We are The voice
BBA brief is a round up of each morning’s banking policy news prepared by the BBA’s media team. It is a selection of the articles in the papers and broadcast stories. The content does not reflect the views of the BBA.
BBA’s latest high street banking data
Reuters (online only) reports on the BBA’s latest high street banking data, which shows that banks approved the fewest mortgages in three months in February and consumer credit growth slowed slightly despite an increase in credit card borrowing. Commenting on the latest statistics Eric Leenders, BBA Managing Director for Retail Banking, said the “Elevated approval volumes for house purchases and re-mortgaging experienced during the winter months fell back in February, to average levels seen throughout most of last year. He adds that “Businesses continue to exercise a cautious approach to borrowing, using cash reserves and alternative lending sources to finance their operations.”
No Brexit punishment – Jean-Claude Juncker
BBC News (online only) has reported on its interview with EU Commission President Jean-Claude Juncker, during which he insisted that Britain’s EU exit bill will reflect “former commitments” by the British Government, explaining that “there will be no sanctions, no punishment, nothing of that kind”. When asked about the exact amount of any bill, Junker said that “we have to calculate scientifically what the British commitments were and then the bill has to be paid.” When asked about potential negotiating tactics, Juncker said the EU was not in a hostile mood when it comes to Brexit because it wishes to have a friendly relationship with Britain in the next decades.
In other Brexit related news, Reuters (online only) has reported that the European Commission could introduce EU passporting and lower regulatory requirements for financial technology firms, which could undercut London’s leading position in “Fintech” as Britain gets ready for Brexit. The EU executive’s vice president Valdis Dombrovskis is quoted saying that the Commission is considering how to regulate the expanding sector to encourage its development in Europe, while protecting consumers from risks that may emerge.
Inflation may not lead to rate rise
The Times (p42) reports on Office for National Statistics figures which show increased footfall on the high street in February. But it was not enough to prevent retail sales from recording their biggest quarterly fall in nearly seven years. Rising inflation and higher fuel prices in particular, ate into households’ disposable income, leaving less for other purchases.
The Times (p40) also reports on comments from MPC member Gertjan Vlieghe who has said that rises in inflation will not make him consider raising interest rates. The article outlines Vlieghe’s view that much of the inflationary pressure is the result of sterling’s devaluation and the consequent rise in prices of products such as fuel and food. He expects inflation to head towards three per cent by the end of the year before starting to fall. However, Ben Broadbent, the Bank’s deputy governor for monetary policy, who has raised the prospect of faster interest rate rises than the market was expecting. “It’s quite possible that interest rates could go up. It’s quite possible. Our forecast was conditioned on pretty gentle rises but rises nonetheless,” he said. The article also states that markets expect a first rate rise in the second half of next year.Read more
Tyrie urges government to have a single official responsible for managing cyber threats
Treasury Select Committee Chairman Andrew Tyrie has called on the Government for a clearer chain of command for managing cyber threats. The Treasury Committee chair published correspondence with the Chancellor calling for the Government to appoint a single official responsible for managing cyber-attacks against financial firms, who would be accountable directly to a single Minister (Telegraph, £, B1). Tyrie writes in his letter that “it is essential that the intelligence community, regulators and wider government are coordinated in making sure that financial cyber crime has a high priority, and is not subordinate to other work. Such a lack of coordination will inevitably lead to greater opportunities for criminals to exploit vulnerabilities in the banking industry’s IT systems” (CityAM, p4).
Barnier warns of the risks of a disorderly Brexit
In a speech to EU regional officials the EU Commission’s Brexit negotiator Michel Barnier warned that a disorderly exit would lead to “total uncertainty” for citizens and breakdowns in trade links for consumers and businesses (Politico, online only). Barnier also used his speech to state that guaranteeing the rights of European citizens, in the long term, will be an “absolute priority from the very start of the negotiations” (Reuters, online only). In his wide ranging speech he also supported the UK Prime Minister’s call for a bold free trade agreement but the EU negotiator warned that any new partnership would “take time” and that transitional arrangements may be necessary (FT, £, p7). Bloomberg (online only) reports that according to a leaked memo EU officials are also preparing for the UK to walk out of the Brexit negotiations.
