Shocks & Stares » Financial Services Reform http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 The future of Libor – 2 key points from a comms perspective http://blogs.hillandknowlton.com/shocksandstares/2012/08/the-future-of-libor-2-key-points-from-a-comms-perspective/ http://blogs.hillandknowlton.com/shocksandstares/2012/08/the-future-of-libor-2-key-points-from-a-comms-perspective/#comments Tue, 14 Aug 2012 09:31:05 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=706 On Friday I attended Martin Wheatley’s unveiling of the Government-commissioned review of Libor at Bloomberg’s offices. Wheatley, who will head the new Financial Conduct Authority, gave an hour long speech setting out the consultation. He’s set himself an ambitious task – the deadline for responses is only four weeks away and Wheatley will publish his final recommendations by the end of September.

The speech itself contained a mixture of detail and vision for the future of Libor or its replacement. From a Comms/PR point of view, there were two particularly interesting points:

1. Who Runs Libor or its replacement? At the moment, Libor is run by the British Bankers Association, the trade group and voice for the industry. Some people are concerned that the setting of such a key market metric is being done by what is effectively a pressure group for the industry. Martin Wheatley, it appears, is less concerned – when asked about this specific issue, he stressed that other similar bodies run indices and provide important data. While Wheatley did acknowledge that the BBA’s history may count against it, at present they appear to still be in the running for a role.

2. How much of an effect does Libor have on consumers? As Wheatley remarked, he found it amazing that Libor had become such a big story outside of the financial press, with tabloids, news channels and Twitter all focusing on the story intently. Perhaps he shouldn’t have been quite so surprised – the prevailing distrust of the financial services sector means that the next scandal to be exposed is always going to attract attention.

There’s another reason as well. As the scandal entered its second and subsequent days, the media ramped up mentions of Libor as a tool which “sets mortgage and interest rates” or something to that effect. In some instances this description for Libor became the norm, occasionally replacing the descriptor of “the rate at which banks lend to each other”.

So just how many mortgages does Libor impact exactly? Well, Wheatley confirmed this – 2%, or as the FT reported in June, around 250,000. In a country of 30m homes that’s still a large number, but it may be legitimate to ask whether the press were right or fair to describe Libor’s role as they did given this statistic.

With the short timeframe for the consultation, the media focus on Libor isn’t going to go away. How the media choose to describe Libor could go a significant way to determining Wheatley’s recommendations, and which of them the Government chooses to implement.

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Europe’s troubleshooter takes on his latest challenge http://blogs.hillandknowlton.com/shocksandstares/2012/03/europes-troubleshooter-takes-on-his-latest-challenge/ http://blogs.hillandknowlton.com/shocksandstares/2012/03/europes-troubleshooter-takes-on-his-latest-challenge/#comments Mon, 19 Mar 2012 13:23:12 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=596 THIS POST IS BY SALLIE BALE

Andrew Gowers, former Editor of the FT, is the man who claimed in 2005 that there is no future in print media, wrote a review of intellectual property for Gordon Brown, was once described by The Telegraph’s City Editor as “our man in a disaster”, was the head of media at BP during the Deepwater Horizon Crisis, and was previously Head of Communications at the ill-fated investment bank Lehman Brothers.

With a CV like that, he is surely the best choice to restore the battered reputation of Europe’s banking industry, isn’t he? Well, Reuters reported earlier this month that the Association for Financial Markets in Europe (also known by the slightly snappier acronym AFME) has appointed Gowers as their Director of External Relations in an attempt to reverse the increasingly negative public perception of the banking industry.

Financial industry body, AFME has a new troubleshooter

It would appear that Gowers has the experience to deal with big name players in crisis – but commentators question whether he is actually capable of success. Obviously the difficulty here is that by their very nature successfully-managed crises are not high profile and so we must look at other measures of success for those crises that are played out in the media.  How quickly and cleanly the company or organisation comes out of a crisis and is able to rebuild trust and reputation is perhaps a better measure.

Lehman Brothers is no more and not remembered fondly and BP is still struggling to regain lost ground. That said the crisis communications industry learnt a great deal both from the failures and successes of the BP Deepwater Horizon episode and hopefully for AFME, Gowers did too.

There is much to be learnt from BP’s Deepwater Horizon incident in 2010, and Gowers will be able to apply these learnings to AFME. Many commentators believe that the biggest obstacle facing the BP communications team was the legalities around what they were able to say, resulting in a ‘too little too late’ situation.

There are so many avenues that this journey could take; will Gowers pick a spokesperson to give the intangible concept of “The Bankers” a human face? Will he advise them to express empathy for what has happened in the past five years? Or will he just soldier on with the task of tackling the endemic structural failures of the European banking system? Will he go to where the people are and use social media to re-connect the masses with the banking industry? Would that work?

It will be interesting to follow his progress and see how his strategy will play out in the coming months, or more likely years. He has already spent three months as a consultant for AFME helping edit the AFME book Investing in Change, and so should be able to hit the ground running.

