18th February 2016

BBA Brief – 18 February 2016

PPI deadline could face judicial review

A claims management company is threatening to launch a judicial review of the Financial Conduct Authority’s proposed deadline for payment protection insurance (PPI) claims (Times, £, p37). We Fight Any Claim has also criticised a proposal that would enable firms that sold PPI to keep half of their undisclosed commission on sales. A legal opinion commissioned by the company claimed that the FCA’s actions were “probably unlawful” and represented a failure of its statutory objective of consumer protection. Andrew Tyrie MP, Chairman of the Treasury Select Committee, said: “The FCA should ensure that the programme of work for PPI complaints does not bring about detriment, or unreasonable delay, for the consumer.” The FCA’s consultation closes next week.

Prime Minister heads to Brussels for key EU summit

David Cameron is heading to Brussels today for a crucial European Union summit that will focus on Britain’s ‘new settlement’ (Guardian, p1). Doubts are being raised over whether the Prime Minister will be able to deliver his proposals. The Telegraph (p1) reports that Mr Cameron is expected to formally announce the referendum tomorrow once he returns to the UK. The Mayor of London, Boris Johnson, has said more needs to be done to obtain his backing for the campaign to keep Britain in the EU.

Slowing wage growth expected to delay interest rate rise

Unemployment dropped by 60,000 between October and December to 1.69m, according to the Office for National Statistics (BBC News). More than 31.4 million people are now in work, the highest figure since records began in 1971. The Guardian (p25) reports that wage growth dropped to 1.9% last year, potentially pushing back the first UK interest rate rise since 2007 even further. The Chancellor, George Osborne, said: “In the face of significant turbulence in the global economy, it is encouraging that more people than ever have the security of a job and a rising pay packet.”

Latest from the BBA

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Today’s diary

EU Summit

ONS: International comparisons of UK productivity 2014

ONS: UK total public services productivity estimate 2013

Bank of England: Capital Issuance Jan 2016

OECD: OECD economic outlook and GDP growth

ECB: monetary policy discussions

CML: mortgage lending figures

Stat of the day

46 per cent – the proportion of households that expect the Bank of England to raise interest rates before February 2017, down from 71 per cent in November (Source: Markit).

In brief

The number of £1m homes is set to triple by 2030, according to research for Santander (Times, £, p28).

The number of people who expect the Bank of England to raise its record-low interest rates over the next 12 months has fallen to its lowest level in more than two years, according to a survey by financial data company Markit (Reuters).

A number of Iranian banks have been reconnected to the global transaction network SWIFT, allowing them to resume cross-border transactions with foreign banks (Reuters).

The Federal Reserve is increasingly cautious about the underlying strength of the US economy and is likely to delay any further interest rate increases, according to minutes released yesterday (FT, £, p10).

The FT (£, p6) interviews Neel Kashkari, President of the Minneapolis Federal Reserve Bank, following his recent criticism of banks for still being too-big-to-fail.

Fraudulent loans are on the rise in China as economic growth slows, placing further pressure on the country’s $29tn banking system. (FT, £, p19)

Potentially radical plans to move Australia’s equities clearing and settlement system on to the blockchain have been announced (FT, £, p30).

What the commentators say

In a letter to the FT (£, p10), Sir John Vickers responds to the Bank of England’s defence of its capital requirement plans for the banking sector.

Writing in the Times (£, p39), Alistair Osborne criticises the FCA for its proposals on PPI.

Ben Chu writes that complex regulatory reform of the banking sector hides that not enough has been done on equity, and says the leverage ratio should be the focus of the debate (Independent, p62).

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