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Almost 30,000 businesses will fail this year, economists at PwC have warned, saying firms will be hit by high interest rates. Company insolvencies are predicted to climb by 15% over the next 12 months, with small businesses the most likely to go under. While PwC forecasts that 2024 will see nearly 30,000 insolvencies, it also estimates that 26,000 companies will have been declared insolvent by the end of 2023. Barret Kupelian, PwC's chief economist, said a combination of high interest rates, low economic growth and high energy prices will make a number of businesses unviable. Caroline Sumner, chief executive of insolvency and restructuring trade body R3, commented: “What we appear to be looking at is sustained volatility for the foreseeable future, where it's likely that insolvencies will remain relatively high."

 

The Daily Telegraph

The Financial Conduct Authority (FCA) imposed fines totalling £52,802,900 in 2023. Between January and October 2023, the City watchdog also cancelled 1,266 firms that failed to meet its minimum standards for authorisation, double the number cancelled in the previous year. As a result of FCA prosecutions, seven people were convicted in the criminal courts for fraud or related offences in 2023, with six receiving prison sentences. FCA chief executive Nikhil Rathi said: “We know at the FCA our role is not just about regulating financial services, it's about safeguarding futures, supporting innovation and informed risk-taking and maintaining a resilient financial ecosystem.”

 

FT Adviser

The Financial Ombudsman Service (FOS) has started to receive complaints where it has to consider the consumer duty, according to chief executive and chief ombudsman Abby Thomas. She said the FOS expects the Financial Conduct Authority’s consumer duty, introduced in July, “to drive up standards for businesses.” Noting that the FOS has started to receive complaints where the duty might be a consideration, she said it will “continue to engage with firms and the FCA through the year.” On consumer credit, Thomas said the use of buy now pay later products continues to rise, “and the scope of potential regulation is still to be finalised, as is the date when regulation may come into force.”

 

FT Adviser

The Information Commissioner’s Office has criticised government plans to force banks to hand over personal information on benefit claimants. The data regulator said officials have not shown that the anti-fraud measure is “proportionate.” In a letter to the Times, Commissioner John Edwards says the Data Protection and Digital Information Bill is not “sufficiently tightly drafted,” adding that the powers “raise questions as to society’s appetite for potentially intrusive measures” and warns that safeguards are needed. He has called on ministers to limit the scope of the power to “only obtaining information that would permit the identification of accounts and individuals that warrant further investigation.”

 

The Times

Both the Investment Association (IA) and the Association of Investment Companies (AIC) say smooth implementation of the Financial Conduct Authority’s (FCA) proposed Sustainability Disclosure Requirements (SDR) will be a key focus in 2024. Chris Cummings, chief executive of the IA, said the “long-anticipated SDR and investment labels regime has brought clarity to investment managers on the regulator’s expectations for this important area of the fund market,” adding that it will “help investors make informed investment decisions.” Mr Cummings also noted that “international consistency and collaboration are crucial to the success of any disclosure requirements.” Nick Britton, research director of the AIC, said the FCA’s release of its SDR and labelling regime “couldn’t be more timely” as research has revealed a lack of trust in funds’ sustainability claims. An AIC poll saw 76% of advisers say greater transparency was needed around how ESG raters score funds.

 

FT Adviser

EY is facing a new lawsuit claiming €1.5bn in damages over its role in auditing the books of payments company Wirecard before it collapsed. Wirecard filed for insolvency in June 2020, owing creditors almost $4bn, after disclosing a €1.9bn hole in its accounts that EY said was the result of a sophisticated global fraud. EY is facing several lawsuits in the matter, including an investor suit claiming over €700m in damages. The latest suit was filed by Wirecard's insolvency manager Michael Jaffe in a court in Stuttgart. Klaus Nieding, a lawyer representing shareholders in a separate lawsuit, said EY should have seen "relatively easily that the alleged €1.9bn did not exist in Wirecard's corresponding accounts," because another auditor later "found this out very quickly."

 

Reuters

French prosecutors have opened an investigation into alleged "aggravated money laundering" related to transfers made by a Cypriot brokerage firm that worked with BNP Paribas' custodian unit. The preliminary probe is focused on transfers worth several hundreds of millions of euros and dollars made by TCR International between 2019 and 2021. The Paris Prosecutor's office confirmed the investigation after an alert from the French finance ministry's anti-money laundering unit.

 

Reuters

The Treasury and Bank of England say legislation will ensure privacy for users of a digital pound. The Bank is planning to create a central bank digital currency (CBDC) - dubbed ‘Britcoin’ - saying it is “likely to be needed in future” as digital payments become increasingly more important in the economy. Officials say legislation will “guarantee” that the Treasury and the Bank are unable to monitor spending habits or access individual data tied to the CBDC. Consultations saw more than 50,000 people express concerns over privacy and the possibility of cash disappearing.