Cheques will be cleared within one day
The Telegraph (p13) and the i (p40) report that the time in which it takes for cheques to be cleared will be reduced to within one working day. Under the new arrangements, co-ordinated by the Cheque and Credit Clearing Company, banks will be able to clear cheques by exchanging pictures of them, which mean customers will no longer need to go to a branch to pay in their cheques. BBC News (online only) adds that the changes will be phased in from October 2017 although it will be the second half of 2018 before all UK banks and building societies are able to offer the faster service.Read more
City backs drive to push women into senior roles
The FT (£, p2) reports that an extra 33 firms, employing 33,000 staff, have recently signed up to the Women in Finance Charter. The total number of committed firms now stands at 122, with a collective staff of over half a million – half of the country’s finance workers. The Charter, launched a year ago, calls for financial service companies to commit to hard targets for promoting women and to publish how they progress towards those targets. Baroness Neville-Rolfe, Treasury commercial secretary, commented that the initiative has “made a strong start” but that the figures were “just the beginning”.
House of Lords warns of need for free-trade agreements for services sectors
City AM (online) writes about a research paper published by the House of Lords EU Internal Market Sub-Committee, which argues the Government must seek a comprehensive free-trade agreement for non-financial services sectors. The paper says that failing to do so would “undermine” any agreement secured for the financial sector. “Walking away from negotiations without a deal would badly damage U.K. plc,” said Lord Whitty on the BBC Today programme.
Mark Carney addresses banks’ loss of public trust
At a Banking Standards Board event yesterday, Mark Carney, the Governor of the Bank of England, recognised that in the past decade, “banking has suffered twin crises of solvency and legitimacy”. He praised efforts by the Bank, the FCA and the Treasury to improve compliance and conduct regulation. He argued, however, that improvements to regulation could only extend so far, and that the financial services sector should place a “greater emphasis on more compelling ex ante incentives for individuals” to behave ethically. (The Financial Times, £, p3)Read more
May to launch Brexit talks on Wednesday 29 March
Many of the papers (including The i p1, Guardian p1) carry on their front page the announcement by the PM that Article 50 will be triggered on Wednesday 29 March. The FT (£, p1) adds that Tim Barrow, the UK’s Ambassador to the EU, informed Donald Tusk of the news on Monday morning, to which he responded by saying draft Brexit guidelines would be issued to the remaining EU27 members within 48 hours of receiving the formal notification. In other Brexit related news, the Daily Telegraph (£, p1) reports that MPs from both sides of the debate, have warned the BBC that it risks undermining Brexit, and damaging the UK’s reputation, with its “pessimistic and skewed” coverage.
High street banks ‘exploited’ by Russia to launder $740m
The Guardian (p.1) reports that 17 UK-based banks, or with branches here, are among those facing an investigation into what they knew about an international money-laundering scheme run by Russian criminals and why they did not take more preventative measures and reject the funds (The Times, £, p2).
Bad bosses blamed for holding back UK Growth
The Daily Telegraph (BP, £, p1) reports on comments from the Bank of England’s Chief Economist Andy Haldane, who has warned that bad managers are “holding back economic growth in the UK by undermining productivity, preventing pay and living standards rising”. He adds that most companies do not even realise they are performing poorly, and suggests potentially high returns from policies which improve the quality of management within companies.Read more
City calls for measures to retain UK competitiveness
The Financial Times (£, p3) reports that City organisations have called for steps to ensure the UK remains competitive after Brexit, including measures to encourage FinTech, employment of skilled labour and a proportionate approach to taxation. BBA Chief Executive Anthony Browne highlighted the need to normalise bank taxation.
