Category: Regulation

EU Finalises Proposal for Investment Protection and Court System for TTIP
Global ComplianceRegulation

EU Finalises Proposal for Investment Protection and Court System for TTIP

The European Commission has finalised its new and reformed approach on investment protection and investment dispute resolution for the Transatlantic Trade and Investment Partnership (TTIP). This follows another round of extensive consultations with the Council and the European Parliament. The proposal for the Investment Court System has been formally transmitted to the United States and has been made public.

The final text includes all the key elements of the Commission’s proposal of 16 September, which aims at safeguarding the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings. The proposal also includes additional improvements on access to the new system by small and medium sized companies.

The new system would replace the existing investor-to-state dispute settlement (ISDS) mechanism in TTIP and in all ongoing and future EU trade and investment negotiations.

“Today marks the end of a long internal process in the EU to develop a modern approach on investment protection and dispute resolution for TTIP and beyond,” said Trade Commissioner Cecilia Malmström. “This is the result of far-reaching consultations and debates with Member States, the European Parliament, stakeholders and citizens. This approach will allow the EU to take a global role on the path of reform, to create an international court based on public trust.”

Since the publication of the Commission’s initial proposal, the text was circulated extensively for consultation to ensure broad endorsement of its main innovative elements, notably amongst co-legislators: EU Member States and the European Parliament.

These elements refer in particular to the strengthening of the right to regulate through a new article, the establishment of a new system for resolving disputes – ‘the Investment Court System’ –, and the creation of an appeal mechanism to correct errors and ensure consistency.

One of the changes made to the 16 September proposal is an additional improvement for small and medium-sized enterprises that would benefit from faster proceedings and would enjoy privileged treatment in comparison with large multinational companies.

EU Commission Considers Completion of the Banking Union
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EU Commission Considers Completion of the Banking Union

This debate is an indispensable part of achieving a full and deep Economic and Monetary Union (EMU), and in particular about bringing forward a proposal for a European Deposit Insurance Scheme (EDIS).

The recent Five Presidents’ Report set out a number of steps to further strengthen EMU. One of them is to move towards guaranteeing deposits at the European level with a European Deposit Insurance Scheme (EDIS). EDIS would mark an important step forward in terms of reinforcing financial stability by reducing the link between banks and sovereigns, and it would enhance confidence by protecting citizens’ deposits at the European level, independent of their bank’s location in the union. It would be based on a system of reinsurance, as a first step.

The Commission’s proposal, which will be made on 24 November, will be accompanied by a Communication which will set out other concrete measures to further reduce risks in the financial system.

Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, said: “Financial stability is a precondition for economic growth and convergence. We need to complete Banking Union as one of the pillars of a resilient and dynamic Economic and Monetary Union. Today’s discussion in the Commission demonstrates our commitment to propose first steps towards an EU Deposit Insurance Scheme already this year. In parallel, we will work on further reducing risks in the banking sector.”

Commissioner Jonathan Hill, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “Everyone agrees that there is unfinished business on the Banking Union. Alongside supervision and resolution, we need an effective system for deposit guarantees. By gradually developing that at the European level, we can reinforce the confidence that depositors have in their banks, and further weaken the link between banks and their sovereigns.”

Financial stability and the confidence of citizens are indispensable preconditions for economic growth. A proposal for EDIS, as suggested by the Five Presidents’ Report, would consist of a reinsurance of national Deposit Guarantee Schemes (DGS) as a first step, moving towards a full European system of deposit guarantees in the longer term. While national DGS are already in place and provide for the protection of EUR 100.000 per person/per account per bank, they are not backed by a common European scheme.

EDIS would help to reinforce depositor confidence in banks across the Banking Union. Pressure on banks would be reduced and the loop between banks and Member States would be further weakened by helping to ensure that all national DGS would have sufficient funds available to weather periods of high stress.

The Commission emphasises the need for all Member States to implement fully the agreed rules of the Banking Union. On 24 November, together with the EDIS proposal, the Commission will also present concrete ideas about how risks can be further reduced in the financial system in general and in the Banking Union, in particular.