 

City AM

The UK government heavily restricted the export of semiconductor technology to China last year with official export control figures showing the Department for Business and Trade blocked the vast majority of licence applications for companies seeking to export semiconductor technology to China in 2023. Figures from a database run by the Export Control Joint Unit show that the UK refused 14 licence applications for semiconductor technology to China in 2023 and approved just two. The prior year, it refused just five licences, while issuing 26, and in 2021, it had issued 26 licences and refused nine. The Telegraph points out that several countries including the US, the Netherlands and Japan have agreed to work together to restrict Chinese access to high-tech semiconductor technology and although the UK hasn’t joined the pact, the figures suggest it is taking a tougher line.

 

The Daily Telegraph

Campaigners are calling on Unilever to disclose how much tax it has paid in Russia over the past year amid ongoing disquiet over the company’s decision to remain in the country following the invasion of Ukraine. Although Unilever condemned the war in Ukraine it continues making and selling what it describes as essential food and hygiene items in the country. Experts at the Kyiv School of Economics claim the company has not been transparent over how much it is paying to the Kremlin. Valeriia Voshchevska, a campaigner with the Ukraine Solidarity Project, said: “Unilever’s continued operations in Russia have seen the company fuel the war in Ukraine by paying millions into Putin’s war chest.” Unilever has not commented on the tax claims, but previously said if it abandoned the company to the Russian state the Kremlin could potentially “gain further benefit.”

 

The Sunday Telegraph

More big firms are likely to go bust in the year ahead amid the “double whammy” of high borrowing costs and pressure on consumer budgets, according to insolvency experts. The construction sector and business services industries will be among the hardest hit, according to PwC's head of insolvency David Kelly. Rob Hornby, partner and managing director of AlixPartners, said he expects company insolvencies to continue apace in 2024 with high-growth tech firms particularly vulnerable to a funding slowdown. Richard Fleming, managing director and head of restructuring for Europe at Alvarez & Marsal, expects more firms to use restructuring plans to avoid full administrations, but warns of potential large failures due to high interest rates and debt burdens.

 

The Scotsman

The owner of Selfridges department store is in talks with its parent company, Central Group, for a cash injection after its co-owner filed for insolvency. Cambridge Properties, the holding company, confirmed discussions to secure funds for forthcoming debt commitments. The rapid collapse of Signa Prime Selection, the co-owner of Selfridges, has put the department stores business under financial pressure. Central Group took control of Selfridges last month and provided a shareholder loan note of £27.3m. Selfridges Group stated that it trades independently from its shareholders and has the ongoing support of Central Group. Signa Holding, the umbrella organisation, filed for insolvency after its attempts to secure capital failed.

 

The Times

The Daily Telegraph

US hedge fund Point72 has joined a slew of investors betting against shares of Hargreaves Lansdown. The British wealth manager faced a leadership crisis last year while scrutiny of the interest that investment platforms earned from customer cash balances also hit Hargreaves Lansdown shares. The Times notes that this culminated in a crackdown announced by the Financial Conduct Authority in December.

 

The Times

The beginning of 2024 sees the start of new rules requiring websites such as eBay, Vinted, Airbnb, Fiverr, Upwork, Uber, Deliveroo and Etsy to record how much money people are making through them and report it to the tax office. The new rules for these platforms are part of a wider crackdown on tax avoidance from people boosting their income through working side hustles, freelancing and self-employment. In the UK, you can earn £1,000 in additional income each tax year alongside your regular job - known as your Trading Allowance. If you make more than this, then you will need to register yourself as self-employed and pay tax on these earnings.

 

Daily Mirror

Reforms driven by the Organisation for Economic Co-operation and Development mean some major economies will from this month start to apply an effective tax rate of at least 15% on corporate profits, increasing annual tax revenue by an estimated $220bn worldwide. The new rules are designed to stop multinationals shifting revenues and profits from one country to another to take advantage of lower tax rates. The new 15% minimum rate will be imposed on companies with global revenues of more than €750m (£653m) and if they reduce that by shifting revenues to a different jurisdiction, it will be charged elsewhere.

 

Financial Times

The Daily Telegraph

The chairman of the Office for Local Government has warned that poor financial management, rather than a lack of funds, is responsible for the challenges hitting councils across England. Lord Morse, a former head of the National Audit Office, told MPs: "All of the failures that we've seen so far; all of the authorities that are in special measures are not primarily attributable to a shortage of money — they're to do with failures in management or failures in governance." There is, he argued, "a lot to be done in improving the quality of management and oversight.” Lord Morse also said that although he was “sympathetic” to their wider financial concerns, councils needed to be “realistic” about the amount of financial support they could get from the government.

 

The Times

A person has died following an outbreak of E. coli in the UK that could be linked to artisan cheeses, health officials said. The UK Health Security Agency (UKHSA) reported 30 confirmed cases of E coli across England and Scotland, with a person from Scotland now dead from the infection. The Food Standards Agency (FSA) issued a recall for several types of Mrs Kirkham's Lancashire cheese, including a product sold by Waitrose. The recall was due to potential contamination with a specific type of E. coli bacteria. Investigations have identified links between the cases and unpasteurised cheeses produced by an English business. The recall applies to all size packs of the four cheeses bought since October 1, 2023.

 

The Daily Telegraph