Top stories

  1. Government announce housing and business reforms
  2. Crackdown on ‘big data’ abuse
  3. Foreign banks prepare for Brexit

Stat of the day

35 per cent – the proportion of the financial services firms that plan to move their operations or staff from the UK to Europe, according to EY’s latest Financial Services Brexit Tracker (Financial Times, online only, £).

Government announce housing and business reforms

The use of combustible cladding is to be banned on all new residential buildings above 18 metres, as well as schools, care homes, student accommodation and hospitals, according to the Guardian (online only). The measure, resulting from a lengthy consultation following last year’s Grenfell Tower fire tragedy, is to be announced by Housing Secretary James Brokenshire at the Conservative party conference today. The ban will cover all combustible materials, including cladding, on new buildings, following a £400 million government  programme to remove suspect cladding from all high-rise social housing in England as well as working with those responsible for private blocks to take action (ITV, online only).

The Conservative Party aims to introduce a higher rate of stamp duty tax for non-UK residents as growing evidence suggests that such purchases by overseas residents are inflating house prices, making it more difficult for UK citizens and tax-paying residents to get on the housing ladder. It’s reported foreign buyers could face a surcharge of one per cent to three per cent on top of stamp duty, with the levy applicable to companies, individuals and ex-pats (Sunday Telegraph, online only, £).  The funds raised are expected to contribute towards helping rough sleepers. (BBC, online only).

Meanwhile, the Chancellor will today call for Britain to put its faith in business to ‘unleash talent’ and ‘improve lives’, ensuring that 21st century capitalism must deliver for families.  In a keynote speech at the Conservative party conference later today, Mr Hammond will state ‘economic freedom goes hand in hand with political freedom and the belief in power and enterprise’. He is also expected to announce plans to plough £125m of new funding into jobs and apprenticeships (Telegraph, p4, £).

Crackdown on ‘big data’ abuse

The government is planning a crackdown on companies that use ‘big data’ to target vulnerable customers and is instructing the Competition Markets Authority (CMA) to conduct a review into Britain’s business practices. It’s reported that Business Secretary Greg Clark has asked Andrew Tyrie, former head of the CMA, to advise him on the overhaul of the business practices and has stated he is ready to legislate if necessary. Speaking at the Conservative party annual conference, Mr Clark said companies that use customer data to charge people more risk damaging consumer confidence and while the digital revolution has offered greater choice, competition and improvements in our living standards, it also leads to exploitative and abusive’ outcomes (The Financial Times p1, £), The Telegraph, B1, £).

Foreign banks prepare for Brexit

The Association of Foreign Banks (AFB)  is pushing for tax cuts to keep the City competitive after Brexit, ahead of the Budget next month. The AFB has warned that many of its members are frustrated at what they perceive to be the poor deal offered by Britain, which charges banks a corporation tax surcharge and a levy on assets. AFB chief executive John Treadwell told The Daily Telegraph “many banks” saw Brexit as an “opportunity for the UK to improve its global attractiveness in terms of its fiscal regime”. Mr Treadwell also said the UK’s eight per cent surcharge on bank profits over £25m in particular had hit “a lot of banks at the smaller end of the market”. The AFB has been making “our views known to government” (Telegraph, p3 £).

The Financial Times (p1, £) reports that Paris is emerging as the favoured financial hub for continental Europe as some of the world’s biggest banks steer their EU operations away from London to the French capital. While Frankfurt and Dublin have so far dominated the pull for subsidiary registrations of outside banks to operate within the EU, Paris is set to win the fight for trading as banks and asset managers realise the merits of establishing a dominant hub to concentrate market liquidity and expertise for the trading of securities.

Meanwhile, European banks are deciding whether to begin closing out their trillions of pounds’ worth of derivatives positions in London over the coming months as the UK finalises Brexit. The European regulator, Esma, has warned UK clearing houses that they may not be able to submit applications to be recognised until after the UK has left the EU (Financial Times, p16, £).

Latest from UK Finance

Andrew Churchill, author of the Digital Identification and Authentication Standards blog, writes on the topic of digital identity and authentication controls.

News in Brief

A survey of the leading 100 financial firms by the Confederation of British Industry (CBI)  has found “widespread” deterioration in sentiment, with managers reporting a “striking loss of momentum” in 2018. (Times, p44, £).

A European Central Bank working group is set to call for a year-long delay to the introduction of a new framework to replace the Eonia benchmark, in order to give banks more time to prepare, reports the Financial Times (p2, £).

The deadline for applications to fill two vacancies on the Bank of England’s Financial Policy Committee (FPC) was delayed by a week amid speculation the Treasury is encouraging more female candidates to apply, according to the Sunday Times (online only, £).

Labour’s plan to force companies to give ten per cent of shares to workers could deter foreign businesses from investing in the UK, according to Clifford Chance (CityAM, p2).

Japan will become the first major economy to launch a domestic payments system based on blockchain technology. Three Japanese banks will start offering customers free real-time money transfers via a new mobile app (Financial Times, online only, £).

What the commentators say

Columnist Pilita Clark calls for companies to advertise boardroom jobs publicly, as a way to tackle the gender divide in the Financial Times (p14, £). According to Clark, women hold 29 per cent of board jobs in the largest 100 UK companies, more than double the share in 2011. However, in the FTSE 350, many companies are failing to increase numbers, with many having a lone female board member. As recently as June, many companies lacked even that. While Clarke acknowledges the effect on share price that advertising for such roles publicly may have, she claims it could also break the cycle of candidates who are known quantities applying, thus creating a more meritocratic system, helping more women achieve those top positions.

Writing in The Times (p45, £), columnist Oliver Kamm describes it as “ominous” that household savings rates in the UK remain so low. He argues that while the Bank of England’s decision to keep interest rates low over the past decade has had the desired effect of boosting consumer spending at the expense of savings, this is “putting off an inevitable reckoning” and has left households with less room to withstand economic pain. He concludes that to guarantee its future prosperity, Britain needs to shift the balance from consumption to investment and net exports.

Calendar

  • Day two of Conservative Party Conference
  • Lord Mayor of the City of London election
  • CBI and PwC publish Financial Services Survey
  • Bank of England publishes Money and Credit statistics, August
  • UK Finance and Post Office launch trial local media campaigns
  • UK Finance publishes Postcode Lending data for Q1 2018

For a full list of upcoming UK Finance statistics releases, please click here.

News in brief – 1 October 2018