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European Edition
24th November 2022
PM backs down in battle with Bank of England over financial regulation
Rishi Sunak has bowed to pressure from the Bank of England and U-turned on his bid to introduce new powers allowing ministers to over-rule City regulators. The Treasury confirmed on Wednesday evening that it would “not proceed with the intervention power at this time,” noting that the government was “committed” to the independence of City watchdogs, which include the Financial Conduct Authority. “Having consulted further we are of the view that the existing provisions in the bill are currently sufficient and will already allow us to seize the opportunities of Brexit by tailoring financial services regulation to UK markets to bolster our competitiveness,” the City minister, Andrew Griffith, said in a statement on Wednesday. But the climbdown sparked an immediate backlash from Tory backbencher Jacob Rees-Mogg. The former business secretary said: “This is a loss of democratic accountability. The power exists to override the Bank of England in extremis and it is a sensible emergency provision to deal with over mighty regulators, I am surprised the government has backed down.”
Business and unions demand Sunak scraps planned bonfire of EU rules
Over a dozen organisations have called on UK prime minister Rishi Sunak to drop plans to automatically strip EU-derived legislation from the British statute book, arguing that it would cause “significant confusion and disruption.” In a letter sent to Grant Shapps, the business secretary, the alliance, including the Trades Union Congress, the Institute of Directors and the Chartered Institute of Personnel and Development, said: “Getting to grips with any resulting regulatory changes will impose a major new burden on business which it could well do without.” The letter says the proposal would overturn “decades of case law” and make the “interpretation of the law highly uncertain.” This could affect holiday pay, safe working hours and laws governing the labelling of some foodstuffs. Jacob Rees-Mogg, the former minister for Brexit opportunities, has previously praised the Retained EU Law Bill, saying it is vital to create distance between the UK and the EU.
Pensions experts ‘shocked’ at hidden borrowing across UK schemes
Pensions experts have expressed shock at the level of “hidden” borrowing across UK pensions schemes, which nearly toppled some funds during the bond market crisis in September. Speaking to politicians on the work and pensions committee on Wednesday, academics and pensions experts laid bare the risks that certain kinds of liability-driven investing (LDI) posed for retirement savings. John Ralfe, an independent consultant, said he was worried about how much leverage was used by pensions schemes as part of their LDI strategies. UK rules bar pensions schemes from borrowing money to fund investments, but experts such as Ralfe and Henry Tapper, executive chair at Agewage, have said LDI hedging arrangements are the same as borrowing.
Ofcom could have greater surveillance powers than spy agencies
The Times reports that Ofcom could have greater surveillance powers than spy agencies under laws being considered by parliament. A legal analysis has claimed that the media regulator is being given authority under the Online Safety Bill to force technology companies to crack down on terrorism and child abuse content on private messaging apps such as WhatsApp, Facebook Messenger, Telegram and Signal. Under the bill, the regulator will be able to order companies to use technology to scan messages to root out terrorism or child abuse. Meanwhile, a failure to comply would result in a fine of up to 10% of the company's worldwide revenue. Human rights lawyer Matthew Ryder said in a legal opinion commissioned by Index on Censorship that Ofcom would not need prior authorisation for issuing a demand for scanning messages and there was no independent oversight of such powers.
EU Court of Justice reverses anti-money laundering rules
Several EU countries have started closing their public beneficial ownership registers after the Court of Justice of the European Union (CJEU) ruled that providing the general public with access to information on beneficial ownership constitutes a serious interference with fundamental rights. The case was sent to the CJEU from a Luxembourg court after challenges to the Luxembourg Business Registers, which disputed the compatibility of this provision with the right to privacy. Maíra Martini, corrupt money flows expert at Transparency International, said: “Access to beneficial ownership data is vital to identifying – and stopping – corruption and dirty money . . . At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.” Others, including the Tax Justice Network, also denounced the ruling. “By requiring corporations and offshore entities to publicly disclose who truly owns them, public beneficial ownership laws are designed to prevent their owners from escaping the rule of law, which can mean preventing billionaires from evading tax as well as preventing sanctioned oligarchs, organized crime and human traffickers from laundering money and financing illegal activity,” the London-based advocacy group said. However, Mishcon de Reya lawyer Filippo Noseda, who represented one of the appellants, said the ruling was a “victory for data protection and the rule of law in an extremely politicised context.”
New EU law will break 'glass ceiling' for women on company boards
The European Parliament has approved a new law requiring large companies in the EU to have women make up at least 40% of non-executive board members. The 'Women on Boards' law also requires that at least a third of all company directors are women. The rules also demand that, where two candidates for a post are equally qualified, priority must go to the under-represented sex. "After ten years since its proposal by the European Commission, we will now have an EU law to break the glass ceiling of listed companies boards," said Ursula von der Leyen, president of the European Commission, which proposed the new rules. "There are plenty of women qualified for top jobs and with our new European law, we will make sure that they have a real chance to get them."
Credit Suisse forecasts $1.6bn loss as wealthy clients withdraw funds
Credit Suisse warned on Wednesday that it was on course to make losses of £1.3bn in the fourth quarter, leaving it £3bn in the red over the full year. The Zurich-headquartered bank revealed clients have pulled £56bn from its wealth management arm and £4.6bn from the domestic Swiss bank since the start of October as fears over its future mount. The loss equates to 10% of AUM leaving its wealth management unit, something Vontobel analyst Andreas Venditti describes as “deeply concerning.” The bank’s shares fell 6% in trading on Wednesday to SFr3.62, its lowest price for at least 30 years.
