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

The Basel Committee on Banking Supervision, a global forum for banking regulators, has revised its rulebook to better address risks from climate change, the rise of non-banks, and digitalisation of finance. The new standard emphasizes the responsibility of a bank's board in ensuring sustainability and introduces a new definition of climate-related financial risks. The committee will also issue new guidelines for banks on managing risks from clients and other counterparties. Regulators are focusing on the rapidly growing non-bank financial sector, calling for better data on risks and links to lenders. The committee will publish a report on the digitalisation of finance and its implications for regulation. "The revised standard reflects changes to promote operational resilience, reinforce corporate governance and risk management practices, and address new and emerging risks," said the committee.

 

Reuters

A global insurance coalition, the Net Zero Insurance Alliance (NZIA), has been disbanded and replaced by the Forum for Insurance Transition to Net Zero (FIT) in response to companies leaving over allegations of collusion by Republican politicians in the United States. The move comes as Republican-led attacks on environmental initiatives dilute efforts to tackle climate change. The FIT will focus on sustainable insurance practices and engagement with companies in different sectors. The NZIA lost over half its members, including AXA and Lloyd's of London, after Republican officials sought information about insurers' membership. The FIT is launching with 46 organizations, including Aviva and Generali, and will be supported by a legal team. Regulators from various countries are also involved. Other UN-backed financial coalitions are also trying to prevent member departures.

 

Reuters

The Treasury has invited the bosses of some of Britain's most prominent private companies to a summit with Chancellor Jeremy Hunt as officials look to entice more companies to London's stock market amid concerns over an exodus from the City. The event in May will target firms that are potential candidates to float, with a focus on entrepreneurs from the fintech and biotech sectors. Those attending have been told that Mr Hunt will discuss the UK's capital markets “and how they can support innovative, high-growth companies such as yours to achieve your growth ambitions." The invitation insists that the government is “committed to ensuring that the UK remains the best place for companies to grow,” and is “already taking forward an ambitious programme of reforms” to improve the UK’s competitiveness. Alongside the Chancellor, business leaders will meet with government officials, City minister Bim Afolami, the Prime Minister's chief business adviser Lord Petitgas, and executives from the London Stock Exchange.

 

Sky News

The Financial Conduct Authority (FCA) will press ahead with plans to announce investigations earlier, despite the House of Lords' Financial Services Regulation Committee saying the City watchdog should pause the plans as identifying the subjects of investigations “risks the overall integrity of the market” and could have a disproportionate impact on companies and their share prices. The FCA typically gives details of an investigation after it has been resolved but says revealing details at an earlier stage will boost transparency and deterrence. Therese Chambers and Steve Smart, the FCA’s joint executive directors for enforcement and market oversight, said: “To tackle unlawful behaviour and ensure the UK’s high standards for the protection of consumers and market integrity are met, our enforcement work needs to deliver impactful deterrence.”

 

Bloomberg

Reuters

The Financial Reporting Council (FRC) has asked the Big Four to explain the measures they are taking to prevent professionals from using AI tools to cheat on exams. The watchdog said it continues to “work closely” with the leading auditing firms and professional accountancy bodies to ensure robust systems are in place to detect, monitor and combat activity which could undermine the quality of audits. An ICAEW spokesman said it proactively works with regulators to monitor potential exam malpractice, adding that it is “constantly monitoring the use of AI and the risk that it poses.” While KPMG reportedly tells employees that cheating using AI could see them lose their jobs, Deloitte tells staff that using AI tools during exams will be considered gross misconduct. In 2022, the FRC ordered audit firms to crack down on cheating after discovering that a number of employees shared answers via email or messaging platforms such as WhatsApp when completing online tests introduced during the pandemic.

 

The Daily Telegraph

The gambling watchdog will meet figures from the betting industry over claims that wrong results are being recorded. Some customers claim that inaccurate data means they are missing out on bets placed on statistics such as the number of tackles or shots in a match. Gambling Commission CEO Andrew Rhodes has said it is important such decisions are accurate and fair. Analysis shows that almost 300 people tried to appeal their football data bets to the Independent Betting Adjudication Service last year.

 

BBC News

Airlines have urged the EU to reconsider rules requiring them to report the non-CO2 emissions of flights. The International Air Transport Association has warned of “growing concern” across the industry.

 

Financial Times

An official study from the Office for National Statistics (ONS) says two million people in England and Scotland are still suffering from long COVID symptoms, of whom 381,000 have had their day-to-day activities limited a lot. The data agency said 3.3% of people surveyed between February 6 and March 7 reported having COVID symptoms that had lasted more than four weeks since an initial infection and were not explained by another medical condition. This was up from the 2.9% who reported long COVID in a similar ONS survey in March 2023 which covered the whole of the UK. The ONS noted that the two surveys' methods were not exactly comparable. The study showed that 9.1% of people who were not working or seeking work reported long COVID symptoms, almost three times the rate among the population as a whole. The most likely to report long COVID symptoms were people aged 45-54 years, and women were 20% more likely to report symptoms than men.

 

Reuters

A Sunday Times investigation reveals that retailers in the UK are facing an epidemic of thefts by their own staff, resulting in an estimated £3bn loss annually. The thefts, which have shown a "significant level of sophistication," have been carried out by employees at supermarkets, department stores, and warehouses. Employee theft now accounts for 40% of all retail theft, with losses from shoplifting reaching £4.7bn. The rise in internal theft has been attributed to organised crime gangs infiltrating the supply chain and the failure of retailers to properly vet their staff.

