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8th May 2024
 
THE HOT STORY
P&O Ferries boss took six-figure bonus after sacking of UK-based crew
P&O Ferries CEO Peter Hebblethwaite accepted a six-figure bonus in 2023 just over a year after the company sacked hundreds of UK-based crew and replaced them with foreign agency workers, MPs heard on Tuesday. Hebblethwaite previously appeared in front of a joint transport and business committee in March 2022, at which time he said the lowest-paid agency worker would receive £5.15 an hour. However, an investigation by ITV News and the Guardian this March revealed some P&O seafarers were receiving an hourly rate as low as £4.87. The UK minimum wage is £11.44 an hour – but the rates do not apply to maritime workers employed by an overseas agency who work on foreign-registered ships in international waters. During his appearance in parliament, Hebblethwaite was asked by Liam Byrne MP: “Are you basically a modern-day pirate?...You seem to be robbing your staff blind.” Regarding his remuneration, Hebblethwaite said he earned a £325,000 basic salary and received an £183,000 bonus in April 2023. “I reflected on accepting that payment. But ultimately I did decide to accept it,” he said. “I do recognise it is not a decision that everybody would have made.”
REGULATION
PwC and EY fined over LCF audit failures
The Financial Reporting Council (FRC) has fined PwC and EY millions of pounds for their audits of London Capital & Finance (LCF), a minibonds firm which took money from almost 12,000 investors before collapsing in 2019. PwC agreed to a £4.9m settlement, discounted from £7m, tied to failures over its audit of LCF’s 2016 financial statements. PwC auditor Jessica Miller was also given a £105,000 sanction. PwC resigned as LCF’s auditor in October 2017. The regulator criticised the firm for an adequate understanding of LCF’s business and internal controls along with insufficient professional scepticism. EY, which audited LCF’s final 2017 accounts, agreed to a £4.4m penalty, discounted from £7m, while auditor Neil Parker was fined £47,250 – the same failures were noted by the FRC. A smaller firm, Oliver Clive & Co (OCC), which was responsible for auditing LCF’s 2015 statements, was fined £42,000 and auditor Emma Benjamin told to pay £14,000. Jamie Symington, the FRC’s deputy executive counsel, said: “These breaches are made considerably more serious by the fact that all of the auditors knew they were auditing an expanding business which was engaged in selling unregulated financial products to retail investors, and that potential investors might place reliance on the clean audit opinions.”
LEGAL
Members overturn 190-years of tradition at the Garrick Club
The Garrick Club had refused to admit women as members for over 190 years, but now members have voted in favour of change and approved the admission of women as members. The vote was roughly 60/40 in favour and came after several judges were pressured to give up their memberships, along with other prominent members Simon Case, the head of the Civil Service, and Richard Moore, the MI6 chief.
WORKFORCE
Response rates improve for crucial labour data, ONS official says
Official statisticians at the Office for National Statistics (ONS) have successfully increased response rates for a key labour market survey, which is crucial for rate-setters at the Bank of England (BOE). Liz McKeown, who oversees economic data production at the ONS, stated that response rates have improved significantly after implementing a recovery plan that included boosting monetary incentives and conducting face-to-face interviews. The BOE has been lacking reliable labour market figures for seven months since the flagship Labour Force Survey was suspended due to quality concerns. The improved data will help inform decisions on interest rate cuts. The ONS plans to introduce a transformed version of the survey in September to gather more accurate labour market data. The BOE has been relying on other indicators in the meantime, but economists and investors believe that the improved response rates may allow for rate cuts later this year. The ONS is also taking measures to ensure that the release of crucial data is not disrupted by potential industrial action at the official data agency.
TECHNOLOGY
BoE policymaker advises against AI traders
Financial firms must avoid using AI trading strategies that amplify market instability, warns a member of the Bank of England's Financial Policy Committee. Jonathan Hall, an external member of the FPC and former investment banker, cautions against the use of 'deep trading agents' - AI-powered strategies that operate semi-autonomously and can collude with each other or be ill-equipped for market turmoil. Hall advises extensive testing and compliance with regulations before implementing AI models. He draws parallels with trading strategies from the 1990s that led to the collapse of the Long-Term Capital Management hedge fund. "If trading algorithms engage in non-compliant, harmful behaviour then the trading manager will be held responsible," says Hall.
STRATEGY
Carpetright to cut 25% of head office staff
Carpetright is set to reduce its operating costs by cutting 25% of its head office staff. The company will eliminate about 70 jobs at its head office in Purfleet, Essex, without affecting its store numbers or staff. The cost reduction measures, to areas such as warehousing and IT, will enable Carpetright to reduce its cost base by £22m. The company is being advised by Teneo, the restructuring specialist, on cost-reduction measures. Kevin Barrett, the chief executive of Nestware Holdings, Carpetright's parent company, said: "As with many businesses, we face ongoing challenges in today's tough economic climate. We've carefully examined our performance against operating costs, leading us to make difficult decisions to ensure the future success of our brand."
