24th February 2016

BBA Brief – 24 February 2016

Bank of England rejects prospect of negative interest rates

Mark Carney has said that the Bank of England has “no intention and no interest” in introducing negative interest rates and would use the full range of the Bank’s other powers to deal with a slowdown in the economy (Guardian, p19). Speaking to MPs on the Treasury Select Committee, Dr Carney highlighted the impact that negative rates could have on the financial services sector. He said: “We take very seriously the potentially counter-productive impact on the building society sector and the financial sector more broadly.” The Times (£, p39) notes that Gertjan Vlieghe, who also sits on the Monetary Policy Committee, highlighted potential “downside surprises” that could lead to a further cut in interest rates.

Claims management companies profit from PPI claims

Almost a quarter of the £22.2bn paid out for payment protection insurance (PPI) compensation has been taken by claims management companies, according to a new report (BBC News). The National Audit Office found that four fifths of PPI complaints to the Financial Ombudsman Service were made through companies that had taken between £3.8bn and £5bn from April 2011 to November 2015. The Daily Mail (p22) quotes Martin Lewis, founder of MoneySavingExpert.com, saying: “Certainly the claims management industry has made billions out of PPI. That is far too much when there is a lot of free information out there for customers.”

Latest from the BBA

Marketing and Business Development Manager for ALMIS International, Gordon Gray, blogs about fair value accounting.

On Thursday 25th February, Eurasia Group will be delivering a webinar on ‘Top Risks for 2016’, click here to register your free place.

Are you ready for the new individual accountability regime? On 7th March 2016, the Senior Managers Regime (SMR) comes into effect. To help you meet the requirements to train staff, NEDs and Senior Managers, the BBA eLearning Academy has developed a number of new eLearning titles on the New Conduct Rules and SMR. Click here to view.

On 15th March, the BBA is running its popular one day workshop on ‘Enhancing Your Sanctions Compliance Programme’. Fully updated to incorporate the recent lifting of sanctions on Iran, this workshop will provide you and your team with a solid knowledge and understanding of sanctions. Click here to register.

Latest from our sponsor Jaywing

Read a blog by Jaywing’s Data Management Practice Director, Inderjit Mund, on the complex challenges that businesses face when it comes to measuring and managing data.

Today’s diary

ONS: UK services producer price index Oct – Dec 2015

House of Lords EU Financial Affairs Sub-Committee: Completing Europe’s Economic and Monetary Union with David Gauke MP and Jonathan Black HMT Director – Europe.

TTIP – Office of US Trade Representative: 12 round negotiation stakeholder presentation and chief negotiator briefing

World Economic Forum: Emerging Technologies report

Stat of the day

£5bn – the upper estimate of the amount that claims management companies have secured from PPI compensation from April 2011 to November 2015 (Source: National Audit Office).

In brief

Banks are among the best businesses when it comes to responding to complaints on social media, according to a report from research company BDRC Continental (BBC News).

Money Mail (p36) reports on the various ways that banks are using data, examining how it is making it easier for customers to manage their money as well as looking at privacy concerns.

The European Banking Authority will start its latest bank stress tests today and will publish the economic scenarios it will be based on, such as a sharp recession, at the same time (Independent, p51, paper only).

The FT (£, p21) looks at how banks are providing dividends to shareholders unlike many other British companies.

Daniele Nouy, Chair of the European Central Bank’s supervisory board, has claimed that “weak profitability might push banks into a hazardous search for yield. And we do observe a trend towards higher risk-taking by banks” (City AM, p7).

Banks have been criticised for wasting up to 10 per cent of their revenue each year on unnecessary costs, according to a survey from the Chartered Institute of Management Accountants (City AM, p5).

London Stock Exchange has confirmed merger talks with Germany’s Deutsche Boerse (BBC News).

Investment banks may face an annual $27bn exposure if the counterparties to tailored over-the-counter derivatives fail to deliver the insurance payments on time, according to a survey by PwC and DTCC-Euroclear Global Collateral (FT, £, online only).

What the commentators say

Philip Aldrick criticises regulators for their plans to strengthen capital reforms, warning that “far from protecting banks, the safety mechanisms have become a source of instability” (Times, £, p41).

Writing in the Times (£, p41), Patrick Hosking calls on the Government to introduce new measures in the Budget to encourage precautionary saving for a “rainy day”.

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