Is this the biggest challenge in Gowers’ career so far? Trying to increase transparency, please many diverse stakeholders and implement meaningful change is going to be a perplexing test for banks across Europe, but the task of communicating those changes to the European public and demonstrating that they have worked is arguably the greatest challenge of all.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/11/fps-friday-fiver-28/ http://blogs.hillandknowlton.com/shocksandstares/2011/11/fps-friday-fiver-28/#comments Fri, 25 Nov 2011 17:24:44 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=436 Happy weekend all! It’s been an incredibly busy week in our financial and professional services team this week, handling everything from the forthcoming surge in Christmas shopping, to understanding the world’s expats just a little bit more. Speaking of Christmas, it’s now just one month away – something our resident Christmas Enthusiast, Karen, reminds us of thanks to this handy iPhone app every single day.

Sadly, there isn’t actually a whole amount of Christmas cheer around at the moment, particularly not if you live in Europe, or indeed the US, as Ross blogged on yesterday. With that in mind this week’s Friday Fiver covers off the continuing economic situation, as well as changes for UK bank customers, and two of the biggest video games of all time. Enjoy, and happy weekend.

BYE BYE FREE MONEY…..When is a free bank account not free? Pretty much always in the opinion of the Financial Services Authority. According to this morning’s Financial Times, the financial regulator is of the belief that free current bank accounts have “distorted the landscape and led to damaging decisions about what products are available”. In other words, the costs of providing free current accounts have been made up elsewhere by retail banks charging higher fees for other services (and by selling occasionally dubious products such as PPI).

The result of all this? The FSA believes that customers should be charged for their current account to negate this problem. It may appear a controversial idea, but the UK is something of an anomaly on bank accounts in the West – lots of other countries charge for this service, albeit at a low level, so we shouldn’t really be surprised that charging may happen here too. That would certainly make starting a retail bank far easier, something Metro and Virgin would probably welcome. Any move is likely to require concerted action though – as the FT also noted, if one bank were to unilaterally start charging, customers would simply get up and walk down the road to a ‘free’ competitor.

IS THE UK REALLY A SAFE HAVEN?…..This week, Germany failed to sell all €6 billion worth of ten year bonds, which came as a bit of a shock to many. Then again, it also provided evidence of what we perhaps should already know by now: even Germany may not prove immine from the unfolding Eurozone crisis. The lacklustre auction may be an indicator that investors and banks are spooked by Germany’s exposure to the Eurozone crisis and the fact they are intrinsically linked to the future success or failure of the Euro currency. Remember it is the bond markets that have wreaked havoc for many of the Eurozone’s failing economies, so this week’s bund auction which only raised €3.6 billion, little over half of the full allocation, is an ominous sign.

It may be Germany's turn to sweat next

Following the under-subscribed auction Germany may have lost some of its image as the safe haven of Europe. This was further compounded by the fact that charges for UK 10 year gilts dropped below the same cost of borrowing for 10 year German bunds – 2.18% and 2.26% respectively – which is the first time this has happened since 2009. This evidence points to the fact markets view the UK as a safer option than Germany right now, a point you can bet Chancellor George Osborne mentions in his Autumn Statement on Tuesday. As Osborne will inevitably say, the low gilt charges are evidence that the Coalition Government’s economic policy is working to the extent that it is repelling contagion from our numerous struggling European counterparts.

Does all this point to the fact the UK is now the European safe haven of choice? We’re not convinced. With youth unemployment now over 1 million and forecasted economic growth of no more than 1% in 2012, the UK is teetering on the edge of slipping back into recession. Whilst the Government should be applauded for appeasing the markets to date, we are no-where near out of the woods yet and certainly can’t consider ourselves a safe haven as suggested by Osborne earlier this year.

GRAPH OF THE WEEK – PROPERTY…..We always enjoy the Business Dashboard graphics created by The Times’ business team, and Tuesday’s was no exception, highlighting the internationalisation of the City’s commercial property.

The City's property by nationality of ownership (Image: The Times)

LOBBYING AND THE BANKS…..With all the threats of regulation and counter threats by financial services companies of ‘we’ll leave the country if you regulate us’, it was refreshing this week to see the mud-slinging continue, this time on the subject of lobbying. The mud in question came from Robert Jenkins, newly appointed to the Financial Policy Committee – the body responsible for spotting risks to financial stability and ways of containing them. Jenkins adopted an aggressive approach, arguing that “A profession which should stand for integrity and prudence now supports a lobbying strategy that exploits misunderstanding and fear”. Though the FT pointed out that the most interesting dynamic in this is whether this rhetoric translates into FPC recommendations, we can’t help but think we could do with less of the rhetoric and more, well,  stability, though the two aren’t apparently (we hope) mutually exclusive.