Bank of America Expands National Community Advisory Council
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Bank of America Expands National Community Advisory Council

The National Community Advisory Council (NCAC), a diverse group of nonprofit and private-sector leaders convened by Bank of America, recognizes its 10th anniversary with the addition of five new members representing environment and sustainability expertise. Meeting this week in Washington, D.C., the group of senior consumer, community and academic leaders gathers twice a year to advise the bank on critical issues impacting society.

Formed in 2005, NCAC initially provided guidance on the bank’s community development lending and investment activities. While continuing its focus on community development and consumer policy issues, the council’s concentration has evolved into a broader focus on environmental, social and governance (ESG) issues and performance.

As part of the broad portfolio of climate change goals and transformative finance initiatives the bank has engaged with several leading environmental organizations. This led to an increased focus and expansion of environmental NCAC membership, which now includes:
• Armond Cohen, executive director, Clean Air Task Force
• Rick Fedrizzi, founding chairman and CEO, U.S. Green Building Council
• Bob Perciasepe, president, Center for Climate and Energy Solutions (C2ES)
• Andrew Steer, president and CEO, World Resources Institute
• Mark Tercek, president and CEO, The Nature Conservancy

Another recent addition to the NCAC roster is Jane Nelson, a globally recognized leader in the CSR arena who currently serves as director of the Harvard Kennedy School’s Corporate Social Responsibility Initiative.

“Our members challenge us and collaborate with us to strengthen the impact of our collective work in the communities we serve, and we welcome new voices around the table to further that goal,” said Andrew Plepler, Corporate Social Responsibility executive, Bank of America, and NCAC chair. “We are proud that what started out as a conversation about community development has evolved into a decade of engagement on some of the biggest issues facing society.”

This week’s meeting will provide an opportunity for NCAC members and bank executives to sit down together and engage in meaningful dialogue on a broad range of topics, including neighborhood stabilization efforts around affordable housing, the state of civil rights, and environmental sustainability issues. These meetings are meant to address important topics and open the lines of communication between NCAC members and the bank on the state of the economy and how these collaborative efforts can lead to meaningful solutions.

“Bank of America has long set a high bar for social responsibility programs that enhance the communities they serve,” said Rick Fedrizzi, founding chairman and CEO, U.S. Green Building Council. “I’m honored to be part of its National Community Advisory Council, and look forward to serving with such an exceptional group.”

The six new members join a seasoned group comprised of nationally recognized consumer advocates, academic leaders, civil rights leaders, and community development and environmental experts

Scepter Partners Backs Former CEO of Santos with $5.1 Billion
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Scepter Partners Backs Former CEO of Santos with $5.1 Billion

 Scepter Partners, a standing syndicate of ultra-high net worth individuals and sovereign investors, confirms that on 20 October 2015 it made a non‐binding indicative proposal (“Indicative Proposal”) to acquire 100% of Santos Limited (“Santos”), a significant independent oil and gas company in Australia.

The offer was at A$6.88 (US$4.97) per share in cash by way of a scheme of arrangement subject to a range of market‐standard conditions which equates to a market value of equity of A$7.1 billion (US$ 5.1 billion).

The Indicative Proposal, if implemented, would deliver the following to Santos’ shareholders:

26% premium to Santos’ closing price on 19 October, being the last trading day before the proposal was submitted.
38% premium to Santos’ 1-month volume weighted average (VWAP) price up to 19 October.
40% premium to the VWAP since 21 August 2015 which was the date on which Santos announced its strategic review.
John Ellice-Flint led Santos management to create over A$8 billion (US$5.8 billion) of value while the company was under his stewardship from December 2000 to June 2008. Mr. Ellice-Flint is widely regarded as one of the foremost oil and gas executives in Australasia.

Mr. Ellice‐Flint would serve as Executive Chairman of the privatized Santos should any Indicative Proposal ultimately succeed. Mr. Ellice‐Flint commented, “Our vision is to build Santos into an Asian oil and gas leader, based in South Australia, harnessing the skills and experience of the Santos workforce.”

With offices in New York and representative offices in London and Beijing, Scepter was founded by financier Rayo Withanage to acquire large assets with a focus in natural resources, infrastructure, real estate and media and telecommunications. Scepter’s global merchant banking activities are led by natural resources investment banking veteran Anthony J. Steains and his former Blackstone Asia Advisory Partners team.

