The BBA is now integrated into UK Finance. Please go to www.ukfinance.org.uk for new content and updates from UK Finance.
Material published by BBA prior to 1st July 2017 is still available on this website.
From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
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.
The Times (£, p1) anticipates that the Budget will include business rate relief for small businesses.
The Financial Times (£, p1) expects the Chancellor will increase taxes, and potentially increase National Insurance contributions from self-employed workers.
Sky News (online) speculates that the Government will invest in the UK’s digital infrastructure, with up to £270m earmarked for research and development initiatives including artificial intelligence.
35,000 staff to be assessed under Certification regime
The Sunday Times (£, online) reports that up to 35,000 bank staff including mortgage advisers and junior investment bankers will be assessed under the FCA’s Certification regime. FCA Chief Executive Andrew Bailey said the annual requirement to confirm staff are fit and proper to carry out their roles is intended to create an environment where staff are clear about the consequences of their actions (City AM, p13).
PRA considers changes to capital rules for smaller banks
The Daily Telegraph (£, online) writes that the PRA is considering measures to promote competition in retail banking by making it easier for small banks to use the internal ratings-based model approach to calculate their capital requirements. Eric Leenders, BBA Managing Director, Retail and Commercial Banking, said: “ultimately, it’s customers who benefit the most from competition and while policy makers should be recognised for their efforts to promote this, a ‘one size fits all’ approach to capital and regulation needs to be avoided.”Read more
Government to include stocks and shares ISAs and pensions in dormant account scheme
Speaking on BBC Radio 4’s Today programme Minister for Civil Society, Rob Wilson MP said that the Government will extend the scheme to use money from dormant bank accounts for charity to include insurance policies and shares. Under the new rules, life insurance policies must have been unclaimed for 120 years before they can be distributed to charity, while money in bank accounts should have been dormant for 15 years (The Daily Telegraph (£, p1). The mylostaccount service helps you trace lost accounts and savings.
Bail-in uncertainty is damaging EU banks
Credit rating agency Moody’s has said that delays in implementing new European rules on loss-absorbing debt, designed in response to the financial crisis, are posing a risk to European banks’ financial stability (Financial Times, £, online). Moody’s cited confusion over different regulatory approaches as “credit negative” for senior bondholders, noting that, “creditors of banks continue to lack certainty over the extent to which liabilities may be expected to absorb losses in a bail-in.”
May to fight amendments to Brexit Bill
Bloomberg (online) reports that Prime Minister Theresa May will seek to overturn amendments to the Government’s Brexit Bill made by the House of Lords. The Government is expected to reject the amendment, which focuses on the rights of EU nationals to remain in the UK after Brexit.
Brexit campaigner Gina Miller has suggested that she would consider taking further legal action if Parliament is not given a further “meaningful” vote on the final deal (The Times, £, p11).Read more
PM determined to trigger Article 50 within two weeks despite Lords setback on Brexit Bill
The Government suffered its first defeat on the Brexit Bill last night as the House of Lords voted 358 to 256 in favour of amending the Bill to guarantee the rights of EU citizens living in the UK within three months of Article 50 being triggered. The Bill will now return to the Commons and MPs will have the opportunity to reject the Lords amendment. Despite the setback, it is widely reported today that the Government is confident the amendment will be removed and that the timetable “remains unchanged” (Daily Telegraph, p1) with Article 50 expected to still be triggered within the next two weeks. The Guardian (p1) reports a Government source saying that “the intention is to seek to overturn this in the House of Commons” and that they are determined to pass a “straightforward, simple bill”. However, Crossbencher Baroness Meacher has warned of a rebellion and said: “…there are 30 Tories who are saying they will vote to support this amendment” (Independent, online only).
FCA sets PPI claim deadline
The FCA has ruled people seeking compensation for mis-sold PPI must make their claims before the 29th of August 2019 (BBC). The consumer watchdog set out plans to run a two-year public awareness campaign, as amidst the millions who’ve already been compensated, many more have yet to claim. Under new rules, claimants who were rejected previously may now be eligible, and the regulator feels the new campaign and deadline will prompt more consumers to act quickly rather than putting it off (Sky News).
