The Financial Conduct Authority (FCA) has proposed a minimum interest rate for savings accounts to improve returns for loyal savers, according to BBC News.
The FCA has said savers who stay with the same bank or building society for a long time are sometimes penalised by being given poor rates. Some banks pay only 0.05% on instant access accounts.
A Basic Savings Rate (BSR) would apply to all easy access ISA cash products and savings account, applies once the account had been open for a set period, for example one year.
Christopher Woolard, executive director of strategy and competition at the FCA said: “Providers can take advantage of high levels of customer inaction to pay lower interest rates to longstanding customers.”
Citizens Advice estimates that customers lose around £48 a year by now switching accounts.
The FCA has proposed that banks would set their own BSR, which would be featured prominently on their site and materials, allowing consumers to compare rates more easily.
The FCA has attempted to address the problem before, by encouraging customers to shop around and asking banks to share information about how to switch accounts. It has also named and shamed the brands paying the lowest rates, but the problem remains.
The prolonged hot weather in the UK could impact food supplies later in the year, worsening the impact of any disruption caused by a no-deal Brexit, according to the Food and Drink Federation (FDF).
There is still no certainty about the nation’s trading relationships following Brexit, which is due to take place in March 2019.
Ian Wright, director general of the FDF, said on BBC radio: “We’re going through the most extraordinary summer and we’re already seeing farmers struggling with crops, with feed for ruminants (Cattle and sheep). There are vegetable shortages because there hasn’t been enough rain.”
Brexit-related disruption to food imports and border crossings could exacerbate the situation, according to Wright.
Brexit Secretary Dominic Raab indicated the government is making preparations to ensure a stable supply of food in the event of disruption. Around 40% of food eaten in Britain is imported, mostly either from or through the EU.
Raab said: “Those businesses importing food, ingredients and finished goods will need to get their goods across the border before March 29 to ensure they don’t suffer disruption from customs changes.”
A shortage of carbon dioxide is causing problems in the food retail sector, according to BBC News.
The gas is used to carbonate drinks and is also deployed to stun animals prior to slaughter. A shortage of CO2 is impacting the supply of beer, soft drinks and meat to supermarkets.
The Food and Drink Federation chairman Ian Wright has said supplies are not expected to return to normal for one week, and in the meantime “choice will be eroded.”
Wright said: “We will see fewer chicken dishes, fewer pork and bacon dishes. We’ll see probably less carbonated drinks and certainly bakery and other things that benefit from what’s called modified atmosphere packaging, which is plastic packaging with a tray underneath and a dish of food in them.”
Baking brand Warburton’s has blamed the gas shortage for halting production at two of its four plants, while a number of other companies have admitted their production has been disrupted.
The British Retail Consortium said: “We are aware of specific pressures in some areas such as carbonated soft drinks, beer, British chicken and British pork but the majority of food products are unaffected and retailers do not anticipate food shortages. However, it is likely that the mix of products available may be affected.”
A spokesperson for the Department for Environment, Food and Rural Affairs said: “They said: “We have been assured CO2 producers are working as fast as they can to get plants up and running again, with CO2 production set to start very shortly.”
Costa coffee has reported a 2% fall in sales compared to 2017 for the first quarter of 2018, according to BBC News.
The coffee chain said total UK sales were up 5.2% following the opening of new stores, but like-for-like sales were down.
Parent group Whitbread pledged in April to demerge Costa from the group. Early morning trading in London saw the company shares rise 1% to £39.36.
Whitbread head Alison Brittain said: “Our stores remain highly profitable and deliver an excellent return on capital.”
A statement from the company said: “The UK like-for-like sales decline resulted principally from footfall weakness in traditional shopping locations, whereas travel locations continued to show good growth.”
Recent months have seen a number of well-known UK chains struggle to cope with challenging economic circumstances and online competition. Brands including Marks & Spencer, House of Fraser, Mothercare, New Look, Byron, Jamie’s Italian and Prezzo have announced plans to close stores.
Companies Maplin, Poundworld and Toys R Us have entered administration.
House prices rose at their slowest annual rate for five years this month, according to figures from Nationwide reported by Reuters.
The mortgage lender said the slowdown was linked to relatively low economic growth and pressure on household spending. UK house prices were 2.0 percent higher in June 2018 than June 2017, a reduction from May’s 2.7 percent rate.
The slowdown is the largest falling off in five years but still lower than a recent 1.7 percent predicted in a Reuters poll. June saw prices rising 0.5% compared to a predicted 0.3% rise.
Nationwide economist Robert Gardner said: “There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.”
Nationwide said it expected house price rises to slow by 1 percent in 2018 as whole. Economists expect the Bank of England to raise interest rates by 0.25% to 0.75% in August, the second increase since the global financial crisis.
A parliamentary committee has said that the government has underestimated the payment to be made to the European Union following Brexit by at least £10bn, according to Reuters.
Negotiations between the UK and EU have settled on a payment of between £35bn and £39bn to discharge ongoing liabilities, to be spread over the next few decades. The issue has been a political hot potato, with Brexit campaigners claiming the UK should not make any payment at all.
The Public Accounts Committee said the figure was an underestimate of the actual cost to the public and that the government needed to be more transparent.
Chairwoman Meg Hillier said: “The true cost of Brexit is a matter of outstanding public interest. Government must provide parliament and the public with clear and unambiguous information.”
