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Following a significant Court of Appeal ruling that sided with customers who claimed commission payments were not fully disclosed in the terms of their auto loans, borrowers may pursue claims worth billions against banks for mis-sold loans, particularly in the car finance sector. Analysts say the issue could become "PPI 2.0" for the sector. Lloyds Bank acknowledged the ruling's potential impact, saying that it sets "a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission paid." The decision has already led to lenders like MotoNovo and Honda Finance Europe halting new car loans, while Close Brothers has paused new business activity. The Financial Conduct Authority is currently reviewing the car loan market, which could result in substantial compensation orders for borrowers. Experts say the matter raises questions about the implications for other lending agreements, with analysts at Jefferies saying the rulings are not specific to motor finance, noting that it "might also apply to commissions paid to credit brokers for other financial products." Meanwhile, Santander UK has postponed the release of its third-quarter results, originally scheduled for October 29, due to the recent court ruling. Santander UK said it is "not practicable to reliably estimate at this point in time the extent of any potential financial impact" from the ruling.

 

The Times

Daily Mail

Sir Keir Starmer says the Budget will embrace the "harsh light of fiscal reality," with the government set to take "tough decisions" and raise taxes in order to prevent austerity. The Prime Minister vowed to "protect the payslips of working people" and spoke of "broader shoulders" carrying a "higher burden on tax." Sir Keir said: “Nobody wants higher taxes, just like nobody wants public spending cuts. But we have to be realistic about where we are as a country.” While Labour’s manifesto included a pledge that there would be no increase in income tax, National Insurance or VAT, the Chancellor is expected to deliver a number of tax hikes on Wednesday, with an increase in employer National Insurance widely believed to be on the cards. This, it is estimated, will raise up to £20bn. Sir Kier said the tax hikes are needed to "prevent devastating austerity and a disastrous path for public finances."  

 

BBC News

Daily Mail

The Financial Conduct Authority (FCA) has handed Kristo Kaarmann, co-founder and chief executive of money transfer company Wise, a £350,000 fine over his failure to notify the City watchdog about “significant tax issues.” Kaarmann failed to notify the regulator about a previous tax issue and fine during an assessment over whether he was a fit and proper person to run a company. He had been fined £365,651 by HMRC in 2021, having failed to notify officials of a capital gains tax liability after he sold shares worth £10m in 2017. The FCA said Kaarmann's approach to the tax issues was "careless as opposed to deliberate or reckless." Therese Chambers, joint executive director of enforcement and oversight at the FCA, said: “We, and the public, expect high standards from leaders of financial firms, including being frank and open.” Ian Weinstein, a partner at law firm Brown Rudnick, said the FCA’s decision showed “the breadth of information” it expected to receive from executives and companies.

 

Financial Times

Reuters

The Daily Telegraph

The Times

Business confidence in the UK has fallen to a four-month low, with the Lloyds Bank Business Barometer seeing a three-point drop to 44% in October. The month-on-month decline reflects growing pessimism among companies regarding the UK economy and their trading prospects, with this exacerbated by an expectation that the Chancellor is set to outline fiscal tightening measures. Ministers are reportedly looking to raise £40bn through a combination of tax rises and spending cuts in an effort to boost funding for public services. The report shows that optimism about the economy weakened by three points to 35% in October, while 55% of businesses felt more confident about the economy than three months ago, down from 57%. Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Although overall business confidence dipped in October, it follows a sustained period of significant optimism, and business sentiment remains above historical levels."

 

City AM

The Guardian reports that lawyers acting for victims of Brazil’s worst environmental disaster say they will pursue their claim in the UK despite the announcement of a $31bn (£23.9bn) settlement between the Anglo-Australian mining company at the centre of the scandal and the Brazilian authorities. Brazilian President Luiz Inácio Lula da Silva last week signed the agreement worth tens of billions of dollars with BHP. The payments are to compensate for human, environmental and infrastructure damage caused by the release of an immense amount of toxic mining waste into a major river in southeastern Minas Gerais state in 2015, which killed 19 people and ravaged entire villages. Tom Goodhead, global managing partner and chief executive at Pogust Goodhead, said: “The deal with the Brazilian authorities only serves to highlight exactly why the proceedings in the English courts are so critical. The victims have not been consulted on the deal and parts of the reparations will be spread over 20 years. It is therefore simply a first step in an ongoing battle for justice and adequate compensation for Brazil’s worst environmental disaster. Our legal case will publicly hold BHP to account and set a precedent; making it more difficult for multinational corporations more broadly to neglect their responsibility to the communities in which they operate."

