Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.
European Edition
1st August 2024
Together with


THE HOT STORY
Consumer Duty is having a ‘tangible impact’ on customer outcomes
Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority (FCA), says the Consumer Duty “is already having a tangible impact on consumer outcomes.” He added that the duty - which obligates financial firms to improve consumer protection standards – “has been driving improvements in firm culture, conduct and governance too, which over time will drive better outcomes still.” Describing the Consumer Duty as “good for consumers, good for firms, and good for growth in the economy,” Mills said the City watchdog has seen “many examples of positive and impactful changes” since it came into force a year ago. The Consumer Duty was initially launched for new and existing products and services that are open for sale or renewal. With a second phase having come into force on July 31, it now covers closed products and services.
ON DEMAND WEBINAR
Consumer Duty insights from the FCA

The introduction of the Consumer Duty has sparked a major shift in the UK financial sector, urging organisations to pivot from merely ticking boxes to embedding consumer-centric practices into their core operations.

Join Martyn Saville, Consumer Duty Delivery Team Manager at the FCA, Dan Waltham, Director at Fourthline, and Protecht's Managing Director Gary Lynam for an on demand webinar to find out key priority areas in the Consumer Duty space over the coming months.

The topics this webinar covers include:
  • Updates on the FCA's Consumer Duty Initiatives
  • Day Two Capabilities Beyond 31st July
  • Consumer Duty Reporting and Self-Assessment
Don't miss out on this great chance to find out directly from FCA about the most important Consumer Duty developments, and how your institution should be preparing for them.