Hillier continued: “Government’s narrow estimate of the so-called divorce bill does not meet this description. It omits at least 10 billion of anticipated costs with EU withdrawal and remains subject to many uncertainties.”
For example, the headline divorce bill figure does not include £3bn in payments to the European Development Fund, which provides overseas aid. The Prime Minister has confirmed that Britain will honour its commitments to the fund.
A Treasury spokesperson said: “The National Audit Office confirmed in April that our estimated figure is a reasonable calculation. Now we are discussing what our future relationship looks like.”
Lloyds Banking Group has announced plans to cut 450 back-office jobs in the latest attempt to cut costs and focus on digital initiatives, according to Reuters.
The group has said it will create 255 new roles at the same time, part of a $3.95bn investment in developing the bank’s technological capabilities. The net job loss will be 195.
Earlier in 2018 Lloyds announced the loss of 930 jobs from the central office and hundreds of cuts and closures of branches. The bank is facing sharp competition from industry disruptors who keep costs low through using low-cost tech and online platforms.
The decision to cut branch numbers has proven controversial with customers and politicians, who say the impact on staff and certain categories of customer is excessive.
A Lloyds spokeswoman said: “Today’s announcement involves making difficult decisions, and we are committed to working through these changes in a careful and sensitive way.”
MPs have called for a change in the ‘alpha male culture’ at UK banks in a parliamentary report that cites the gender pay gap and hazy criteria for performance bonuses as key problems, according to the Guardian.
The investigation into women in finance found that an alpha male culture was one of the main reasons women gave for opting not to move into senior management at City firms. The culture was said to be particularly noticeable in negotiations over bonuses, where men are said to secure higher bonuses by making forceful demands.
The committee found that financial firms often feature a ‘pyramid’ structure where women are filtered out at each level of seniority, until the upper levels of management feature very few women at all.
The report comes two months after the deadline for UK companies with more than 250 employees to report on their gender pay gap, which highlighted significant gaps in UK banking. Barclays’ investment division pays men a median of 43.5% more than women, compared to the national average gap of 18.5%.
The Women in Finance report identified a 49% gender pay gap in UK bank bonuses and 38% at building societies. For every £100,000 in bonuses awarded to men, women receive just £56,500. The hourly pay gap in finance is 28%.
Treasury select committee chair Nicky Morgan said: “The benefits of gender diversity are highlighted in the report, including better financial performance, reduced groupthink and more open discussions.
“The next step must be for firms to set out how they will abolish their gender pay gap and support the progression of women. Firms should focus on changing the culture in financial services firms, which remains a deterrent for women, especially the bonus culture.”
The report calls on banks to tackle the gender pay gap through measures such as encouraging more men to take up flexible working, discouraging presenteeism and long hours culture, developing gender pay gap strategies and including partners and subsidiary companies in gender pay gap reporting. Recruitment and promotion policies should also be developed to prevent unconscious bias.
Visa has cited a broken switch as the root cause of payment processing problems on Friday 1 June that saw failed transactions across Europe, according to the Guardian.
Some 5.2m transactions failed during the IT outage. A hardware switch was supposed to turn on a data centre but did not function as intended. In the UK 2.4m transactions were unable to complete while a further 2.8m were disrupted in Europe.
Visa Europe chief executive Charlotte Hogg wrote to the Treasury Select Committee confirming that the problem began at 2.35pm on 1 June and was not rectified in full until 12.45am on Saturday.
Hogg wrote: “The incident was caused by the failure of a switch in one of Visa’s data centres. We understand what hardware malfunctioned (the switch) and the nature of the malfunction (a very rare, partial failure). We not yet understand precisely why the switch failed at the time it did.”
The data centre was intended to work as a back up in the event that Visa’s main system malfunctioned, but in this case the back up also failed.
Hogg said: “We operate two redundant data centres in the UK, meaning that either one can independently handle 100% of the transactions for Visa in Europe.
“In normal circumstances, the systems are synchronised and either centre can take over from the other immediately … in this instance, a component with a switch in our primary data centre suffered a very rare partial failure which prevented the backup switch from activating.”
Nicky Morgan, chair of the Treasury Select Committee, said the committee was satisfied with the responses from Visa and cited the detriment to customers as evidence of the growing reliance on card payment systems.
Struggling retailer Poundworld may not vanish from the High Street after all, following news that its founder is considering purchasing some of the stores, according to BBC News.
The discount retailer was founded by Christopher Edwards in 1974 and sold it for £150m to TPG Capital in 2015. Edwards believes the chain could be saved with a fresh management team.
Poundworld called in Deloitte to act as administrators after a failed bid to sell the company to R Capital. The chain has been struggling like other retailers with a weaker pound and the growth of online shopping.
Edwards said the brand”s management had “not adjusted” to rising price pressure and had therefore “lost their profit margin.” The management’s decision to introduce multiple price points also attracted criticism from Edwards.
Speaking to Radio 5 Live, Edwards said: “B&M Bargains hasn’t gone, Home Bargains hasn’t gone, Wilko hasn’t gone. So for every store that goes down others are still thriving. It’s about management style, that is what makes the business work.”
Edwards said he was “sad and emotional” about the chain’s collapse and would decide whether to get involved within the next two weeks.