 

The Sunday Times

The Sunday Times

Shop workers in the UK have been subjected to a surge in abuse from individuals protesting the war in Gaza, according to the British Retail Consortium (BRC). The BRC has reported a significant increase in verbal attacks on staff who sell items from the conflict-ravaged region. The trend of abuse has reached "exceptional levels," the BRC said, with over 1,300 incidents recorded daily.

 

Sunday Express

Four people, including former chief financial officer Christopher Marsh, have pleaded not guilty to fraud charges in a case centred on an accounting scandal at Patisserie Valerie that led to the bakery chain's collapse. The defendants are accused of conspiring to defraud shareholders and creditors by misstating and inflating cash figures on the firm's balance sheets. It is claimed that they made false representations to auditors Grant Thornton, as well as lenders Barclays and HSBC. Patisserie Valerie collapsed in 2019 after a £94m black hole was discovered on its balance sheet. In 2021, Grant Thornton was fined £2.3m for failures in its Patisserie Valerie audits.

 

Bloomberg

The Daily Telegraph

The AGCM, Italy's competition authority, has imposed a fine of €10m ($10.6m) on Amazon for allegedly engaging in unfair commercial practices related to online purchases. According to the AGCM, the practice of pre-selecting the "recurring purchase" option instead of the "one-time purchase" option limits consumer choice and infringes on their freedom to choose. This pre-selection tactic, applied to a wide range of products on Amazon's Italian website, has been deemed contrary to standards of professional diligence.

 

Tech Times

Manufacturers are now legally required to protect internet-connected devices against access by cyber criminals, after new laws protecting consumers from hacking and cyber attacks came into effect. The legislation bans weak default passwords and requires manufacturers to publish contact details for reporting bugs and issues. Science and Technology Minister Viscount Camrose said the laws make the UK the safest place in the world to be online. The laws are part of the product security and telecommunications infrastructure regime, which aims to strengthen the UK's resilience against cyber crime.

 

The Guardian

Holiday resort business Butlin’s is suing Aviva over the definition of a storm after serious flooding meant it had to shut its largest resort, which resulted in a bill of £60m. A group of insurers, led by Aviva, told the firm that the damage fell within the category of a “storm” and that as a result they would only cover £25m of damage, which it has paid. However, Butlin’s argues that as the Met Office had not declared a “named storm” when the flooding occurred, its claim should not be capped at £25m.

 

City AM

Recent high-profile cases of alleged misconduct or company failings have put internal investigations in the spotlight, raising questions about the quality and independence of some lawyer-led probes.

 

Financial Times

Nearly one in five London-listed companies have issued a profit warning in the past 12 months, according to a report by EY-Parthenon, with contract delays and cancellations cited as the main reason. A third of profit warnings have come from businesses in consumer discretionary sectors, while the biggest growth in the number of warnings came from the personal goods sector, where more than half of firms issued a profit warning in Q1. Companies in industrial support services, which includes business service providers, industrial suppliers and recruitment companies, have issued 18 warnings in the past six months, higher than the total for the whole of 2022. The financial services sector saw 11 warnings in the first quarter, marking the highest level since the pandemic.

 

The Times

Almost 5,000 Police Service of Northern Ireland (PSNI) officers and civilian staff are involved in legal action following a major data breach which exposed the personal details of around 9,500 workers, including their names, ranks, and locations. The PSNI estimates that the breach could cost £240m in security and compensation payouts. Law firm Edwards & Co is representing the officers and staff, with three test cases scheduled for a liability hearing in June 2024.

 

BBC News

Ministers have been urged to scrap “double taxation” that is hitting stock market investments. Investment trusts are listed on the stock market and therefore subject to the stamp duty regime, meaning savers pay a 0.5% levy when they buy shares in the trusts while the trusts are charged 0.5% when they purchase shares in companies the fund managers invest in. By contrast, savers do not pay stamp duty when investing in open-ended funds which are not listed on the stock market. Experts said this double taxation on listed trusts is unfair on the sector, warning that it holds back saving and investment and hinders the wider stock market and economy. Richard Stone, chief executive of the Association of Investment Companies, said: “Stamp duty on shares shouldn't be there at all. It is a tax on liquidity. But if you can't get rid of it completely, they should get rid of the double-dipping.” A report by City broker Peel Hunt describes it as “a pernicious tax that is having a material impact on equity markets,” while Abrdn boss Stephen Bird said the tax is “as unpatriotic as it is economically destructive.”

 

Daily Mail

The Communication Workers Union (CWU), which represents 110,000 postal workers, has conceded that it will accept an end to six-day-a-week letter deliveries. Royal Mail may now look to reduce postal services after the union agreed that the current service is “no longer financially viable.” Royal Mail is calling for reform of the legally binding universal service obligation which says letters must be delivered to every UK household six days a week, saying it wants to move to delivering second-class post only every other day. Royal Mail now has to convince ministers and the industry regulator, Ofcom, to accept the reduced service.

 

The Sunday Times

Asset manager M&G, the owner of Superdry’s flagship London store, has engaged with lawyers from Hogan Lovells to review the retailer’s rescue plan that is set to impose steep reductions on landlords. Other Superdry landlords, including Landsec, are also understood to be monitoring the situation ahead of the disclosure of detailed proposals next month. Superdry says it is hoping to gain large rent reduction across 39 UK stores, with 15 locations switching to nil rent, as part of a major restructuring plan as it looks to stay afloat.

 

Sky News

The largest western banks that remain in Russia paid the Kremlin more than €800m in taxes last year, a fourfold increase on pre-war levels, despite promises to minimise their Russian exposure.

 

Financial Times