GOOD WEEK/BAD WEEK…..In the Good corner this week, it’s Infinity Ward. Never heard of them? They’re the guys behind the Call of Duty video game, which along with our client Bethesda’s Elder Scrolls V, is currently outselling Hollywood blockbusters at a rapid rate. Video games are big, big business these days, enjoying huge marketing campaigns and massive airtime. It’s all a far cry from Pong in the 70s that’s for sure. Call of Duty isn’t without its detractors though – a group of MPs this week started a petition against the game in Parliament. As The Independent noted though, support hasn’t exactly been overwhelming for the cause, while Murdoch-scourge Tom Watson MP appears to be something of a fan – probably no select committee hearing just yet then.

In a rare appearance in the Bad corner, it’s the usually all-conquering Sir Philip Green, owner of the Arcadia Group which counts Topshop and Miss Selfridge among its raft of retail businesses. Green was forced to announce a hefty plan to axe over 200 stores this week following a large drop in profits. Arcadia has been a strong retail pillar in recent times, with Topshop leading the way on the high street. With consumer spending tightening each day in the UK, it could be a bumpy ride for Green ahead.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-22/ http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-22/#comments Fri, 14 Oct 2011 14:48:34 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=354 Hello All, and welcome to a surprisingly sunny Friday in central London. There’s certainly not been a shortage of financial services and politics related stories this week, and we’ve tried to give you a flavour of some of our favourites below. Thanks as ever to Ed Jones and Jonny H for their contributions.

TAXING TIMES…..Barely a week goes by without the EU sparking controversy on our idyllic isle. Among other things it was the EU’s proposed financial transaction tax causing consternation. As noted by the Telegraph this week, John Cridland said: “The likely effect of many of Brussels’ current proposals will be to damage the UK’s prospects for growth. Nowhere is this more acutely the case than for professional and financial services, which are being bombarded with unwarranted regulation.” He went on to describe the proposals as “a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”. He didn’t stop there though, also slamming Brussels’ plans for Solvency II…

Cridland’s point was very clear - this will lead to the demise of London as a financial centre, to be overtaken by the perennial competitors New York, Singapore and Hong Kong. Sad times.

A TOUGH WEEK FOR GOLDMAN…..A lot of people like to have a dig at Goldman Sachs, but the first time in a while investors now have a reason to complain as well. It’s been a grim week for the world’s premier investment bank. Having their name dragged back into the mud following Raj Rajaratnam’s sentencing to 11 years in prison for insider trading didn’t help. Being accused of dodging a large UK tax bill didn’t exactly add to the party mood either.

These are tricky issues for Goldman, but the real concern for them is their bottom line performance. Ahead of their quarterly results next week, some analysts are suggesting the bank may be headed for an (almost) unprecedented loss. To put this into context, the bank has made precisely one quarterly loss in the past 12 years – right in the heart of the financial crisis. To be fair, it’s not just Goldman. Other investment banks are struggling as well. But when the leader of the pack is looking down at their shoes, you know something is definitely up.

IT’S OH SO QUIET…Shhhhh…..It’s not been a great week for Blackberry users. The company avoided the Friday Fiver’s Bad Week slot but owing to a loose wire or something of that ilk, services across the globe went down and messages piled up in the virtual post-room.

As Alice Ross of the FT observed on Twitter, the business community did not know what to do with themselves. People were forced to talk to each other and instead of shuffling head down, thumb scrolling their way on to the tube, take in their surroundings. Email can become fatiguing and we’re sure this week’s enforced rest will not have done anyone any long-term harm.

APPS FOR FINANCE…..The tweet below caught our eye this week from Hargreaves Lansdowne’s Tom McPhail, signalling an interesting development in the way that people manage their investments.

GOOD WEEK/BAD WEEK…..It remains pretty hard to find people or companies enjoying good weeks at the moment, but the FT’s Claer Barrett managed to find two on Friday. As she noted, both Harrod’s and Poundland posted strong trading results this week. Regardless of which end of the retail spectrum you’re at, the message is clear – if you’re a market leader, there is still room for growth. It’s mainly those in the chasing pack that are struggling at present.

As for bad weeks, Goldman above qualifies for one definitely, but we’re plumping for BNP Paribas. It’s tough enough being an investment bank at present anyway. But what you really don’t need to add to your woes is one of Germany’s leading business newspapers losing its rag with you and publishing a quite unique interview, minus any of the words uttered by the bank’s chief executive (you can see the worded version here). PR’s a tough game sometimes….

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-20/ http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-20/#comments Fri, 23 Sep 2011 13:04:41 +0000 Edward Jones http://blogs.hillandknowlton.com/shocksandstares/?p=294 Known unknowns…

Frank Portnoy, Professor of Law at the University of San Diego has written a fantastic article in today’s FT on market uncertainty, rogues, risk taking and trust in banks. The best we’ve seen and rather frightening, Dr Doom would be proud, because ultimately, however much we regulate, we are only basing decisions on what has happened in the past, rather than what could happen in the future – i.e, Greece defaulting.