Mr. Steains commented, “Scepter considers that this Indicative Proposal, if implemented, would provide Santos shareholders with an attractive premium and the certainty of cash in the face of significant future uncertainty. Scepter’s plan would be to build and grow a significant oil and gas business that advanced the presence of Australian companies in Asia.”

As a principal investor, Scepter is supported by the discretionary assets of a core syndicate of investors who have combined resources to invest in large transactions globally. Scepter is represented in this transaction by Highbury Partnership and Gilbert & Tobin. For more information, please visit www.scepterpartners.com.

Main Changes Regarding Buy-to-Let Taxes and How It Will Affect Landlords
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Main Changes Regarding Buy-to-Let Taxes and How It Will Affect Landlords

The biggest shake up to landlord tax rules is the amendment to the interest only mortgage payment on a buy to let property and how this is offset against your tax bill. There shouldn’t be any change to how basic rate tax payers and mortgage free properties are taxed, the change is only applicable to high rate tax payers. Beware, if you are a basic rate tax payer and your rental income pushes you into the higher rate tax bracket, these changes will also affect you!
Currently higher rate tax payers pay 40% tax on the rental income over and above the interest only mortgage payment. E.g. £1,000 per month rent with a £400 per month interest only mortgage payment means that you will pay 40% tax on the £600 per month difference. You are given full tax relief on the £400 per month interest only payment so do not have to pay any tax on this and just pay tax on the profit. Makes sense.

With the new changes high rate tax payers will no longer be able to claim full tax relief on the interest only payment and will only be able to claim tax relief up to the basic rate of 20%. Therefore if we use the same scenario: £1,000 per month rent and a £400 per month interest only mortgage payment this now means you will pay 40% tax on the £600 profit and 20% tax on the £400 per month mortgage payment. This is an increase in this example of £2,400 a year.
In the current climate of low interest mortgage rates this is certainly a blow as it will mean higher rate tax payers paying more tax and making less profit on their portfolios. However, what should worry landlords are the consequences when interest rates start to rise.

A rise in interest rates equals a rise in tax!
Under the new rules, interest rates don’t need to rise that much to make buy to lets costly for landlords. As an example let’s say a landlord owns a property valued at £250,000 with an outstanding mortgage of £187,500 (75%). They charge £1,000 per month in rent and have a current interest only mortgage payment of £400 per month. Under the new system they will receive £600 per month income and pay tax of £320 per month. So they will make a net profit after tax of £280pm. If the interest rate on the mortgage rises to just 4.80% they will be paying £750 per month in mortgage interest payments and making a profit of £250 per month. Under the new tax scheme they will also be paying tax of £250 per month. Therefore the net profit from the property will be zero. If interest rates rose to 6.40% this landlord would be charging £1,000 per month rent, paying £1,000 interest and still be charged £200 per month tax from HMRC.

If a landlord reaches the point where they are making no profit from the rent, are spending time managing it and possibly even making a loss on it, the it is understandable that a landlord will consider two things; Firstly, they may look to increase the rent. This is a likely scenario and it seems grossly unfair that the new tax changes could ultimately have a detrimental effect on the tenants themselves. Secondly, the landlord will look to sell the property. Again, this will involve notice being given to tenants and will create a very unstable environment for many tenants who thought they had a long term let agreed as the properties which have long term tenants are more likely to be sold first as these tenants generally have fewer rent reviews and therefore these properties will become unsustainable for the landlords first.

What’s likely to happen as a result of the new tax?
The expected effect of this tax then will be that more property will come on to the market but only from those landlords that are hitting a higher rate of tax due to personal income (as well as a bit from rental income) these are the landlords that were only really in the BTL game for capital growth (“It’s my pension”) and who have perhaps found themselves enjoying the extra few hundred pounds a month income, it is probably they that will be selling their buy to let houses and flats as the profit margins become less attractive. We have already spoken to several property landlords who will be instructing agents to sale their property.

Those landlords (sometimes referred to as accidental landlords) selling up will bring more property on to the market for first time buyers and home movers and could see property price inflation easing in certain areas of the UK. This scenario would be a good result for First Time Buyers who are currently up against other FTB’s as well as property investors. It is worth remembering that landlord mortgages are not subject to the same regulation as residential owner occupier mortgages. BTL landlords can have a Buy to let mortgage up to 85% on an interest only basis making the monthly payments much less than a regulated mortgage which at 85% must be on a capital and interest basis.

