC in the year to March 31st, according to analysis by UHY Hacker Young. This represent an increase of £13m on the previous year, with HMRC targeting unpaid tax on fees paid to agents. HMRC’s long-running investigation into football finances centred on nine clubs, in addition to 93 players and 23 agents. Elliott Buss, a partner at UHY Hacker Young, says that HMRC is concerned that football clubs are underpaying National Insurance on agents’ fees, with image rights payments made to players among other areas of focus.

 

The Times

The Pensions Regulator is taking part in emergency talks designed to calm financial markets following the turmoil caused by the mini-budget. The watchdog is understood to have been drafted into closed-door meetings of the Authorities’ Response Framework (ARF). Such talks take place when an “incident or threat” could cause major disruption to the UK’s financial services. The ARF was established in response to the financial crisis and sees Treasury officials and City regulators – the Bank of England and Financial Conduct Authority – address threats to financial stability. It is understood that the latest round of meetings mark the first time the Pensions Regulator has taken part in the forum. The talks come amid market uncertainty that saw the Bank of England intervene with a £65bn bond-buying programme in order to avoid a pensions crisis.

 

The Guardian

French finance minister Bruno Le Maire says his country’s government is "worried" about the economic situation in Britain. With the pound slipping and market turmoil coming in the wake of the mini-Budget which saw the UK government announce unfunded tax cuts, Mr Le Maire said it showed the danger of delivering "dramatic" announcements on economic policy. Suggesting that the UK is paying the price for Brexit, he said: “Leaving Europe comes at a considerable cost because Europe offers protection,” adding that the eurozone “protected us during the Covid crisis."

 

The Independent

Nearly £30bn has been wiped off the value of FTSE 250 stocks in the past quarter - the third quarter in a row that the overall value has fallen. The FTSE 250 – where firms tend to be more exposed to the strength of the British economy than those in the FTSE 100 - ended September 10% lower than at the start of the month. This marked the worst month for mid-cap companies since March 2020. Over the quarter, the index slipped by 8.1%, with the total value of its constituents down by £29bn. Jason Hollands, managing director of wealth manager Evelyn Partners, said: “It’s ugly out there,” adding: “Medium-sized and smaller UK companies, which have a greater exposure to the UK domestic economy, have been battered as the outlook has deteriorated.” Meanwhile, analysis shows that the FTSE 100 fell by 5.2% in September and by 3.7% over the quarter. Sterling’s general weakness has helped limit the index’s losses, with constituents making about three quarters of their money overseas.

 

The Sunday Times

BlackRock says it is reducing leverage in so-called liability-driven investment (LDI) funds at the centre of recent chaotic market conditions for British pension funds, to protect its clients' capital. A BlackRock spokesperson said: “We have been reducing leverage in some of our LDI funds, acting prudently to preserve our clients' capital in extraordinary market conditions. Trading in BlackRock funds has not been halted, nor has BlackRock ceased trading in gilts.”

 

Reuters

Business Secretary Jacob Rees-Mogg has hinted the government will merge the UK’s financial services regulators. During the Conservative leadership campaign, Prime Minister Liz Truss suggested she wanted to roll the Financial Conduct Authority, the Bank of England’s Prudential Regulation Authority and Payment Systems Regulator into one body. When asked about a potential merger yesterday, Mr Rees-Mogg said he could not comment on future announcements but added: “I’m sure the things promised in the election campaign will be delivered upon.” The government is currently moving the Financial Services and Markets Bill through parliament and Mr Rees-Mogg has suggested that it could be amended to include the merger of regulators. The Policy Exchange think-tank has previously said having a single financial services regulator would “enable greater accountability for regulatory performance” and lead to “more talented people being put in charge of regulating the sector.”

 

City AM

With market turmoil and concern over potential interest rate hikes prompting lenders to pull more than 1,600 mortgage deals, Financial Conduct Authority (FCA) chief executive Nikhil Rathi says banks must explain when the deals will be back on the market. In an interview with the Sunday Times’ Jill Treanor, he says: “If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to market so that those people who may need to refinance are able to proceed with their plans.” Mr Rathi, who said the City watchdog is being “incredibly vigilant” about the impact of higher rates on households, notes that lenders are not yet reporting a rise in customers falling behind on payments.