Every picture tells a story…

Photograph: Dan Kitwood/Getty

Indeed this photo, featured in Jackie Ashley’s excellent comment piece on what the future may hold for the Liberal Democrat’s (it’s a fairly bleak outlook) tells a very specific story of the Liberal Democrat’s past; the good intentions of fresh faced Lib Dem MP’s. Contrasted this week, with the harsh realities of Government, and the tensions between the two, superbly captured in Danny Finkelstein’s commentary.   

F8: The media story of the week…

Facebook and Spotify have teamed up to bring free music to Facebook users and announced the fruits of their labours this week with this video. Mashable provide a better summary than we ever could, but this is certainly worth knowing about.

“Disastrous miscalculation” – but by whom?

Yesterday Kweku Adoboli, the UBS trader accused of losing £1.5 billion, appeared in court on charges of two counts of fraud and two of false accounting dating back to 2008. During the hearing his lawyer said that he is “sorry beyond words” for his actions.

Mr Adoboli is not the only one who should be sorry – or worried. Mr Adoboli actually shopped himself; it was not the UBS risk or compliance teams that picked up on his reckless behaviour. This presents a massive problem for UBS and its internal control systems as they have been shown to be unfit for purpose.

“Disastrous miscalculations” have certainly been made, both by an individual and an institution.

Get set for the iphone 5…

Infographic: Dusan Belic, IntoMobile

 

The ‘will they, won’t they’ speculation was all a bit much for the iPhone junkies around the office this week, and despite the lack of information coming out of Apple themselves, we think all this confusion just makes for an even bigger launch when the iPhone 5 actually hits the stores – and we can’t wait.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-18/ http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-18/#comments Fri, 02 Sep 2011 17:32:25 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=267 Hello All! A little late this week, and we apologise for that, but as it’s now officially the end of summer that means it’s the start of the business season and we’ve all been a little flat out here at H&K Towers. Still, we wouldn’t want to miss out on reporting another busy week in the world of financial and professional services. And what a week it’s been. Thanks to our contributors this week: Ed, Ross, Clare and Rachel.

Turn that frown upside down…At the end of a pretty crazy August, there have been some fairly gut-wrenching figures this week from the Markit/CIPS Purchasing Managers Index (one of our clients). Declines in manufacturing output prompted fresh talk of double-dip recession, construction continued to be weighed down by weak confidence in the housing market, and all eyes are now on the all-important Services PMI which comes out on Monday.

Happy faces are hard to come by in the UK at the moment. But are we talking ourselves down too much?

Worrying indeed, but could it be that the UK economy is going through stage four of what could be termed ‘post financial crisis bereavement’ (PFCB)? According to one description, this involves ‘a feeling of listlessness and tiredness’ and possibly ‘wandering around in a daze.’

Well it certainly does feel like that sometimes but if the theory holds at least this is the final stage before acceptance sets in and the economy ‘regains its energy and goals for the future.’  It may just be the time for a bit of Vince Cable style positive thinking.

Breaking News – Football clubs spend less…The last minute wheeler-dealing of transfer deadline day was interesting for many reasons. But it’s the debate it has started about financial fair play which poses the biggest question for the future of the beautiful game. We’ve commented before on the ownership of football clubs, particularly in the immediate future. The onset of the Financial Fair Play from UEFA, requiring elite clubs to record a maximum debt of £39.5m over a three year period, may also have implications.

Fernando Torres may be the last £50m player we see for a while

Michel Platini, champion of these new regulations, would argue otherwise, but the financial future of football could go one of two ways. Clubs will either find loopholes in the rules and splash out enormous sums of money for overpriced talent. Or the rules will re-establish a sense of financial realism and build a future for football based on financial sustainability. The more prudent approach from England’s top clubs in the latest transfer window is a hopeful start. Ultimately however, the path football decides to take will come down to UEFA’s refereeing of the clubs who fall foul.

Women and Pay – the fight goes on…All things being well, Clare’s imaginary great granddaughter will be assured a pay packet that is on a par with her male counterparts, according to research published by the Chartered Management Institute this week. Some might call that progress. But we don’t.

There still aren't enough women in boardrooms (Image: Able & How)

It is forty one years since the Equal Pay Act. The Act prohibits employers from favouring one sex over the other in terms of pay and conditions. Whilst some things have improved in the past four decades, many others have not. Men still earn, on average, nearly a third more than women doing the same job. This, quite frankly, is ridiculous.

Over the past couple of months, the issue of women in the workplace has been an ongoing topic, particularly following Lord Davies’ inquiry into the dominance of men in company boardrooms. Whilst we think it is great this topic is being addressed, why is it employers still think that they can treat 50% of their workforce in such a manner? And the conclusion Clare has come to is this: they can, because they can get away with it. Is there another Act in British history that has been allowed to be so flagrantly ignored?