For the landlord with only a couple of properties and not earning above the higher rate tax bracket or the property developer that is offsetting costs through refurbishment expenses that doesn’t pay higher rate tax or indeed the wealthy landlord with no mortgages anyway then it will be business as usual. The other tax changes to how much you can offset for wear and tear will have some affect but is not a game changer. So it would seem that the real likely result will be that where one type of landlord sell’s up, a different type of landlord will come along with a desire to buy up that same property.

Watch out Brussels is coming!
Whilst on the subject of the different types of landlords now is a good time to mention the European led Mortgage Credit Directive which comes into effect in March 2016. The new regulation will regulate some buy to let’s. The legislation will differentiate between 2 types of BTL. They may be referred to as either an ‘Investment Property Loan’ or a ‘Consumer Buy To Let loan’.

The accidental landlord that has perhaps been unable to sale their house and who has instead re-mortgaged it to a buy to let will fall under the consumer BTL category and will be subject to new guidance overseen by the FCA. This guidance could see lenders checking affordability for the buy to let using personal income or only lending where there is sufficient savings in place to cover 3 months’ rent in the event of a rental void. Those clients with existing buy to lets or those buying a property specifically to let it out will fall under the Investment Property Loans and will be subject to less scrutiny!

In summary the Buy to let market as we know it is changing and interference from Europe and its blanket policies is changing the face of Buy to let.

Budget Blues
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Budget Blues

The investment organisation has announced that the newly announced budget will make life difficult for customers and businesses alike and its success depends heavily on whether businesses will be able to rise to the challenge, according to their summer forecast.

Against a background of tax rises and a sharp squeeze on welfare spending, reconciling the Chancellor’s fiscal goals with maintaining healthy growth in the economy will require businesses to step up their investment and export plans, according to the firm. They also suggested that if this did not occur then the adjustment will have to come through slower growth and imports.

The club’s forecast predicts that companies will respond positively to the Chancellor’s challenge. Business investment is
expected to accelerate to 7.4% in 2016, from 5.1% this year, and 7.1% in 2017. An improvement in the UK’s overseas investment income and exports of services will also provide some of the room needed for the Chancellor’s budget surplus and help to rebalance the economy away from the consumer spending-led growth prevalent this year. However, investment and exports are unlikely to extend far enough to prevent growth slowing over the next few years. As a result the EY ITEM Club expects GDP growth to reach 2.7% for 2015 and 2016 before it slows to 2.4% in 2017 and 2018.

The Chancellor’s plans for the UK economy are serious gamble which could go either way, according to Peter Spencer, Chief Economic Advisor to the EY ITEM Club.

‘The Chancellor has thrown down the gauntlet to businesses in a risky strategy that will require them to rise to the challenge and respond positively to his Budget announcements. Companies will have to invest in plant and skills to boost productivity and allow them to pay higher wages. However, we expect this strategy to be only partially successful and we are likely to see growth and imports slow down as well.’

Mark Gregory, EY’s Chief Economist, added in his comments that the living wage could potentially cause major problems for businesses.

‘Businesses will have to dust down their export and investment plans and increase spending and borrowing levels. As labour is becoming more expensive, following the Chancellor’s announcement for the introduction of a living wage, investment levels should increase. This could be the time for businesses to consider investing in technology as a way to reduce labour costs.’

Banks to Invest Heavily to Comply with Reforms
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Banks to Invest Heavily to Comply with Reforms

56% of the finical institutions which participated in the Accenture 2015 Global Structural Reform Study, including banks, insurers and capital markets firms, are expecting to invest at least $200 million on projects which will overhaul how they do business, in order to comply with the global structural reform legislation. Nearly a third expect to spend over double that amount, $500 million, over the course of the year.

The new regulations were introduced to re-shape financial services institutions and make them more resilient following the issues they faced during the financial crisis of 2007-2008.

Steve Culp, Senior Global Managing Director for Accenture Finance and Risk Services, emphasised the vast scale of these reformsand the impact they will have on the industry.

‘Over the past five years, many firms have struggled to keep pace with the multitude of regulatory, conduct and compliance related issues. Their responses have been fragmented and they have made significant investments in people, process and tools to remediate.

