The Complaints Commissioner’s 2017-18 annual report has criticised the Financial Conduct Authority regarding what it describes as “attitudinal problems”, which include ”defensiveness, lack of candour, and lack of empathy”. Commissioner Antony Townsend formally investigated 83 complaints against the FCA; 67 of them alleged that the FCA was failing to regulate the financial services industry properly, and in many cases this hinged on a specific firm as an example. He found the FCA has an “unwillingness to admit error” and spends too much time “constructing defences for past actions”. In response, the FCA said: “We do accept that we could seem defensive sometimes and we will work on how to communicate in a more effective and transparent way”.
Financial Reporter

According to the MTF Broker Sentiment Survey, one third of the122 specialist brokers canvassed said funding development projects was the most popular reason for completing a bridging loan in the second quarter of the year. This was up from 24% during the same period of 2017. Refurbishment was the second most popular reason for getting a bridging loan at 27%, compared to 19% during the second quarter of 2017. MTF found that overall demand for bridging finance increased in the second quarter, with 38% of brokers noticing a rise in bridging loan volume, up from 30% in the first quarter of 2018. The biggest demand for bridging loans in Q2 2018 came from the South East, followed by the Midlands.
Best Advice

The Financial Conduct Authority is looking into the fact that three in every 1,000 new mortgage customers are unable to meet their monthly payments within six months of the loan being taken out, with one in every 600 into arrears by the point the second payment is due. The regulator said: “Where a consumer falls into arrears within a short period of time (two to six months) this could be an indicator of an unsuitable or unaffordable product having been sold.” It added that it would monitor the situation as “any sustained increases may indicate that we need to do more work to assess if the harm of unaffordable or unsuitable mortgage sales is increasing.”
The Daily Telegraph

Thistle Finance has reported a 30% rise in the number of UK landlords incorporating their portfolios during Q2 2018 compared with the previous quarter. Commenting on the fact that the average size of portfolios being incorporated fell by around 40%, Mark Dyason, managing director at Thistle Finance, said: “Landlords that are genuinely committed to buy-to-let are starting to optimise their portfolios, not just by remortgaging on to better rates – where there’s a huge amount of activity – but by moving into limited company ownership.”
Bridging and Commercial

Jonathan Newman, senior partner at Brightstone Law, says there has been an increase in lenders over-valuing the gross-development-value of properties, affecting whether they come to market. “Short-term lenders went into development finance in a hurry probably circa four or five years ago” he said, adding “It is quite a specialist area of lending … Lenders are now beginning to see problems arise which they weren’t expecting mainly as a result of a lack of experience”. He describes development lending as “double the risk” of other types, and advises lenders use experienced solicitors, specialist valuers and knowledgeable quantity surveyors to manage risk.
Mortgage Introducer

MoneySupermarket is investing £1m in Podium, a start-up aimed at digitising the process of taking out a mortgage. The Times notes that the move, a 50/50 joint venture with entrepreneurs Matt Denman and Mark Hawkins, puts MoneySupermarket in competition with fintech firms such as Trussle, Habito and Dynamo, who are also developing digital mortgage broking services.
The Times

Research from Amazon has shown that financial services are among the sectors that are leading the SME economy, with companies in the sector seeing a 1.7% increase in revenues over the past year. The Q2 2018 Amazon SME Growth Tracker from Capital Economics found that while small business owners across all regions were not feeling positive about their business conditions over the coming year, SMEs in the financial services sector were feeling more optimistic, with the SME Confidence Index showing a score of +3. Commenting on the research, Amazon’s UK Country Manager Doug Gurr said that it is clear that if there is confidence in business conditions, then owners of small businesses are creating plans for job creation, growth and investment, so the more that can be done to increase SME business confidence, the greater the benefits are for the whole of the economy.
London School of Business and Finance

The Times’ Jonathan Ames talks to a selection of lawyers about the Financial Reporting Council’s updated corporate governance code. The changes, which aim to improve workforce relations and the independence of board chairs, and will require remuneration committees to consider reputational and other risks from excessive pay, were broadly welcomed. The paper also notes that the BEIS consultation on legal reform for companies facing insolvency has ended. The proposals would make directors of a parent company personally liable for losses to a subsidiary’s creditors where that subsidiary is sold and subsequently fails. This plan, says Jamie Nellany, a lawyer at Addleshaw Goddard, would be “at odds with the concept of limited liability and our business-rescue culture.”
The Times

Former deputy governor of the Bank of England Sir Paul Tucker has called for the Financial Conduct Authority to be reformed or stripped of its independence. Sir Paul was commenting on the power held by unelected technocrats within Britain’s regulatory structures arguing that the more influence they have the more “alienated people will become.”
The Times

New mortgage lending data from UK Finance shows that specialist lenders and challenger banks saw the biggest growth in lending over 2017. Gross lending totalled £257bn, up 4% on 2016, slightly down on the 11% growth rate seen in 2016. Challenger banks and specialist lenders saw an almost 20% increase in activity. UK Finance warned that uncertainties relating to the UK economy “have the potential to affect the path of lending for the rest of this year and beyond”.
Finance Reporter

UK Finance has announced that British banks will implement UN-backed “responsible banking” principles that will influence lending and company behaviour. UK Finance Chief Executive Stephen Jones is set to tell attendees at the banking trade body’s annual dinner: “Environmental risk and opportunity is beginning to reshape the way we look at business planning and economic growth … A broad base of stakeholder interests, from regulators, to investors, employees and customers are increasingly challenging banking and finance to find more innovative and sustainable ways in which to operate.” The United Nations Environment Programme Finance Initiative principles will be launched during the UN General Assembly in New York next week.
Daily Mail