What then is the answer? Implementation! Transparency! Mobilisation! Anyone want to join the revolution? Please note – it might take us another 98 years to get anywhere near what we want…

Britain’s place in Europe…Ross wrote two weeks ago about the detrimental impact politics and politicians are having on the global economy and investor confidence. He was particularly critical of Angela Merkel as she seemed to be avoiding the glaringly obvious: Germany has to underwrite the debts of those struggling in the Eurozone and be prepared to commit much more to the European Financial Stability Facility (EFSF) for it to be taken seriously.

Credit where credit is due, Chancellor Merkel seems to be winning over enough parliamentarians in order to squeeze a bill through the Bundestag that will give German parliamentarians more of a say on the EFSF. By giving the Bundestag more of a say on future aid packages Ms Merkel is hoping to bridge the domestic and international problem she faces by merging the two. She is currently having to overcome domestic political pressures as the German electorate resent the fact that they should have to pay for the problems of others in distance places like Greece.

Should the Bundestag gain these powers, Germany’s economic dominance in Europe is likely to sore further. On the one hand, this may finally be the security the Eurozone needs, but on the other it may push the UK even further to the periphery. So far the UK Prime Minister David Cameron has kept the UK out of the Eurozone crisis, but by doing so Germany may be able to cement its position as the true leader of Europe.

Good Week/Bad Week…Two sides of the banking coin this week. For Vince Cable, champion bank-basher, scorned scourge of Rupert Murdoch, and Parliamentary stand-up it wasn’t a particularly good week. He’s been banging the drum on banking reform for several months now, but it seems as though the Independent Banking Commission’s recommendations are firmly on route to the long grass.

On the flip side, for bankers, and particularly those with both retail and investment arms, it was a relatively good week for the very same reason. Their lobbying effort has been long, hard and expensive, but with the likes of the CBI and BCC now on-board, it looks like it might be paying off. It wasn’t all good for the banks this week though – Alastair Darling’s forthcoming book launch looks set to drag them through the muddy playing fields again in a few weeks time.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-13/ http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-13/#comments Fri, 29 Jul 2011 17:27:30 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=226 We’re back, providing another round-up of some of the big stories from the world of financial services, the economy and Westminster this week. Contributors this week include Clare, Linzi, Jo and Ed, who bring us an overview of banking, pensions, retailers, and our new feature – Good Week/Bad Week.

Banking – fundamental flaws and failed customers…On Tuesday, Vince Cable held court at the Which? Banking Reform – An Agenda for Competition and Growth discussion at the Commonwealth Club, where he re-iterated his opinion that “banking is a structurally flawed industry that has fundamentally failed customers”.

Vince Cable - on the attack on banking once again (Image: Which.co.uk)

That the current system of banking is flawed is a no-brainer, but the harder question to answer is where exactly do the flaws lie? The conversation on Tuesday spanned the topics of increased competition, universal banking, ring-fencing, culture and behaviour along with new entrants into the banking market, but it seems that, nearly three years since the start of the global financial crisis, more questions continue to be posed than answered.

Is universal banking really the root of all banking evil? Do customers really feel their banks have failed them given so few of us have switched? With the array of initiatives, commissions, inquiries, and comite des sages taking place at the national, European and international levels, one has to hope that between them they will be able to identify and remedy the flaws that exist. However, there is the potential for all of these to come up with different flaws and different answers which complicate and confuse structures and customers alike!

Paying more for retirement…The spotlight returned to public sector pensions this week as figures leaked to The Daily Telegraph revealed exactly how much workers in the public sector will pay extra each month for their pensions.

Danny Alexander was asked how much more he personally would have to pay towards his pension this week (Image: Thesun.co.uk)

As expected, higher earners will take the brunt of the increases and the lowest paid workers, earning less than £15,000, will escape any increases at all.

Here are some of the figures from the proposals:

  • Those earning over £100,000 will pay £284 a month (£3,400 a year) more
  • Public sector workers in the £50,000 bracket will pay between £684 – £768  more
  • Those on a £35,000 salary face paying an extra £516 a year more

Despite the backlash, which was always going to happen, you can’t escape the welcome news that low paid public sector workers, some 750,000 people, will be exempt from any increase in contributions and those earning £21,000 will be out of pocket £108 a year, or just £9 a month. The fact remains that even with these increases, public sector pensions are still a valuable benefit.

We still aren’t buying much on the high street…Another worrying week for retailers as figures on Thursday showed that sales fell at their fastest pace for a year as consumers become increasingly reluctant to spend. This is brutal news for the already struggling retailers and may be a sign of further deterioration and shop closures to come.

Only one in three retailers claimed their sales volumes were up on a year ago, with food retailers being particularly hard hit – either we’ve all been hit by the rise in food costs and are watching the pennies like hawks or the nation is on a collective pre-holiday diet.

However, one retailer that isn’t afraid of the UK high street (or shall we say Oxford Street) is cut-price U.S. brand Forever 21, which opened its doors for us on Wednesday. Some critics state that we are not ready for ‘cheap, fast, American’ fashion’ but with the way things are going on the high street we may not have a choice.