Looking ahead, the financial services landscape will continue to be re-written, given the cumulative impact of global structural reform, especially for internationally active banks and insurers. Those with a clear and connected global implementation plan in place will be best positioned to get the most from their investments.’

The financial industry as a whole is confident that they are prepared for the reforms, with 60% of the survey’s participants stating that they are ‘well prepared’ and a further 35% claiming to be ‘extremely well prepared’ to become compliant with the changing structural regulations.

Samantha Regan, a Managing Director in Accenture Finance and Risk Services and the lead of the Regulation and Compliance practice, was keen to highlight the importance of taking the reforms seriously but also using attitude to bring about a positive outcome to the situation.

‘Financial institutions cannot afford to adopt a wait-and-see approach in their response to the challenges presented by GSR. They need to tackle structural reform with the same bold, strategic thinking that they are using for other industry challenges. First movers can potentially turn this challenge into a competitive advantage with clients and customers drawn to firms with clear business strategies.’

Queen's Speech Announces Enterprise Bill
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Queen’s Speech Announces Enterprise Bill

“The announcement in the Queen’s Speech today introducing a new Enterprise Bill – giving additional support to SMEs to settle payment disputes – ought to be welcomed by businesses across the UK. To have this Bill included in the speech should give hope to many struggling businesses that the government is serious about the need to protect SMEs and bring an end to the issue of late payments.

The current payment terms that many suppliers in the UK are subjected to mean that goods delivered today wouldn’t need to be paid for until long after summer is over; a practice that isn’t sustainable, but it is a reality that, until now, SMEs have had very little power to change. The implementation of a Small Business Conciliation Service should protect SMEs against larger and more powerful entities, and should reduce the number of SMEs that fold due to intense cashflow problems.

Whilst acknowledgment in the Queen’s speech has symbolic importance, businesses have been waiting for support from Government to tackle this issue for a long time, so will be watching the progression of this Bill with care and limited expectation.

In the meantime, there are options available that cover the gap between work completed and money in the bank. It’s therefore important for firms to thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”

Olgiers: Global Offshore and Legal Advice Relevant to Tax
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Olgiers: Global Offshore and Legal Advice Relevant to Tax

Ogier has launched a cross-jurisdictional Tax team in response to requirements from corporate clients, their advisers and trustees.

Having advised financial institutions, multinational corporates, funds and asset managers on offshore and legal advice relevant to tax for many years, the firm has now drawn together a team of partners with specific tax expertise.

‘Our tax team is global, reflecting the fact that many of our clients operate in more than one jurisdiction,’ said Jersey based partner Chris Byrne. ‘The depth and breadth of our knowledge ensures that we are able to support our clients’ business needs by providing access to lawyers who understand tax issues across our global network of offices.’
Ogier is the only offshore law firm with a Luxembourg capability and Luxembourg partner Caroline Bormans is a recognised tax expert.

The other team members are:
BVI – Simon Schilder
Cayman – David Cooney
Guernsey – Marcus Leese
Hong Kong – Nathan Powell
Jersey – Chris Byrne 

Ogier’s Tax team will primarily work with tax departments at onshore law firms and with clients direct on all aspects of cross-border advisory and transactional tax matters. It will not provide tax structuring advice or offer the type of tax compliance services offered by accountancy firms

.
For further information please contact:
Kate Kirk
E: [email protected] or
T:+44 1534 753842

ECB can Pause for Breath.... but Still a Lot Left to Do
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ECB can Pause for Breath…. but Still a Lot Left to Do

This should give the ECB a chance to catch its breath after a bumpy start to the year. Its quantitative easing programme (QE), launched to address the currency union’s anaemic economic performance, is show¬ing results. Much has happened through the currency channel, with the euro depreciating sharply against major currencies since the policy was announced. Consumers are also starting to feel the benefits: confidence across the Eurozone is up and retail sales are growing at their fastest pace since 2005. This has caused some to think that the ECB may ter-minate QE earlier than the currently suggested timeframe of end 2016.

The last two years suggest that trying to gauge the economic climate a year ahead can be tricky. Cebr remains on the cautious side. The Eurozone job is definitely not done yet, let alone well done. Germany is carrying on a decent path to recovery but the union’s second-largest economy, France, is still far from finding its way there. Much needed labour market reforms have been absent from the picture, and with the presidential election season approaching fast, appetite for pressing on with unpopular measures is bound to decline.