 

The Guardian

Volkswagen plans to shut at least three German plants, axe tens of thousands of jobs and slash pay by 10%, Daniela Cavallo, the head of VW’s works council, has told employees. "Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round," Cavallo told several hundreds of employees in Wolfsburg. "This is the plan of Germany's largest industrial group to start the sell-off in its home country of Germany," she added, without specifying which plants would be affected or how many of Volkswagen Group's roughly 300,000 staff in Germany could be laid off. Cavallo said the German government needed to urgently come up with a masterplan for German industry to ensure it does not "go down the drain".

 

Financial Times

Reuters

According to poll for the Trades Union Congress (TUC), UK businesses are losing valuable staff working time due to delays in accessing healthcare and caring responsibilities. Over half of the 500 business leaders surveyed reported that employees had taken time off in the past year because of public service issues. The Institute for Public Policy Research highlighted that the 900,000 individuals lost to the labour force since the pandemic could cost HMRC £5bn in lost revenue this year. The TUC emphasised that improved public services would enhance productivity, saying: "Better public services would help companies grow by allowing workers to be more productive."

 

The Guardian

The European gas industry has walked away from the Just Transition European Framework Agreement - a deal on retraining for hundreds of thousands of workers to prepare for a low carbon economy.

 

Financial Times

Maritime insurer London P&I Club is facing both the French and Spanish states in the Court of Appeal in London, in a legal battle concerning the loss of a vessel off the coast of Spain in November 2002. The High Court ruled in favour of the British insurer in October 2023, declining to follow the decision of the Court of Justice of the European Union (CJEU). Judges at the Court of Appeal will consider whether the High Court was obliged to follow the EJEC judgement.

 

City AM

Extinction Rebellion activists staged a protest in London on Monday, sailing a pink dinghy through the city and occupying buildings linked to major insurers. They targeted the Walkie Talkie building, the Prudential Regulation Authority, and offices of Hiscox and Axa, accusing these firms of "insuring fossil fuel criminals to keep digging and drilling." The group also reported occupying the Colmore Building in Birmingham, home to insurers including Chubb and Allianz.

 

The i

Jamba Europe, a subsidiary of HOF Capital, is mounting a renewed bid to increase its stake in Revolut at a heavy discount. Private trading platform Republic cancelled Jamba’s original offer after the Financial Conduct Authority ruled that communication around the offer could be seen as a “financial promotion,” which would need specific regulatory approval. Republic has also disclosed Jamba’s links to HOF Capital and that the private equity firm has a minority shareholding in Republic. Jamba is looking to buy Revolut shares starting at the lowest price in a reverse price auction.

 

City AM

Odey Wealth Management, a subsidiary of Odey Asset Management, has filed for voluntary liquidation a year after it began winding down its business, with Evelyn Partners appointed as its liquidator. Odey Asset Management was thrown into crisis last year after more than a dozen women accused founder Crispin Odey of sexual assault. While the Financial Conduct Authority will not be taking any regulatory or enforcement action against any of his companies, a probe into Odey is still ongoing.

 

City AM

Dame Rachel de Souza, the Children's Commissioner, has highlighted the alarming neglect of children's safety by social media companies, which profit significantly from their platforms. In her report, based on the experiences of over 250,000 children and parents, she stated that the safety of children online is "unacceptably subject to the whim of technology companies." The report revealed that 69% of children under 13 and 22% of teenagers feel unsafe online, with issues such as cyberbullying and exposure to harmful content prevalent. Dame Rachel has urged Ofcom to implement the Online Safety Act urgently and to prioritise children's interests over corporate profits.

 

The Daily Telegraph

The world's largest sovereign wealth fund, valued at $1.8trn, is under scrutiny for not meeting its climate commitments, according to a report by a Norwegian NGO. The Norges Bank Investment Management managed fund, which aims for its 9,000 investments to achieve net-zero emissions by 2050, voted against 17 out of 21 significant climate resolutions during this year's AGM season. Lucy Brooks, an advisor on sustainable finance at the NGO, said the fund had been consistent in voting against company management on issues such as excessive executive pay but less so when it comes to climate change. Despite engaging with companies, the fund's voting record raises concerns about its alignment with its own climate action plan. In the first half of 2024, the fund supported only 31% of sustainability-related shareholder proposals.

 

Daily Mail