 

The Sunday Times

British businesses are urging the government to avoid a trade war with Brussels, with firms concerned they could be frozen out of lucrative public sector contracts with the EU. Businesses have expressed concerns about the potential fall-out if ministers fail to secure a negotiated settlement with the EU, with European trade important for businesses within the FTSE 100, where companies make 80% of sales outside of the UK. Amid uncertainty surrounding Northern Ireland protocol negotiations, some businesses are concerned that EU officials could make it difficult for British companies during the EU procurement process. Dr Roger Barker, the director of policy at the Institute of Directors, said: “A stable and cooperative relationship with the EU is a priority for UK business.” He added: “It would bring clear commercial benefits, including in areas like EU procurement.”

 

The Sunday Telegraph

Credit Suisse executives have sought to ease concerns over the financial stability of the bank. In a memo to staff, chief executive Ulrich Koerner said the bank had a “strong capital base and liquidity position.” The bank last week said it was pressing ahead with a strategic review that includes potential divestitures and asset sales. Shares in Credit Suisse have fallen by nearly 60% in the past year and dipped by 20% in the past month. With the board reportedly considering splitting the bank into three, Mr Koerner said bosses were in the process of “reshaping Credit Suisse for a long-term, sustainable future – with significant potential for value creation.”

 

Financial Times

Reuters

City AM

Shareholder advisory group PIRC has questioned JD Sport’s multi-million pound payout to former CEO and chair Peter Cowgill, saying it is “most definitely not a good look for the company’s governance.” Mr Cowgill’s exit terms include a £3.5m payment over two years for agreeing to certain limits and £2m over three years for a consultancy agreement. Questioning the deal, PIRC pointed to the sportswear retailer’s £4.3m in fines for competition regulation breaches under Mr Cowgill’s tenure. The retailer was scrutinised by the Competition and Markets Authority over possible breaches of takeover rules as it looked to acquire Footasylum. PIRC also criticised JD’s decision to have Mr Cowgill in an advisory role, saying it did not “seem consistent” with an objective to “shift” governance practices.

 

City AM

David Ames, who lost investors almost £400m through a “fatally flawed” Caribbean property scheme, has been jailed. Mr Ames’ property development company collapsed in 2013 losing investors a total of £398m. Mr Ames convinced more than 8,000 unsuspecting backers to part with their life savings, promising that he would build them properties in a number of exotic locations. However, his company - Harlequin Group - had no other sources of funding and he had been warned that its unsustainable business was likely to fail. Judge Christopher Hehir sentenced him to a total of 12 years in jail, including two consecutive sentences of nine years and three years, for operating what became a “gigantic Ponzi scheme.” Lisa Osofsky, director of the Serious Fraud Office, said: “Those who are trusted with investors’ money have a fundamental duty to safeguard the interests of those investors."

 

The Daily Telegraph

City AM

The Guardian

Legal experts believe that proposals to compel businesses to use mediation before they recover unpaid bills in county courts would "make getting justice even more frustrating." The Ministry of Justice has proposed making mediation mandatory for all contested claims under £10,000. To do this it will expand the small claims mediation service. The Federation of Small Businesses said the change was "welcome" if the mediation was quick and affordable. However Judith Turner, deputy chief ombudsman at the Dispute Resolution Ombudsman, said that while she would advocate any alternative to referring such disputes to the courts, other mechanisms already existed that could be expanded. Mark Beer, a former president of the International Association for Court Administration added: "In theory it is an excellent idea but in practice the [courts and tribunal service's] track record with mediation is hopeless."

 

The Times

A new report from the Office of National Statistics (ONS) reveals a 25% rise in the number of people in England and Wales targeted by fraudsters in the year to March 2022, compared with the same period before the pandemic. This includes a 900% rise in what's known as advance-fee fraud, where victims make upfront payments for goods or services which then never appear, and a 57% rise in consumer and retail fraud, from pre-pandemic levels. “As the pandemic pushed more consumers towards online shopping and services, cybercriminals were hot on their heels,” said Marijus Briedis, chief technology officer at NordVPN. “These types of attacks are here to stay and much more needs to be done to educate people about the threat of phishing and online fraud, and that work should start in schools.” 

 

The Daily Telegraph

The Guardian

The FT’s Alicia Clegg says workplace abuse is common but hard to eradicate, and while organisations say they abhor bullying, few tackle the power imbalances that advantage bullies and weaken victims.

 

Financial Times