Conditions seem brighter in the South, especially in Iberia. Looking ahead to the rest of the year, the Eurozone’s southern periphery will most certainly enjoy an uptick in the summer as tourist season kicks in. Receipts from tourism should be especially strong this season given the weakness of the euro and geopolitical tensions in regional competitors such as North Africa. But the fundamentals remain weak.

Greece, while closer to a deal now after a new reforms package emerged from the new negotiating team in Athens earlier this week, is still at a very fragile state. Its banking sector is heavily dependent on the ECB’s willingness to continue providing funds through the Emergency Liquidity Assistance mechanism. In 2015 thus far, around €30 billion of deposits have been withdrawn from Greece’s banks. And non-per¬forming loans are at 35%, much higher than 2012 levels of 25%. The banks remain systemically sound: capital adequacy ratios at above 12% are exceptionally high. But any “accident” in the negotiation process would quickly make banks lose deposits. It will then be up to the ECB to decide the country’s fate.

Concerns over Rising  Employment Costs  and Competition
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Concerns over Rising Employment Costs and Competition

Less than half of small business owners (49 %) expect business growth within the next 12 months, according to the latest Small Business Health Index from CAN Capital, Inc., the market share leader in alternative small business finance. This is a decline from the 58% of small business owners who expected growth in the previous index conducted in September 2014. It seems that small businesses expect 2015 to be a year of stability rather than expansion, with 40% of owners saying they expect their businesses to remain about the same over the next 12 months, up from 34% in the fall.

CAN Capital’s Small Business Health Index, powered by SurveyMonkey™ taps into key issues and trends that can help business owners across the country expand and grow their businesses including access to capital, marketing, government regulation, competition and talent recruitment and retention.

“After years of growth, small business owners seem to think things are leveling off,” said Daniel DeMeo, Chief Executive Officer, CAN Capital. “They’re concerned about rising employment costs, competition, regulation and new trends in digital marketing and digital payments. While they recognize the opportunities that exist from investing in their businesses, they also appear to be feeling more cautious than they’ve been in the past.”

Small business owners in the Southwest and the West are the most optimistic, with 62 percent of owners in the Southwest and 60 percent in the West saying the small business environment in their regions is either excellent or good. In contrast, only 48% of small business owners in the Northeast described the environment as excellent or good, making it the only region of the U.S. where fewer than half of respondents had a positive view.

Threats & Opportunities
Rising employment costs from regulations including new minimum wage laws and the Affordable Care Act were cited by 44% of respondents as the biggest threat facing small businesses today. Competition was a close second, cited by 40%.

Many small business owners also recognize the need to do a better job of reaching their customers online, with 60% saying their knowledge of digital/social media marketing was either fair or poor. Only 29% of small businesses said they have optimized their websites for mobile devices and 27% said they don’t have a website at all.

Small businesses are also coping with the shift to digital and mobile payments. The survey found:

Less than half (44 %) of small businesses currently accept payments online. Only 13% accept mobile payments such as Apple Pay. While more than half (55%) are familiar with the transition to EMV (chip & PIN) credit cards, only 19% have taken steps to update their point-of-sale systems to be compatible with EMV. Just 18% say they plan to invest in new payments technology in the next 12 months.

“Technology is bringing revolutionary changes to small businesses,” said James Mendelsohn, Chief Marketing Officer, CAN Capital. “From new payments technology to the analytics and customer insights that are now much more readily available, there are incredible opportunities for small business owners to use these tools to better serve their customers and grow their businesses. At the same time, it can be hard to compete with the technological know-how of larger companies, and there’s danger in being left behind if they don’t invest time and money in increasing their capabilities.”

Capital Access
Only 30% of small business owners surveyed anticipate needing external capital to run their small businesses in the next year, down significantly from 43%last quarter.

For those who do apply, capital appears to be easier to come by. 38% said it is quite or extremely challenging to gain access to working capital, compared with 61% who said the same thing in the previous survey.

This survey marked the first time that bank loans through a traditional process were the number one way small businesses successfully secured funding/working capital, replacing loans from friends and family. Notably, 44% of small business owners said they have not faced any challenges obtaining access to working capital, a large increase from the 27% who said the same thing in the previous survey from September 2014.