George Soros - the latest financial veteran to retire

Good week/Bad week – George Soros & George Osborne…A tale of two George’s this week. For the first (the man who ‘broke the Bank of England’), the effective end of a remarkable 40 year investment career. While the manner of his retirement was a little sour, blaming US regulations, you can’t argue with his success over the years. He will likely be missed.

On the flip side, it was a less than stellar week for the younger George, who, as yet more vanilla growth figures rolled in, suddenly found himself the victim of attacks from several fronts. How he must be wishing for the summer break to roll around quickly.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/06/fps-friday-fiver-7/ http://blogs.hillandknowlton.com/shocksandstares/2011/06/fps-friday-fiver-7/#comments Fri, 17 Jun 2011 17:16:28 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=172 Hello again all. It’s been a frantically busy week here in the Financial & Professional Services team, but as ever we bring you the Friday Fiver which rounds up this week’s events. Thanks to contributors Mel, Nick, Jo and Jonathan this week.

Freedommmmmm…Braveheart bonds, kilt edged bonds, Connery bonds and Jonathan’s own personal suggestion of shortbread bond are just some of the names being used to describe new powers that will allow Scotland’s government to issue debt.

Mel's adopted country is about to issue its' own bonds

The Scotland Bill makes provision for the country to raise up to £2.2bn from markets to fund infrastructure projects. There had been calls to permit up to £5bn of borrowing but this idea has been dismissed and Treasury ministers are at pains to emphasise that this does not amount to writing a blank cheque. It remains to be seen what ratings agencies will make of Scotland’s credit worthiness.

However, this week also saw riots on the streets of Athens as the Greek government seeks to implement austerity measure s to cut spending and meet the nation’s debt commitments. The dangers of small economies borrowing big sums of money should be front of mind for Scottish ministers.

We hear all about the Economist…This week,we were lucky enough to meet Daniel Franklin at the FPS Big Bite. The well respeceted Business Affairs Editor has been at the Economist for a staggering 28 years and gave us an insight into the passion that journalists have for this successful newspaper. With a circulation of over 1.5million around the world and 200,000 in the UK you can imagine that the publication only attracts the best of the very best of journalists!

We learnt all about the 'weekly newspaper' this week

After making us promise that we wouldn’t bombard him with emails following our lunch (sorry in advance Daniel!!) he went on to explain the thinking and routine behind The Economist giving the team a useful inside look into the ‘fiercely independent’ newspaper.

A regulatory phoenix …On Thursday the Government published its financial regulation White Paper and draft Bill which will see the creation of the new Financial Conduct Authority and Prudential Conduct Authority, and split of regulatory supervision now been offered up to replace the FSA.

Those readers who are equally wizened as this writer (Mel) might have a sense of déjà vue, having witnessed at first hand – working as a fresh faced, hopeful graduate at the Bank of England when the BCCI crisis erupted in the 1980s setting off – the chain of events which ultimately culminated in Gordon Brown forcing the old lady to relinquish her jealously guarded control of the banks.

Fast forward to 2011 and, here we are again!, the previously lauded and internationally revered one-stop financial regulatory juggernaut of the FSA and the ambiguous tripartite structure between HMT, the Bank of England and FSA both now found failing in the aftermath of the latest – and let’s acknowledge – near Armageddon financial crisis.

So another brave new phoenix emerges from the ashes with strengthened and expanded statutory objectives around responsibilities for the insurance sector, an enhanced competition regime and a strengthened role for FOS.

Otto Thoresen, Director General, ABI endorsed these measures but pointed to unanswered questions about how the links between the different regulatory bodies – PRA and FCA – will work in practice and how exactly FOS will work with FCA. Indeed, yes it is important to avoid overlap and confusion. Sound familiar?

The battle for pension reform is about to begin…The pressure has slowly been building on this one, with strikes being pencilled in across the week. But Treasury Secretary Danny Alexander lit the touch paper this morning with an article in the Daily Telegraph outlining the government’s intention to force public sector workers to work longer and pay more for their retirement pots.

Saving for old age is a very hot political potato

Is it fair? Many in the private sector would say so. Will it happen? That’s still in the balance – Alexander certainly came in for a tough time at an IPPR event this afternoon where he outlined the government’s thinking. The key date is 27th June, when negotiations are likely to conclude.

Brand promises & customer experiences…It’s fair to say that financial institutions have endured something of a reputational rocky patch amongst consumers. Many customers have been disappointed with the service they’ve received, coupled with poor products and several miss-selling scandals – a fact highlighted by this week’s episode of Panorama.

Thankfully it seems the industry is finally beginning to wake up and adopt a much more consumer oriented approach. Nick was lucky enough to be able to attend an event at the Financial Services Forum examining the relationship between brand promises and customer experiences. One of the central themes that emerged from the discussion was that a brand is not represented by a new logo or slogan but by the 1000’s of gestures made by the business to its customers across the world every day.

