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Digital bank robberies and cyber hacks pose a significant risk for countries launching digital versions of their currencies, according to a report by the Bank for International Settlements (BIS). The report highlights the challenges faced by central banks in providing digital cash, including technological know-how and the environmental impact of their energy needs. The worst-case scenario would be a cyber hack resulting in money being stolen from a central bank's digital vault. The BIS report emphasizes that cyber security is a key risk for central bank digital currencies (CBDCs) and could have far-reaching implications for current central bank operations. The report also mentions that the number of banks working on CBDCs has tripled in the last three years, with nearly a dozen already launched. The use of new technologies like distributed ledger technology (DLT) in CBDCs presents unique cyber risks due to the lack of a widely accepted cyber security framework. The report concludes that issuing a CBDC will have major implications for central banks' business models and risk profiles.

 

Reuters

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PwC has launched an AI chatbot to aid deal-making. The new technology will analyse client documents and provide guidance to deal-makers. PwC's chatbot, developed in collaboration with AI start-up Harvey, aims to reduce deal failure and provide a competitive advantage. The company plans to license the platform to clients, including private equity firms and banks, and has already implemented Harvey's AI tools in other departments. Lucy Stapleton, UK deals leader at PwC, said its new AI chatbot will help staff develop new skills and boost productivity by allowing more time for analysis. The Telegraph notes that the launch of the chatbot comes just weeks after PwC announced up to 600 job cuts across its advisory team in a voluntary redundancy scheme, with weaker demand for advisory services leaving the Big Four firm overstaffed.

 

The Daily Telegraph

San Francisco-headquartered identity-verification company Okta has reported a data breach impacting all of its customer support system users, except for government customers. The breach resulted in the theft of customer data, including full names and email addresses. Okta's Chief Security Officer, David Bradbury, warned of an increased risk of phishing and social engineering attacks and advised all customers to use multi-factor authentication.

 

Wall Street Journal

Chancellor Jeremy Hunt has refuted suggestions that the tax cuts announced in the Autumn Statement will mean sharp spending cuts to public services down the line. Mr Hunt told MPs on the Treasury Committee that the cuts are “designed to help growth,” which in turn will help fund public services. “The way that we fund our public services over the medium is by having a healthy growing economy,” he said. This comes after MPs suggested Hunt’s plans were based on a “fiscal fiction.” The Chancellor hit back, saying: “It would be fiscal fiction if I chose to cut taxes in areas that didn’t impact growth. But I didn’t.” Mr Hunt went on to highlight Office for Budget Responsibility estimates which say measures announced in both the Spring Budget and the Autumn Statement will help to increase GDP by 0.5%.

 

City AM

With the Financial Conduct Authority (FCA) setting out plans that will require personal investment firms (PIFs) to set aside capital so that they can cover compensation costs, the watchdog says these firms would need professional indemnity insurance (PII) or a comparable guarantee covering their business since authorisation. However, acknowledging that some firms may find it difficult to get PII cover, the FCA says that these may be allowed to hold materially higher levels of capital or “ring-fenced” amount of core liquid assets. This would ensure that PIFs without PII access have “adequate resources” to settle any valid claims brought against them.

 

FT Adviser

The Competition and Markets Authority (CMA) has successfully appealed against a ruling saying that it did not have the power to investigate tech firm Apple. The CMA opened an investigation into the dominance of Apple and Alphabet in mobile browsers, and the possibility that Apple may be restricting the cloud gaming market through its app store. Apple challenged the lawfulness of this at the Competition Appeal Tribunal (CAT), which backed the tech giant. However, the Court of Appeal has overturned the CAT’s decision.

 

City AM

PwC affiliates in Hong Kong and China have been fined $7m by the Public Company Accounting Oversight Board (PCAOB). The US accounting watchdog found that more than 1,000 audit staff cheated on internal training exams between 2018 and 2020. Without admitting the allegations, PwC’s Hong Kong firm has agreed to pay a $4m settlement, while PwC China is to pay $3m. PwC said it was “highly regrettable” that staff had shared test answers. The PCAOB has ordered the firm to strengthen its policies to ensure staff act with integrity in internal training.

 

Compliance Week

Financial Times

Reuters

The Wall Street Journal

Some of the world’s biggest tech firms have backed a charter designed to prevent consumers from being hit by online fraud. The charter outlines a number of voluntary commitments, including: being able to quickly identify, flag and remove content and accounts suspected of being involved in fraud; taking steps to protect people from fraudulent advertisements; responding to law-enforcement requests detailing criminal users or content as soon as possible; and quickly sharing information on fraud. Amazon, eBay, Facebook, Google, Instagram, LinkedIn, Match Group, Microsoft, Snapchat, TikTok and YouTube have backed the charter, with the firms pledging to implement the changes within six months. The UK government said a joint fraud taskforce chaired by Security Minister Tom Tugendhat will hold the companies to account for delivering the commitments.