FCA sets out priorities for FinTech
Christopher Woolward, FCA Director of Strategy and Competition, sets out the regulator’s approach to FinTech (City AM, p12). Around 70 firms have applied to be part of the FCA’s regulatory sandbox, which allows companies to trial innovative products, noting customers are likely to see rapid change in the types of products available to them. He also warned against using Brexit as an opportunity to create a “bonfire of regulation” noting that the UK’s reputation rests on the high quality of it’s market structures and operating environment.
Government may consider 10-year interim Brexit deal
Politico (£, online) reports that the Government is exploring a 10-year interim trade deal that would set tariffs at zero if a trade deal is not agreed as part of the formal Brexit negotiations. Citing WTO rules that would allow the UK and Brussels, “a reasonable length of time to agree a free trade deal”. The Daily Express (online) notes that this would reduce fears of a damaging cliff-edge when the UK leaves the single market.Read more
Bank of England holds interest rates but decision was split
Interest rates were held again yesterday after the Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates at 0.25pc (The FT, £, p3). However, the decision was split for the first time in eight months, with Kristin Forbes the only one of the nine members voting to raise rates (The Guardian, p31). Forbes, pens an op-ed in The Daily Telegraph (£, online, p2) explaining her contrarian view: “Monetary policy will continue to be set to keep inflation at around 2pc on a sustainable basis, taking into account our assessments of any trade-off with growth and unemployment. And, in my personal assessment, this trade-off has fundamentally changed. […] the inflation side of the trade-off has worsened.”
German Finance Minister calls for London to remain strong financial centre
Wolfgang Schauble, the German Finance Minister, delivered a keynote speech at the International Finance Conference in Frankfurt yesterday and indicated his hopes for negotiating a Brexit deal that keeps the UK’s key global role in financial services (Telegraph Business, p1, paper only). He said: “I am convinced that for Europe as a whole – and I’m not sure this will be very beloved in Paris – it’s in our own interest to have a strong financial centre in London” (City AM, p3). Downing Street stated that it had taken “great interest” in Schauble’s comments (Daily Mail, p10).
Treasury Select Committee Chair raises concern to FCA Chief about potential ONS data leaks
Andrew Tyrie MP has written a letter to Andrew Bailey, FCA Chief Executive, urging the regulator to examine whether “ONS statistics may be being leaked prior to their official release, and that this information is being used for inappropriate gain in financial markets” (The Daily Telegraph Business, p5, paper only). Tyrie’s request follows analysis conducted for the Wall Street Journal which showed that UK government-bond futures often rise and fall as would be expected if some traders were in possession of economic data in the 24 hours before the public release of sensitive ONS data. Bernard Jenkin MP, Chair of the Public Administration and Constitutional Affairs Select Committee, has also said his committee will discuss this issue and that “even circumstantial evidence of the breach of pre-release access undermines faith in the whole system.”Read more
Germany to make concessions on Basel III
The Financial Times (£, online) writes that German officials have signalled that “real progress” has been made in discussions around the introduction of an output floor into models for calculating capital requirements. Previously, it had been proposed that the floor should be set at 75%, with a phase-in period starting at 55%, however the paper reports that, “people familiar with Basel discussions said that the 55 per cent to 75 per cent range had now significantly narrowed”.
£2 million per day lost to fraud
The Daily Mirror (p10) reports on data from FFA UK that criminals steal personal details and credit or debit card information from approximately 5000 customers, with up to £2 million lost to fraud, every day. Commenting on the findings, FFA UK Director Katy Worobec highlighted a, “significant problem with fraudsters using increasingly sophisticated methods to circumvent bank technology and target victims”. The full report is available here.
