Big institutional investors have taken legal advice to pursue the Financial Conduct Authority for market abuse following its disclosure of a market sensitive investigation which sent the value of insurance firms into a downward spiral, the Financial Times reports.
Half a dozen of the City’s biggest investors have consulted international law firm Slaughter and May over the potential for compensation over losses during a market panic caused by statements in The Telegraph from a briefing with FCA director Clive Adamson, which the regulator later clarified in a statement.
The Telegraph had reported Mr Adamson as saying the FCA’s investigation could force pension providers to allow savers that have taken out some 30m policies over the past four decades to exit or switch to a better deal for free, and could even see high exit charges banned.
The FCA clarified later that it was “not planning to individually review 30m” policies or “to look at removing exit fees... providing they were compliant at the time”, but not before shares had been allowed to plummet by as much as 20 per cent in a six-and-a-half hour sell-off.
A four-page legal opinion from law firm Slaughter and May seen by the Financial Times “identifies three potential allegations of market abuse by the FCA”. They relate to selective disclosure of information, the spreading of misleading information and a delay in correcting the false market.
According to the FT, some legal experts warned that investors faced a “high bar to any claim against the FCA”, whose actions on Friday provoked a furious response by the chancellor this week.
The FCA board said it is to hold an inquiry into the affair to be conducted by an independent law firm.
FCA in move to Olympic park
In further FCA news, the FCA has confirmed to the FT that it is to move its headquarters from Canary Wharf to a new business district at the former Olympic Park in Stratford when its current lease expires in 2018.
It will become the biggest single tenant so far in an area that prime minister David Cameron had envisaged as a new “tech city”.
The FT said the FCA will take 430,000 sq ft in the £2bn Stratford International Quarter, about 10 per cent of the total office space under construction, and said the imminent arrival of Crossrail was a key factor.
RBS to close 44 branches
According to the Guardian, Royal Bank of Scotland is closing 44 branches across the UK.
Customers have been told about the closures – across the UK from Scotland to the south coast of England - and 14 of them are “the last branch in town”. There has been no public announcement.
RBS formalised its pledge in its “customer charter” in 2010, but in 2012 the advertising watchdog upheld a complaint about misleading promises by RBS to be the last branch in town. By 2013 it had “watered down the commitment”.
London house prices to “unravel” when rates rise
Deutsche Bank has warned London house prices could “unravel” due to a toxic mix of a strengthening pound and possible interest rate rises, according to the Telegraph.
Europe’s largest investment bank has brought forward its expectations for the bank to increase interest rates starting from May 2015 - raising concern among mortgage holders already struggling to service their debt.
The German lender expects rates to increase to 1 per cent by the end of next year, in a research note titled “Strong growth not built to last”.
Coupled with the end of “easy money” on global capital markets as central banks rein in loose monetary policies, Britain’s housing market could come crashing back to earth as the influx of foreign buyers dries up.
Lack of endorsement for Co-op board overhaul
Former Treasury minister Lord Myers is attempting to persuade members of the loss-making Co-operative Group to endorse his plans to overhaul its board and replace it with a ‘plc-style’ structure, reports the Guardian.
Lord Myers, who in December was appointed to the board of the Co-op Group, has suggested scrapping the current board – made up of five members of the independent co-operatives, 15 members elected from all walks of society and himself – and replacing it with something more akin to a ‘plc-style’ board: “more firmly in the control of a chief executive and chairman”.
Members – who effectively own the Co-op chain of supermarkets, funeral parlours and pharmacies – would then be represented by a national members council.
Household debt to jump 43%
According to the Mail, rising house prices and decreasing savings over the next five years are expected to cause a steep hike in household debt which is already at its highest level since 2009.
The Money Charity said that, according to the latest forecasts by the Office for Budget Responsibility released alongside last month’s Budget, average household debt including mortgages is expected to rise 43 per cent from a level of £54,472 in February this year to £85,220 in the first quarter of 2019.