Selfridges cuts jobs as luxury spending slows
Selfridges is set to cut jobs for the second time in nine months due to a slowdown in luxury spending and the end of tax-free shopping for tourists, according to a memo to staff seen by The Sun. The department store group reported a loss of £125m last year and has seen a decline in spending. Chief executive Andrew Keith said in the staff memo "we cannot ignore the external headwinds" as he revealed plans to axe around 100 of Selfridges staff, or 2%. He also hinted that Selfridges would be shifting investment away from online as internet shopping has waned after lockdowns. The memo said: "The huge growth in online luxury that was widely forecast post- Covid has not materialised at the pace expected . . . we recognise a need to reprioritise our tech and digital roadmap."
DIVERSITY, EQUITY & INCLUSION
Lack of diversity in primary teaching, say researchers
Researchers from the University of Warwick have found that the level of diversity in primary teaching has barely changed in years, with over half of primary schools having no ethnic minority teachers. The study found that 55% had no teachers from a minority background and 30% had no male teachers. Meanwhile, a quarter of schools in England have only white female teachers, with no other adults to act as role models. Researchers claimed that this failure to make progress fed into wider recruitment and retention problems for teachers. Joshua Fullard, an assistant professor of behavioural science, said: "Diversity in the classroom matters. We know ethnic-minority students and young boys are missing out by not having teachers that represent them."
TAX
HMRC launches crackdown on 'digital side hustles'
HM Revenue & Customs (HMRC) is cracking down on tax compliance for digital side hustles and content creators. Thousands of letters are being sent to individuals suspected of not declaring all their income. Liam Quirk, CEO of Quirky Digital, warns that digital footprints are bigger than ever and it is crucial to declare all sources of income on tax returns. Failure to do so could result in fines of up to 100% of the tax owed. Keeping accurate records and understanding tax regulations is essential to avoid penalties. If individuals receive a nudge letter from HMRC, it is an invitation to review and correct financial details, Quirk says.
INTERNATIONAL
US job switchers report lower satisfaction than those who stay
Job switchers in the US are reporting lower satisfaction at work compared to those who stay in their jobs, according to a survey by the Conference Board. The survey found that in 2022, job switchers scored higher on all aspects of job satisfaction, but in the most recent tally, those who quit said they were less pleased than those who remained, particularly in terms of job security, interest in work, and colleagues. The decline in satisfaction could be due to job switchers focusing solely on pay bumps and failing to consider other factors such as skills training and career development. Overall job satisfaction was the highest since 1987, with remote workers being the most satisfied. The least satisfied workers were those who switched jobs during the pandemic, expressing dissatisfaction with their employers' bonus plans, promotion policies, and training. Job switchers now feel stuck and believe that nobody is investing in their skills, said Allan Schweyer, a principal researcher at the Conference Board.
Chinese provinces encourage 'Mama's Posts' to support working mothers
Chinese provinces are urging companies to offer women flexible job roles called "Mama's Posts" to support work and childcare balance. The move comes as China's population declined for the second consecutive year and births reached a record low. "Mama's Posts" provide relatively flexible working hours, making it easier for mothers to balance work and childcare. However, available job options are often limited, with short or temporary contracts, hindering the protection of women's rights and interests. While some positions target unskilled workers, authorities in Guangdong province aim to promote the model across other roles, including professional, technical, and management positions. The high cost of raising children, societal expectations, and gender discrimination contribute to many women in China choosing to stay childless. To boost the birth rate, authorities have implemented incentives such as longer maternity leave, financial benefits, and housing subsidies.
Citigroup adjusts work hours in Asia to align with US for faster settlement times
Citigroup's global custody business has adjusted the work hours of its staff in Asia to align with those in the US in preparation for faster settlement times. The firm has also created a task force dedicated to the move to a one-day settlement cycle. The shift, known as T+1, is expected to cost global investors over $30bn annually. Citigroup is moving a portion of its staff in Kuala Lumpur to a Tuesday to Saturday schedule to better coordinate with counterparts in the US. The firm has also enhanced its online global ETF portal to automate the creation and redemption process, simplifying order management and onboarding. Citigroup's ETF Services business covers 12 markets globally, with over $555bn in assets under administration.
Tesla is reportedly bringing in foreign strike breakers
Tesla is reportedly bringing in workers from the UK, Ireland, and Portugal to fill the gaps left by striking employees in Sweden. The company is recruiting internationally to ensure operations continue smoothly amidst the strike.
OTHER
Ofcom publishes draft code of practice on social media
Children under 13 may be banned from social media platforms as Ofcom introduces strict age checks to protect them from harm online. Social media companies like Facebook and Instagram will be required to implement robust checks, including the use of photo ID, to enforce age limits. The move could result in millions of children being removed from social media sites. Tech firms failing to comply with the new regime may face fines up to 10% of their global turnover. Michelle Donelan, the Secretary of State for Science, Innovation, and Technology, says she supports the measures, stating that they aim to shield children from age-inappropriate content and address the harmful effects of addictive features and damaging algorithms. Self-declaration of age will be banned, and social media companies will need to configure their algorithms to filter harmful content. The draft code will be presented to Parliament for approval next spring. Ofcom research shows that social media use increases with age, with 95% of 16 to 17-year-olds using it. The NSPCC welcomes the code as a step towards protecting children online.
 


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