Reforms to IPOs
The Financial Times (£, p1) reports on mooted FCA reforms addressing rules for initial public offerings to address concerns about investment banking instructions being won with favourable analyst research. The newly proposed policy measures seek to improve both the quality of information available and the timing with which it is received, during the IPO process (City AM, p5). City experts welcome the amendments yesterday, which would require businesses to share more research with independent experts who could properly scrutinise plans (Daily Mail).Read more
BoE highlights need for post-Brexit arrangements
Charlotte Hogg, the Bank of England’s new Deputy Governor for Markets, told MP that UK banks will need a minimum of 12 – 18 months to adapt to the new post-Brexit framework after the negotiations have concluded (City AM, p6). Reuters (online) writes that Brexit Secretary David Davis has asked government departments to prepare for the UK to leave the EU without a new trade agreement in place.
FCA says over 55s feel at highest risk of scams
Only 42% of those aged over 55 feel confident they could spot a financial scam, according to a survey by the Financial Conduct Authority (FCA) (Daily Mail, p13). Mark Steward, the FCA’s Director of Enforcement warned hallmarks of a scam include, “being contacted out of the blue, promises of low risk and/or guaranteed above market returns, special deals just for you, time pressure and, very often, flattery.”
Regulator to review IPO rules
The Financial Conduct Authority has today proposed changes to the rules on IPOs to address concerns about information flow between banks’ research analysts and those advising on the deal (Bloomberg, online). Under the new rules, the prospectus would be published before research by banks “connected” with the float. Christopher Woolard, the FCA’s Executive Director of Strategy and Competition said the proposals are designed to improve the range, design and quality of information made available to investors (Reuters, online).Read more
Regulators warn on enforcement and financial stability risks
FCA Chief Executive Andrew Bailey has warned that a hard Brexit may undermine competition, financial stability and future enforcement action (The Guardian, p4) . In a letter to the Treasury Select Committee, Bailey writes that, “any lack of certainty with regard to the regulatory framework may affect the ability of the FCA, and perhaps other regulators, to take enforcement action as a means of both addressing and deterring misconduct”. The Systemic Risk Council has cautioned that relaxing the global regulatory framework risks, “sowing the seeds of a bigger crisis than 2008” (The Times, £, p45).
BCC calls for Brexit transitional arrangements
The British Chambers of Commerce has called for the Government to consider transitional arrangements with the EU if it unable to negotiate both an exit deal and new trade agreement within two years of triggering Article 50 (The Times, £, p38). City AM (p4) reports comments from Bundesbank Board member Andreas Dombret, who promised a “pragmatic” Brexit that did not penalise the City. The BBA’s Brexit Quick Briefs set out the major issues facing banks and their clients across the EU.
New clearing bank launched today
The Financial Times (£, p24) reports on the launch on Clearbank, the first clearing bank to be launched in nearly 200 years. Speaking on BBC Radio 4’s Today programme, Clearbank’s Chair Nick Ogden said that this would allow a wider range of firms to offer current accounts and provide customers with payment services such as debit cards.Read more
Brexit may prompt tougher equivalence assessments and second Scottish Referendum
The European Commission plans to toughen rules on assessing whether regulation in other jurisdictions can be deemed equivalent with EU standards. This could include on-site inspections at regulated firms and maintaining on-going access to data (Financial Times, £ p4). The Times (£, p1) reports that the expected triggering of Article 50 in March will prompt the Scottish Nationalist Party (SNP) to call for another independence referendum ahead of Scottish elections in May.
US requires annual cyber security attestations
The New York Department of Financial Services (DFS) will require senior bank and insurance executives to confirm that their firm’s cyber security programme can protect consumers’ data and, “ensure the safety and soundness of the state’s financial services industry” (Financial Times, £, p17). The new rules require material breaches to be reported to the DFS within 72 hours.
Investors favour UK for financial services and fintech
A survey by PwC reveals that investors see the UK and Germany as equally important to future growth prospects, surpassed only by the US and China (The Daily Telegraph, £, B1). London was the only European city ranked in the top five most important destinations for growth, behind New York but ahead of Beijing, Shanghai and San Francisco (International Business Times, online).Read more
BBA high street lending data show rise in mortgage approvals
Reuters (online) reports BBA data showing 44,657 mortgages were approved last month, the highest level of house purchase approvals in year. Commenting on the data, Eric Leenders, BBA Managing Director for Retail Banking said,“the new year saw homeowners make the most of historically low interest rates by taking advantage of competitive re-mortgage offers. Nearly 29, 000 of these deals were approved last month – 16% higher than January last year.” The BBA’s January 2017 High Street Lending data is available here.