De La Rue slams auditor over ‘going concern' warning
De La Rue, the banknote printer, saw its shares fall by as much as 25% on Wednesday after the company cut its profit forecast for a third time this year. CEO Clive Vacher hit out at his company's external auditor, EY, accusing the firm of exhibiting an “overabundance of caution” after it flagged a “severe but plausible downside scenario” under which, if key currency contracts are not won or fall outside the going concern period, and the company “is not able to secure alternative contracts, without sufficient and timely cost mitigation,” it would breach a covenant on its revolving credit facility. Mr Vacher said it was “based on analysis that is neither plausible nor realistic and done with an overabundance of caution.”
Nationwide latest to restrict crypto payments
Nationwide has followed Starling Bank, Santander and Virgin Money in restricting customer payments to cryptocurrency exchanges. The building society said it would be introducing a daily limit on payments to crypto assets in the near future. The tighter controls by lenders come in the wake of the collapse of crypto exchange FTX, which filed for bankruptcy protection with an $8bn black hole in its accounts amid claims customer deposits were secretly misused.
Brussels demands share of London derivatives clearing
Systemic banks trading large volumes of derivatives in London should start using accounts at clearing houses in the EU for some of their transactions, according to measures outlined by the European Commission.
TalkTalk given record fine over data theft
TalkTalk has been fined a record £400,000 over a cyber-attack in October last year which led to the theft of personal data of almost 157,000 customers. Elizabeth Denham, the Information Commissioner, said: “TalkTalk’s failure to implement the most basic cybersecurity measures allowed hackers to penetrate TalkTalk’s systems with ease. Yes, hacking is wrong, but that is not an excuse for companies to abdicate their security obligations.” She added: “TalkTalk should and could have done more to safeguard its customer information. It did not and we have taken action.”
Health sector responsible for one in five data breaches
Data from the Information Commissioner's Office (ICO), analysed by solicitors Hayes Connor, reveals that the health sector is the worst industry in the UK when it comes to reporting data breaches. Businesses and bodies in the health sector typically take more than 72 hours to report nearly 40% of their data breaches, which is against ICO regulations. "What's concerning is the public sector puts a lot of trust [in the health sector] . . . With the expectation that their data is being handled securely," legal director at Hayes Connor Christine Sabino said. "With so many of these data breaches being caused by human error, it's very clear that these industries are in dire need of data handling training, at the very least."
Tax take rises 30% in five years
HMRC, the UK's tax authority, collected £757bn in taxes in the year to 31 October 2022, up from £584bn in 2015/16, official figures show. After rising by 30% over the five year period, taxes are set to soar further following Chancellor Jeremy Hunt’s Autumn Statement. The Office for Budget Responsibility (OBR) estimates the tax burden is on course to hit its heaviest level since WWII with total UK government national account tax revenues expected to top £1tn in three years. The tax hikes risk harming investment levels further, analysts say. “Maintaining UK tax competitiveness will now be more important than ever . . . If the UK were able to stimulate business investment back to pre-pandemic levels, it would generate an estimated £11bn to the economy,” Jon Richardson, head of tax policy, PwC, said. Elsewhere, Paul Falvey, tax partner at BDO, believes simplification of the tax system would help: “The sad reality is that the tax system lacks coherence. New taxes and reliefs are overlaid on existing measures, with complex rules bolted on to prevent avoidance. The result is a system of such dizzying complexity it’s hardly surprising that so many businesses and individuals get it wrong.”
Hospitality bosses say rail strikes will devastate business
Pubs and restaurants could lose £1.5bn in sales as a result of walkouts by the Rail, Maritime and Transport workers union (RMT) just days before Christmas, hospitality bosses have said. Kate Nicholls, chief executive of UK Hospitality, said the strikes will be devastating for a sector already facing soaring bills, staff shortages and a cost of living crisis.
Compensation for dyslexic M&S employee dismissed over mistakes in emails
Rita Jandu, a clothing and home planner at Marks & Spencer who has dyslexia, has been awarded over £50,000 after she was dismissed for making mistakes in emails. Jandu, who worked for the High Street chain for 22 years, struggled to read and write lengthy messages and preferred to communicate using bullet points. An employment tribunal heard that Jandu was "singled out" by managers at M&S who selected her for redundancy after she appeared to rush her work and her emails contained inaccuracies. The tribunal has now ruled that M&S managers ignored the impact that Jandu's dyslexia had on her work including her ability to concentrate and communicate. Jandu was awarded £53,855 for disability discrimination and unfair dismissal.
Thousands defrauded in £48m web hoax
An international spoofing website defrauded about 200,000 victims in the UK alone, the Metropolitan Police has said, after an anti-fraud operation brought the crime spree to an end. More than £48m was taken from victims as a result of the platform, the force said. The website allowed criminals to pose as high street banks including Barclays, Santander, HSBC, Lloyds, Halifax, First Direct, NatWest, Nationwide and TSB. At one stage, officers found that almost 20 people a minute were being contacted by scammers hiding behind false identities. The biggest loss to a single victim was more than £3m, while victims lost £10,000 on average.
Investor wants Purplebricks chairman out
Purplebricks shareholders will vote on whether to oust the estate agent’s long-term chairman in the week before Christmas after activist investor Lecram Holdings forced a general meeting. The activist, led by the property investor Adam Smith, has blamed Paul Pindar for the company’s “disastrous” performance in recent years.

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