Research from insolvency practitioners KSA Group shows that SMEs where boards have female representation are less likely to become insolvent. Looking at insolvency rates at the UKs 1.5m companies with two or more directors in the 12 months to June 2019, it was shown that it is 49% higher in all male boards than mixed boards and 32% higher in all male boards when compared with all female boards. The insolvency rate for male-dominated boards was 0.63%, for female boards it was 0.48% and for mixed boards it stood at 0.43%. Robert Moore, marketing manager for KSA Group, said: “Whilst it is not possible to prove that women are better at running businesses than men, the body of evidence is growing that companies which have women on the board do reap benefits in terms of increased profitability and less corporate failures.”
Commercial Reporter

Britain has retained its place in the world’s top ten markets to do business, rising from ninth place a year ago to eighth this year. The UK has made it easier to start a business, with it now quicker and cheaper for a business to get connected to electricity supply, for example. However, business costs have increased due to a more onerous pensions regime and the extra time required to administer taxes. The Department for International Trade noted that the latest World Bank analysis placed the UK second place among the G7 group of leading economies and second place among western European nations, behind the United States and Denmark, respectively.
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A series of surveys this week are expected to show the weight of Brexit uncertainty on the UK economy. The CBI’s distributive trades survey is expected to show retailers struggling while the GfK consumer confidence survey will indicate household gloom over economic prospects. The PMI for manufacturing will on Friday show the sector in recession, the Sunday Times reports. Finally, a new assessment of the economy by the ratings agency S&P predicts growth of just 1.3% a year over the 2020-22 period. Britain’s outlook remains negative due to “the risk of sustained economic weakness”, S&P said.
The Sunday Times

Research by the Association of Short Term Lenders (ASTL) has found that bridging lenders have grown in confidence about the outlook for the UK economy, their own business and the bridging sector. The study, which was carried out shortly after the date was confirmed for the forthcoming General Election, revealed that over 75% of bridging lenders are confident about the long-term prospects for the UK economy, compared to just 50% when the survey was last run in June. Lenders have also grown in confidence about the prospects for their own business. Nearly three-quarters (72%) said they expect their business to grow over the next six months, which is up from 59% in the last survey. Meanwhile, 52% of lenders said they expect the bridging sector to grow in the next six months, compared to 23% who anticipated growth in June. Throughout this period, lenders also expect modest growth in competition from other lenders and competition is no longer seen as the b iggest challenge for bridging lenders. It has been replaced by the slow moving property market, which was identified as the main hurdle by 55% of respondents.
Mortgage Finance Gazette Online Mortgage Introducer

Knowledge Bank’s most recent criteria activity index for October has revealed that minimum loan amount was the most searched for criteria in the bridging category. In the commercial category, mixed-use properties/part commercial has entered the top five, while semi-commercial properties has retained the top spot. First-time landlords has returned to the top of the BTL category for the first time since July, while lending to limited companies — which was the most searched for criteria in the previous month — has dropped to second. Knowledge Bank CEO Nicola Firth said: “There was more change in the bridging sector with searches for regulated bridging losing the top spot it had held for the past two months to searches for the minimum loan amount. Additionally, in the commercial sector, we saw searches for mixed-use properties, i.e. part commercial, enter the top five searches for the first time. Within the BTL sector brokers have been looking for lenders who would consider first-time landlords, making this the most popular search performed during the entire month, the first time this has happened since July.”
Financial Reporter Best Advice

Richard Buxton, head of UK equities at Merian Global Investors, has suggested that a Brexit deal could put the pound among the world’s strongest currencies, given the right circumstances. Mr Buxton believes the Bank of England may have to “gently nudge” interest rates up by the second half of 2020, saying: “I think it will just be symptomatic of the fact that the UK, relatively to other parts of Europe, will be growing really quite nicely.” This comes as 0.3% expansion reported this week means Britain has had 13 quarters of economic growth since 2016’s Brexit referendum.
Daily Express

Planned cuts to corporation tax next April are to be put on hold, Boris Johnson has told the CBI conference, with the money being spent on the NHS and other services. The Conservative leader told the conference that while big business did not want the UK to leave the EU, his withdrawal deal would provide the certainty “that you want now and have wanted for some time”. If elected with a Commons majority, the PM is hoping to get the agreement on the terms of the UK’s exit into law by 31 January, and begin talks with Brussels on a permanent trading relationship. In his address to the CBI, Labour leader Jeremy Corbyn said business had nothing to fear from a Labour government, arguing that while the richest would pay more, there would also be “more investment than you have ever dreamt of”. He also said Labour’s Brexit plan is the one that would actually “get it sorted quickly”, adding that Labour’s plan will im mediately end the uncertainty for businesses as it “won’t be ripping up our main trading relationship”.
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Shorter-term fixed rate mortgages have increased in popularity, with more homeowners opting for two-year fixed rate products, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index. The research, based on interviews with 201 mortgage intermediaries, found that two-year fixed rate mortgages accounted for 39% of mortgage business introduced in Q3 2019, up from 37% recorded in Q2. Whilst fixed periods of five years or more remain the most popular, the proportion of mortgage customers opting for a long-term fix fell from 51% in Q2 to 46% this time round. Fixed rate mortgages (89%) were still the overwhelming preference over tracker rate mortgages (9%).
Mortgage Solutions Financial Reporter

The Conservatives plan to introduce a 3% stamp duty surcharge for non-UK residents, whether the overseas buyer is an individual or a company. Rishi Sunak, the Treasury chief secretary, said the move could raise up to £120m, adding that this would be used to tackle rough-sleeping. Meanwhile, the Liberal Democrats would crack down on foreign buying of second homes with a stamp-duty surcharge on overseas residents buying such properties.
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