Access On demand webinar now

 
INVESTMENT
City firms to invest £20bn in UK businesses
Phoenix Group and Schroders have formed a joint venture called Future Growth Capital to invest up to £20bn of pension money in high-growth UK businesses. The investment vehicle aims to deploy the funds into private markets over the next decade and give UK long-term savers the potential for higher returns from a diversified portfolio. It will focus on companies involved with green energy, windfarms, solar, property, and small businesses. The initiative is part of government reform designed to increase returns for savers and boost the British economy. Peter Harrison, CEO of Schroders, said the partnership will support businesses to grow and thrive in the UK.
ECONOMY
Economists: Rate decision a ‘close call’
As Bank of England policymakers prepare to vote today on whether to cut interest rates, financial markets suggest that there is a 65% chance that the Monetary Policy Committee (MPC) opts for a lower rate. With inflation falling to the Bank’s target rate of 2% in May and June, some economists think the MPC could reduce the base rate from 5.25% to 5%. James Smith, developed market economist at ING, believes it will be a “close call” but expects policymakers to vote for 0.25% rate cut, saying inflation “is the “guiding light” for Bank policy. Sanjay Raja, senior economist for Deutsche Bank, also predicts that rates will be cut to 5%, but says it will be a “delicate balance.” Andrew Goodwin, chief UK economist at Oxford Economics, says policymakers could opt to hold rates at 5.25% and use August’s meeting to “lay the groundwork” for a 0.25 percentage point reduction in September.
Eurozone inflation rises unexpectedly
Official figures show that eurozone inflation accelerated in July, rising by 2.6% and exceeding economists’ estimates of a 2.5% increase. Core inflation - which excludes factors such as food and energy - held at 2.9% when economists had expected a slowdown. The data could have an impact on European Central Bank policy and whether it opts to cut interest rates. The central bank cut interest rates in June, marking the first reduction in five years, but held rates in July amid concerns over inflation. Franziska Palmas, senior Europe economist at Capital Economics, believes July’s small fall in services inflation “is probably just enough for a September rate cut to remain the base case.” While analysts at Nomura said July’s figures “support a September ECB rate cut,” Peter Vanden Houte, chief eurozone economist at ING, suggested that the data “has not given the ECB the certainty it needs to confirm that the inflation battle has been won.”
TRADE
‘Ambitious' UK-EU agri-food deal will help ease NI trade issues, says minister
Nick Thomas-Symonds, the UK's minister for EU relations, visited Belfast to discuss post-Brexit trade barriers and the need for an ambitious agri-food deal with the European Union. He emphasized that such a deal would allow for a freer flow of goods from Great Britain into Northern Ireland. Labour has pledged to reset relations with Brussels, with a focus on food safety and animal and plant health. Thomas-Symonds stated that negotiations for a sanitary and phytosanitary (SPS) agreement with the EU would begin next year. He also expressed the importance of implementing the Windsor Framework in good faith and maintaining high legal and regulatory standards. The Cabinet Office minister said Northern Ireland would be at the “forefront” of his mind when it came to the discussions with Brussels. “I wouldn't expect hard-edge formal negotiations to begin until the early part of next year, but do I hope that an SPS agreement, an ambitious SPS agreement, is going to ease the situation in terms of GB-NI trade, absolutely,” he said.
REGULATION
Sikka: Finance watchdogs 'lapdogs of the industry'
The UK's financial watchdogs have been criticised by Labour peer Lord Sikka, who accused them of being "lapdogs of the industry." Addressing the House of Lords, he said that after the financial crisis, "the regulators' duty to promote the industry was abolished and they were primarily required to be what I call watchdogs and guide." However, he added, the last government "changed that legislation and now regulators are required to promote competitiveness and growth of the industry . . . The regulators have effectively become puppies and lapdogs of the industry. Regulatory actions requiring stringent oversight or lower gearing ratios could be interpreted as a tax on competitiveness and potential growth of the industry."
COMPLIANCE
Citi breached a US rule that is meant to keep banks safe
A Citigroup document from December viewed by Reuters indicates the bank breached a US Federal Reserve rule to limit intercompany transactions, leading to errors in its internal liquidity reporting. The Regulation W rule requires banks to restrict transactions such as loans to the affiliates they control. It is meant to protect depositors whose money is insured up to $250,000 by the US government. Reuters notes that the rule breach comes as Citi seeks to remedy separate problems in its risk management and internal controls. Authorities described the company’s risk practices as "unsafe and unsound" in 2020, and criticised the bank for how it measured counterparty risks in 2023. This year, regulators have been critical of Citi’s resolution planning, and the bank was most recently punished with $136m in penalties for insufficient progress on compliance.
IASB proposes guidance on climate change disclosures
The International Accounting Standards Board (IASB) has proposed guidance on how companies can better disclose the impact of climate change on their financial performance. The proposed guidance seeks to address concerns raised by investors about insufficient or inconsistent information on climate-related uncertainties in financial statements. The IASB has launched a consultation on the proposed guidance, which aims to help companies apply existing rules for reporting climate change impacts in their financial statements.
CYBERSECURITY
Microsoft says cyber attack triggered latest outage
Microsoft has revealed that the service outage on Tuesday was caused by a cyber attack. The tech giant stated that the initial problems on its Azure cloud platform were triggered by a distributed denial-of-service (DDoS) attack. Microsoft confirmed that an error in the rollout of its own defences amplified the impact of the attack. The company resolved the issue by making network configuration changes. The incident affected various Microsoft services, including Microsoft Teams and Xbox Live.
Precious metals producer hit by cyber attack
Precious metals producer Fresnillo has revealed that it was hit by a cyber attack that resulted in unauthorised access to certain IT systems and data. The company's IT experts, in co-ordination with external specialists, are taking all measures to investigate and assess the scope of this incident. All business units were able to continue their activities and no material operational or financial impact was experienced.
FRAUD
Ministers urged to lead fight against fraud
Ministers have been called on to show leadership in the fight against fraud by helping businesses to better share intelligence to detect the crime and to protect customers. A coalition of businesses led by the consumer group Which? has committed to sharing data to combat fraud and appealed to the government to prioritise the fight against it. The group, which includes Barclays, BT, Mobile UK, Nationwide, NatWest, Starling, Three UK, UK Finance, Virgin Media O2, and Vodafone, wants to see better intelligence-sharing arrangements. It fears that companies, law enforcement agencies, and the government are not working collaboratively enough to share information on how fraudsters exploit gaps in their systems.
CORPORATE
TalkTalk faces debt default
TalkTalk is likely to default on its debts, one of the world's leading ratings agencies has warned. Fitch has downgraded TalkTalk's credit rating from CCC to CC, indicating a very high level of risk for debt default. The company owes £1bn to lenders, with repayment deadlines in November and February 2025. To avoid collapse, founder Sir Charles Dunstone is preparing to offer a £200m lifeline alongside shareholders Toscafund and Ares. TalkTalk is also mortgaging £200m of assets to extend the repayment deadline.
STRATEGY
St. James's Place announces £500m cost-cutting plan
St James's Place has revealed a £500m cost-cutting plan in its latest half-year results. The strategy shake-up aims to cut £100m a year by 2027, with a £500m savings target by 2030. The announcement led to a 25% increase in the company's share price, the largest jump in 16 years. St James's Place has been struggling since a regulatory crackdown on its fees earlier this year. Despite the recent surge, the share price is still 60% below its 2022 peak. CEO Mark FitzPatrick believes the company has turned a corner and plans to double the £400m of underlying cash generated annually. The plan includes reducing spending on consultants and using more automation. Job losses are expected, but no details have been provided.
Rio Tinto chief rejects calls to drop London listing
Jakob Stausholm, chief executive of Rio Tinto, has rejected calls from investors to drop the firm’s London Stock Exchange listing. Activist investor Palliser Capital has urged the mining firm – which holds a dual-listing on the London and Sydney Stock Exchanges - to unify its corporate structure in Australia. Mr Stausholm said: “It’s very clear . . . that it does not make economic sense to unify Rio Tinto,” adding: “Our conclusion is that it would destroy value.”
REPUTATION
Boeing lands new CEO
Boeing has announced that Kelly Ortberg will replace Dave Calhoun as chief executive. Ortberg, the former CEO of aerospace supplier Rockwell Collins, will step into the role on August 8. He joins the plane maker as it looks to move on from a turbulent period that saw aircraft grounded in the wake of a midair blowout in January. Steven Mollenkopf, the chair of Boeing’s board, said Ortberg “is deeply respected in the aerospace industry, with a well-earned reputation for building strong teams and running complex engineering and manufacturing companies.” Ortberg, a former Chair of the Aerospace Industries Association trade body, said: “There is much work to be done, and I’m looking forward to getting started.”
OTHER
Air stewardess loses discrimination case over mohican haircut
An air stewardess has lost her discrimination case against Jet2 after being asked to change her Mohican haircut. Marion McKay claimed that the request breached the company's uniform policy and that she was being discriminated against because she is female. However, the Edinburgh employment tribunal dismissed her claims of sex discrimination and constructive dismissal. Judge Michelle Sutherland ruled in favour of Jet2, stating that McKay's haircut did not comply with the uniform policy.


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

Content is selected to an exacting brief from hundreds of influential media sources and summarised by experienced journalists into an easy-to-read digest email.

Risk Channel enhances the performance and decision-making capabilities of individuals and teams by delivering the most useful news and knowledge in a cost-effective way, while promoting a sponsor's brand to the risk and leadership communities.

If you would like to sponsor a Risk Channel special report, reaching thousands of influential professionals, companies, business leaders and decision makers through our US and/or UK & Europe editions, please get in touch with us via email sales team

 

This e-mail has been sent to [[EMAIL_TO]]

Click hereto unsubscribe