Concerns over proposed LSE-Deutsche Boerse merger
Over 40 Eurosceptic City and political figures have written to Prime Minister Theresa May and Bank of England Governor Mark Carney calling for a halt to the proposed merger between the London Stock Exchange (LSE) and Deutsche Boerse (The Times, £, p37). The letter argues the merger would make it easier for the EU to mandate the transfer of Euro-denominated clearing to the Eurozone. The LSE argues that the deal would benefit the City and wider economy (City AM, p1).
Loss of passporting could prompt 25% fall in trade in financial services
Bloomberg News (online) reports on a study by the London School of Economics which found that the loss of passporting rights, “may entail a reduction of over 25 percent in the U.K.’s total financial services trade”. The Financial Times (£, online) notes that German central banker Andrea Dombret will call for, “a transitional deal to allow UK-based financial services to access the single market after Britain’s planned withdrawal in 2019”. The BBA’s Brexit Quick Briefs set out the major issues facing customers and the industry across the UK and EU.Read more
UK regions lead growth in banking jobs
BBA data shows banking jobs grew fastest in the South West, West Midlands and Scotland in 2015. The number of bank and building society jobs in Scotland now account for 10% of the UK’s total banking workforce (The Times, £, p50). BBA Chief Executive Anthony Browne highlighted, “the overwhelming contribution the industry makes to communities across the UK, through jobs and apprenticeships.” Jonathan Reynolds MP, Labour’s Shadow City Minister commented that, “these figures reinforce the important contribution of financial services to our economy throughout the UK, not just in the Square Mile. Read the latest BBA’s Jobs Factsheet.
Warning over EU ‘currency nationalism’
Deputy Governor of the Bank of England, Sir Jon Cunliffe, has warned that the EU’s attempts to force Euro-denominated derivatives to be cleared within the single currency area risks splintering the global financial infrastructure (The Daily Telegraph, £ B8). Dr Craig Pirrong, Professor of Finance at the University of Houston, commented that this would, “increase systemic risk and substantially increase the cost of clearing” (City AM, p1).
Regulators keen to finalise Basel rules
Reuters (online) reports that Basel Committee Secretary General William Coen has said regulators are keen to finalise capital standards “sooner rather than later” ahead of the Committee’s meeting next week. However, approving any deal would be difficult until the Trump administration appoints a new top financial supervisor at the Federal Reserve, while regulators continue to disagree over the output floor element of the rules.Read more
Brexit impact on financial stability and jobs
The Guardian (p1) reports on interviews with senior bankers noting that the potential relocation of banking and related professional services jobs will threaten financial stability across the UK and EU. Secretary of State for Leaving the EU David Davis has said that it will take years to replace roles held by EU workers after Brexit (The Times, £, p1), while European Commission President Jean-Claude Juncker warned the UK will not be able to leave the EU “at a discount or at zero cost” (BBC News, online).
UK to adopt Criminal Finance Bill
Security Minister Ben Wallace has said that the Criminal Finance Bill will make it harder to hide and use the proceeds of crime ahead of the legislation being sent to the House of Lords, noting that the measures are major signal that the UK will take action on human rights abuses (The Independent, p19). The Financial Times (£, online) writes that the UK is the third country to adopt rules of this kind that allow the Government to freeze the assets of human rights violators, which may help counter the UK’s reputation as a “safe haven” for illegal assets.
MiFID II may inadvertently increase dark pool trading
The Financial Times (£, p22) reports on potential flaws in rules designed to increase transparency in equity markets. The rules may reduce the quality of public markets by encouraging more transactions via “dark pools” or through banks’ internal trading desks. The paper cites concerns from market participants that that this could damage volume and quality of liquidity on lit markets.Read more
Brexit without trade deal could cost UK £6bn
Leaving the EU without a trade deal could cost the UK up to £6 billion if it falls back on WTO arrangements, based on analysis of World Bank and UN international trade figures The Guardian (p1). The Daily Telegraph (£, p1) reports that the European Commission wants the UK to continue paying into EU projects until 2023, as part of a €60 billion leaving package. However, The Times (£, p8) reports that Germany is understood to be critical of this approach, and along with Spain, is likely to support the UK’s efforts to agree a new trade in parallel with negotiating agreements to leave the EU.
Gender pay gap to persist until 2041
A report by PwC suggests that it will take another 24 years to close the gender pay gap (Financial Times, £, p1). The largest pay differences recorded in 2015 were in financial services (34%). On average, women earned 18.1% less than their male counterparts. The Times (£, p40) reports that Justine Greening, Minister for Women and Equalities, will give evidence to a Parliamentary committee after the Government rejected many of the committee’s recommendations to narrow the gender pay gap.Read more