Every interaction is a chance to reinforce the business’ brand values and this needs to be recognised throughout the entire customer journey. Managing expectations coupled with the odd piece of exceptional customer service can go a long way! It was refreshing to see such a detailed deep dive into the lives of the consumer and what struck me was the extent to which experiential brands such as Alton Towers, Emirates and Walt Disney are streets ahead.

Their whole proposition is built around the consumer experience and they understand the importance of recognising this at every level. With regulatory bodies also placing unprecedented levels of scrutiny on consumers rights, perhaps many of the UK’s biggest banks should take a leaf out of the books of Mickey Mouse and Pluto. A smile and a genuine belief in the brand you represent seem key.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/06/166/ http://blogs.hillandknowlton.com/shocksandstares/2011/06/166/#comments Fri, 10 Jun 2011 17:34:24 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=166 Hello All, and apologies for a slightly late Financial & Professional Services Friday Fiver this week, but we’ve all been a little hectic. To round out the week we bring you banking, more banking, an Archbishop and Blackpool football club. Happy weekend all!

The Big Four Banks feel the heat….The big four revealed deep divisions on restructuring at Wednesday’s treasury select committee appearance as their CEOs jockeyed for position with the powers that be. Stark divisions were revealed on the Independent Banking Commission proposed scope for ring fencing core retail banking functions. RBS’ Stephen Hester alluded to the “moral hazard” problem if government effectively insulated the market, which could perversely encourage excessive risk taking, a view supported by Barclays.

In contrast, HSBC and Lloyds support a broader separation and more diverse mix to encourage the much needed supply of credit to the market – note the Q1 figures which reveal banks failed to stay on track with “Project Merlin” pledges.

Vince Cable - back on the banker bashing trail this week (image from Telegraph.co.uk)

Finally, Vince Cable rattled the sabre again, unveiling a not so “veiled threat” to link bank bonuses to SME lending! Will this create the required traction on this fragile detente between the City and the Government? Watch this space, but maybe don’t hold your breath.

Anthony Hilton digs in his heel as well…At the same time as surviving a tough session in Westminster, Barclays came under fire from the Evening Standard’s Tony Hilton. While CEO Bob Diamond was claiming to Parliament that his bank had been a “stabilising force” in the crisis (though some might argue the Middle East was the real ‘stabiliser’), Hilton was taking aim at his finance director for something called ‘Project Protium’.

Barclays and the Cayman Islands - source of Anthony Hilton's wrath this week

This essentially involved hiving off some of the bank’s toxic assets to a Cayman Islands registered company in a neat little trick to reduce losses on the company’s profit and loss account when the assets turned sour. It’s fair to say Hilton really went for the jugular on this one. The moral of the story? If he writes something once and you don’t like it, be prepared to read it all again two days later if you complain about it.

The Archbishop caused a stir too…Rowan Williams stole Prince Phillip’s thunder whilst acting as guest editor of New Statesman this week, using an article to heavily criticise the Coalition and its policies. He argued that ‘we are being committed to radical, long-term policies for which no one voted’ thereby questioning the Government’s mandate to govern.

Was he right? Probably not. As Defence Secretary Liam Fox pointed out, ‘the Government has legitimacy because it has a majority in the House of Commons.’ Whilst some policies have undoubtedly been rushed, a Government is elected to make decisions and lead a country, and it’s fair to say the Coalition is certainly doing that – despite clamours for the Chancellor to adopt a plan B, he presses on resolutely.

As businesses need strong leadership and clear direction, we need our politicians to show equal virtues. Questioning the Coalition’s mandate is much like Donald Trump and others questioning Barack Obama’s place of birth place and therefore his right to be President; an unnecessary distraction from a much more important job at hand.

Boom, Bust or Blackpool…Is it us or is the world of football slowly going mad? We say this having recently read an article on Deloitte’s annual Football Money League. We’re no experts on the ins and outs of running a football club, but GCSE maths and a pinch of common sense tells us that paying your staff more than 70% of your total revenue in any industry is a bit iffy – as our colleague Nick puts it, the desire for a couple of extra places up the league table “seems to me a bit like financial Russian roulette”.

Blackpool gambled and won promotion - others have been less fortunate

We’ve already seen Portsmouth fall spectacularly from FA Cup winning glory to administrative collapse. With wages still increasing it may not be long before other Premiership clubs follow suit. One could argue Uefa’s Financial Fair Play Initiative is a step in the right direction but for us the danger lies in clubs trying to establish themselves as a prominent Premiership force.

Football governance should improve and a lot of lessons can be learned from the world of business. Just as CEO’s have a responsibility to their shareholders; boards, managers and players have a responsibility to fans. I’m sure if you ask most Bolton fans whether they’d rather finish 10th and risk financial meltdown or 14th and still be here in twenty years most would take the latter. We know Nick would!