Government to set up new anti-money laundering body
The Daily Telegraph (£, online) notes that the Government will set up a new body to tackle money laundering and address the gaps in oversight of existing money laundering regulations. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will sit within the Financial Conduct Authority (FCA) and is due to launch next year (City AM, p7).Read more
Banks ‘at risk’ of leaving UK unless transition plan in place
London Mayor Sadiq Khan has called for the Government to prioritise an early deal on interim arrangements for Brexit, “warning that banks “can’t wait” for the full two-year negotiation to be concluded” (Evening Standard, online). Giving evidence to a committee of MPs yesterday he said that although banks, “love being in London, because of the technology, the talent, the finance, the legal services, our court”, they will have no choice but to leave unless transitional arrangements are set out when Article 50 is triggered (Sky News, online).
Identity theft reaches record levels
Fraud prevention service CIFAS has found that there were 172,919 incidents of identity fraud last year BBC News (online). 88% of fraud was committed online and nearly 15% of victims were under 30, with the number of under-21s defrauded rising by a third, driven by the volume of data they share on social media. Read the BBA’s tips for consumers to help protect against online fraud.
30% Club: Diversity and development opportunities decline with seniority
A report published today by the 30% club has found that, “the chronic shortage of senior female executives can be linked to how people are managed”. The report comes as the Bank of England is encouraged to prioritise diversity as it looks for replacements for Kirsten Forbes and Charlotte Hogg to join the MPC (Financial Times, £, p1). The BBA’s Diversity and Inclusion report highlights the steps banks have taken to increase diversity and improve culture.Read more
Article 50 to be triggered after 27 March; SNP calls for second referendum
MPs and Lords have approved the Bill that will allow the Government to trigger Article 50. The Daily Telegraph (£, p) has reported that the Government is expected to do this after 27 March. Scotland’s First Minister Nicola Sturgeon has called for a second Scottish independence referendum between Autumn 2018 and Spring 2019 (The Guardian, p1). The Times (£, p6) reports that support for independence has increased to 51% since Prime Minister May confirmed the UK would leave the single market.
The Banking Standards Board publishes bank staff survey
The Banking Standards Board (BSB) has published a survey of 28,000 bank staff across 22 firms. BSB Chair Dame Colette Bowe highlighted findings on health and well-being, noting that the responsibility to ensure these figures improve lies, “fairly and squarely on the shoulders of the Board” (City AM, p6). The survey also found that 13% of staff said they might not be able to get ahead in their own careers without flexing their own ethical standards (Financial Times, £, p2).
Hackers target phones, TVs and watches with ransomware
The National Cyber Security Centre and National Crime Agency (NCA) have published a report saying that criminals are using software to exploit vulnerabilities in consumer devices and demanding money from users to make them operational again (The Daily Telegraph, £, p11. Speaking on BBC Radio 4’s Today programme, Donald Toon, the NCA’s Director of Economic Crime warned that criminals could use internet-enabled consumer goods to power, “distributed denial of service attacks” against banks and other businesses.Read more
Article 50 ’could be triggered tomorrow’
The Bill that allows the Government to trigger Article 50 could be agreed today, with MPs expected to reject changes made to the Brexit bill in the House of Lords requiring a Parliamentary vote on the deal and an early commitment to safeguard EU citizens’ rights (BBC News, online). The Financial Times (£, p1) speculates that the Prime Minister may trigger Article 50 as early as tomorrow and is expected to do so by the end of the week.
SNP could call for second independence referendum this week
Sky News (online) reports that SNP leader Nicola Sturgeon may call for a second referendum ahead of the SNP’s party conference on Saturday if Article 50 is triggered this week. The Daily Telegraph (£, p1) reports that the SNP wants to retain full single market access, and may issue an “ultimatum” to the UK Government asking for a bespoke Brexit deal for Scotland in exchange for not calling for a second independence referendum.
Review of economic crime enforcement agencies
The Financial Times (£, p2) reports that the Government is reviewing the bodies that enforce economic crime regulations, noting that the Serious Fraud Office may be incorporated into another agency. Home Secretary Amber Rudd said the review, “will include looking at the effectiveness of our organisational framework and the capabilities, resources and powers available to the organisations that tackle economic crime.”Read more