 

BBC News

About 850 jobs are expected to be lost amid a cost-saving drive at Metro Bank. The lender recently said it is seeking savings of as much as £50m a year, having been forced into a £925m emergency refinancing that rescued it from possible collapse. Chief executive Daniel Frumkin said Metro Bank is “committed to stores and the high street but will transition to a more cost-efficient business model while remaining focused on customer service.” It has been suggested that this will see Metro shedding a fifth of its 4,266 employee workforce, meaning 850 job losses. Metro, which has added branches and extended hours as other lenders have closed thousands of sites, is now in talks with the Financial Conduct Authority over making cuts to its service and plans to review its seven-day-a-week opening hours. 

 

Sky News

BBC News

The Daily Telegraph

The Times

Britain's biggest domestic lender, Lloyds Banking Group, has announced the closure of 45 branches, including Halifax and Bank of Scotland-branded branches, between March and November next year. The move has raised concerns about public access to financial services, as the retreat of lenders from high streets continues. Lloyds' branch network will be reduced to 1,061 sites, down from approximately 1,800 in 2018, due to a decline in the number of customers using branches. 

 

Sky News

The Independent

Daily Mail

Daily Mirror

The Times

The chair of the Commons Business and Trade Committee says regulators should look to reclaim dividends paid to Wilko’s founding family before the retailer’s collapse in August. Liam Byrne has called on regulators to “explore every option to claw back those dividends so that Wilko pensioners are not short-changed.” In response, Business Minister Kevin Hollinrake said the Insolvency Service is looking at the matter and the directors' conduct report from administrator PwC. He noted that it “been clear in that report so far they have no evidence of director misconduct, but there’s further work ongoing.” It comes after the cross-party committee heard from former Wilko chair Lisa Wilkinson. Mr Byrne said Ms Wilkinson “was not able to answer why 70% of the profits in the last four years were paid out in dividends to family trusts, while the deficit in the pension fund mounted, to now £50m.”

 

The Guardian

William Osmond, a lawyer who informed a client that the Serious Fraud Office (SFO) was carrying out a money laundering investigation into a £4m loan he was involved in, has been sentenced to nine months in prison. Mr Osmond, founder of commercial and property law firm Osmond & Osmond Solicitors, is the first solicitor that the SFO has prosecuted for tipping off a client. His sentence has been suspended for 18 months. He has also been ordered to complete 100 hours of unpaid work and pay £5000 toward the SFO’s costs.

 

City AM

Health insurance rates in the UK are expected to increase by at least 20% next year due to the surging number and cost of claims, according to industry advisers. The use of company health schemes has expanded as the National Health Service struggles to meet patient demand after the COVID-19 pandemic. A record 4.4 million people are now covered by employer health insurance, as waiting lists for hospital treatment hit record highs. Insurers are experiencing higher inflation than the medical trend rate, leading to rising premiums. Some workplace health insurance schemes are seeing rate rises of over 40%. Employers are starting to question how to tackle the rising costs, with potential solutions including employees paying a flat fee for initial consultations with online doctors or offering health screening. "The market is nervous, we are in a very unknown phase and insurers don't like unknowns," said one health insurance industry consultant.

 

Reuters

Insurance broker Howden Group Holdings is facing a new lawsuit from Aon, just one month after settling another claim. Aon, along with its subsidiaries Aon UK and Aon Brasil, filed the lawsuit in the English High Court. The lawsuit targets Howden and 11 other defendants, including its reinsurance branch, vice-chair Elliot Richardson, and CFO Ahmed Farooq. Aon has instructed City law firm Lewis Silkin to handle the case. This comes after Howden was sued earlier this year by reinsurance business Guy Carpenter and its parent company, Marsh McLennan.

 

City AM

Half of German companies are facing difficulties in filling vacancies due to labour shortages, according to the DIHK Chamber of Commerce and Industry. Despite the stagnation of the euro zone's largest economy, Germany is experiencing deep labour shortages, particularly in skilled high-growth sectors. The proportion of companies struggling to hire has slightly decreased from the previous survey, but still stands at 50%. Achim Dercks, DIHK's Deputy Chief Executive, stated that the skilled labour situation remains critical. The German economy currently has 1.8 million unfilled jobs, resulting in a loss of over €90bn in added value. The survey also revealed that eight out of ten companies expect negative consequences from labour shortages. To address this issue, the German government has passed new legislation to facilitate the establishment of foreign workers in the country. More than half of the companies consider recruiting foreign labour and skilled workers as a viable option to secure skilled labour.

 

Reuters

Newly minted billionaires have collected more of their wealth from the deaths of relatives than through their own work and entrepreneurship, according to a report by UBS. Of the 137 people who became billionaires in the past year, 53 inherited a combined $150.8bn from their family, exceeding the combined $140.7bn created by "84 new self-made" billionaires. UBS predicts that over the next 20 years, more than 1,000 billionaires will pass on an estimated $5.2tn to their children. The report also highlights the growing significance of billionaire families across all major regions, with inheritors in Asia-Pacific, the Americas, and EMEA having higher average wealth than entrepreneurs. The number of billionaires worldwide has increased by 7% to 2,544, with their combined wealth reaching $12tn.

 

Financial Times

The Guardian