Demystifying Digital…Finally, H&K this week held one of our regular ‘D2′ events aimed at tackling and understanding the digital world. Our very own Nick Woods presented on how financial services brands can engage in this sphere, highlighting the work we do with HSBC International Bank. We’ll have more on this next week for you, as will the main HanK blog but in the meantime congrats to Nick on a cracking presentation.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-4/ http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-4/#comments Fri, 06 May 2011 13:22:55 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=104 Yes, it’s back. After a break for the Easter holiday, some glorious weather and that dress, we return with the Financial and Professional Services team’s Friday Fiver. We also have a fresh contributor this week, our new regulatory and government expert, Melanie Worthy. Other pieces this week come from regulars Ed Jones, Ross G, Karen and myself.

Crunch time for RBS and the FSA…The Treasury Select Committee and the FSA announced this week that they’ve asked City heavyweight Sir David Walker and lawyer Bill Knight to conduct an independent review of the report the FSA is producing into the failure of RBS. They will examine whether the report fairly reflects the findings of the FSA’s investigation of RBS, as well as analysis of its own regulatory activities.

Sir David Walker - charged with reviewing the demise of RBS (image from guardian.co.uk)

Walker’s unique attributes of being both a credible City figure plus a trusted Government adviser make him an obvious choice for the role. His track record helps too – he has headed Government enquiries, such as in 2009 when he examined governance at the big UK banks.

Just as well then, as he’s going to have his work cut out. However “complex” the issues were, as the FSA cites somewhat reluctantly, there will be strong media interest and expectation for answers as to the causes of RBS’ demise; the excessive cost to the public purse from bailout; and the wider malaise that played out across the banking sector as the financial crisis ensued.  Whilst Walker and Knight tread through a minefield to avoid the legal conflicts to RBS employees, they’ll be mindful of the need to show teeth and forensic review on both sides of the regulatory fence.

Nick Clegg – Stick or Bust…Most observers of the Westminster Village Ed’s spoken to in recent months have agreed on one thing: May 5th and the outcome of the AV referendum will determine the fate of the Coalition Government. As we’ve said previously, the fates of Nick Clegg and Ed Miliband appear eerily interlinked, with success for one leading to failure for the other. It seems neither will come out of this episode particularly favourably though.

It's not been a vintage week for Nick Clegg

Judging by Chris Huhne’s recent outbursts, it would seem to look more terminal for Nick Clegg, and Ben Brogan was on to something this week when he said Nick Clegg’s body language in PMQs was ominous.

Cameron, demonstrating his exceptional political judgement, was keen to move the story on and talk up the other important work the Coalition has set out. But where can it realistically go from here? If Lords reform is offered as a carrot to the Lib Dems to carry on, it’s highly likely a similar demoralising defeat will occur on it. On the flip side, Lord Knight’s suggestion that an early election to deliver the Conservative’s a majority is intriguing, but given the barriers against this, difficulties over NHS reform and the current state of the economy, this would appear wide of the mark.

Where else can the Lib Dems look?…Given the loss of 300 council seats and a probable resounding no to AV, what will be telling in the coming days is how the Lib Dem rank and file respond to defeat. Paddy Ashdown has already launched an attack at David Cameron, and Clegg may well be hoping that this and other attacks distract party members from aiming their wrath at him.

Clearly, Clegg is going to have to secure some tangible wins for the Lib Dems in order to quell the growing frustration. With this in mind, he may seek to increase the fight for a greater say on health reforms. The Health and Social Care Bill should allow for greater private provider provision of health care, but the extent to which the Tories have wanted to pursue this has caused unease amongst many Lib Dems.

The current pause in the process of passing the Bill and now the increased chance of Lib Dems demanding changes means that private equity firms are going to be increasingly turned off due to the levels of uncertainty around private provision. If the Lib Dems decide to really dig their heels in, private equity firms could lose out on what previously looked like a sure investment.

Exchange-Traded Funds – the current big thing?…Earlier this week, we enjoyed a fantastic training session with David Yates from Finance Talking. One of things he focused on was the growth of ETFs in recent years. Financial News picked up on this point earlier this week as well, noting the recenty outflow of money from four of the five largest asset managers and into ETFs – the magazine claimed $41.4bn of new money was poured into ETFs in Q1 2011 according to Blackrock.

Not everyone seems convinced though. In today’s FT, Gillian Tett examined the boom in this market, and argued that concerns are building amongst regulators about it. While not as inherently dangerous as the pre-2007 fad for ‘CDOs’, she did note that there are some striking parallels here. Clearly, others are still a big fan of them though, as FT Alchemy notes today.

This week's Big Bite was all about the future

Learning about the future…The exciting guest for this week’s FPS Big Bite was Patrick Harris from The Futures Company. He gave us some great insights into the world of futures and left us with an interesting and thought provoking debate.  As Patrick pointed out ‘the future is all around us, it’s just not evenly distributed’. We hope that gets you all thinking as much as it did our team!

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