DeMeo said, “While small businesses are having an easier time obtaining working capital, nearly half still report challenges, from being unsure of where to turn to lacking adequate collateral. Many of them are also waiting longer than necessary, with more than a third saying it took them more than a week and sometimes several months, to secure funding. CAN Capital is committed to offering fast, efficient access to capital, as well as tools and advice to help small businesses grow.”

Parties Fail to Address Needs of Renewables Industry in Election Campaign
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Parties Fail to Address Needs of Renewables Industry in Election Campaign

Renewable energy companies overwhelmingly believe that the needs of the industry have not been properly addressed during the ongoing election campaign, a survey carried out by the Renewable Energy Association (REA) has revealed.

Of the 136 REA members who responded to the survey, 95% said that they did not ‘feel that the political parties are addressing the needs of the renewable energy during this election campaign’.

The Green Party was viewed as the party that would be ‘best for the renewable energy industry’ (29%) with the Liberal Democrats seen as the next best.

Members were less optimistic about the two parties most likely to form a government after the election. Nearly a fifth (18%) of respondents believed that the industry would be in the best hands under Labour, whereas the Conservatives received the support of 15%.

Members also stated the government policies which would be a priority for their business. Over half (56%) stated that the Feed-in Tariff was the most important policy, with the Renewable Heat Incentive close behind on 52%. Moreover, the 2030 decarbonisation target was high on the list of priorities for a significant number (44%) of respondents.

Commenting on the findings of the survey, Chief Executive of the Renewable Energy Association (REA), Dr Nina Skorupska, said:

“These figures show first-hand the concern of renewable energy companies up and down the country at how the political parties are failing to adequately address the needs of our industry.

“The next government will need to show much more leadership early on and face-up to the challenge of ensuring that the UK meets its ambitious renewables targets, which will allow our industry to play a key role if the regulatory environment enables us to expand, innovate and thrive.

“We very much look forward to working with the next government to address the concerns of the renewable energy, ensuring the UK makes the transition to the low-carbon economy that will bring with it cheaper bills, more jobs and greater energy security.”

Pension Reforms Could Spark Surge in Small Business Start-Ups
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Pension Reforms Could Spark Surge in Small Business Start-Ups

Findings from research carried out on behalf of pension investment specialists, AXA Wealth, which questioned 1,500 UK residents aged over 55, indicate that one in ten (10 per cent) of the UK’s over 55s who are due to retire in the next 18 months would consider drawing down on their pension pots to start a small business or go into consultancy. This ‘later-life entrepreneurs’ trend could see over half a million over 55 year olds shun retirement in favour of starting up their own business venture.

The average value of a pension pot of those asked was found to be £550,000, and of those considering withdrawing money to invest in a new business, almost half (47 per cent) intend to use their 25 per cent tax-free lump sum to fund their start-up.

Top three reasons stated for starting a new business with released pension funds:

– For those planning on starting a new business, realising a lifelong dream to be a business owner was cited as the top motivation by over a third (35 per cent)

– For those planning on starting a new business, monetising a hobby was revealed as the investment incentive for a quarter (25 per cent)

– For those planning on starting a new business, nearly one in five (19 per cent) are driven by the urge to utilise the experience and skills gained throughout their professional career in order to supplement their pension income

The research also reveals how the pension reforms will vary in impact upon the UK’s different regional economies. The South West is expected to most likely experience a mini boom in teashops and restaurants with 22 separate new establishments being considered, while the Midlands could see a resurgence in manufacturing, with 25 new production facilities being considered in light of newly invested start-up capital.

Adrian Lowcock, head of investing at AXA Wealth, comments; “We’re seeing a revolution when it comes to retirement spending. The widespread concern that pensioners will blow their whole pension on a supercar feels exaggerated. Instead we are seeing a diverse approach; with the over 55s taking to the freedom and opportunities created by the pension reforms – in this case fuelling a whole new generation of later-life entrepreneurs.”

(UK) Ending Austerity and Increasing Spending Is Foolish
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(UK) Ending Austerity and Increasing Spending Is Foolish

“Proposals to end austerity and increase departmental spending are wholly misguided given that the UK is still running a deficit of £90 billion a year and the government is spending nearly half of national income. Small steps to reduce the deficit have been made over this Parliament and today’s SNP manifesto would eradicate this progress.

“Clamping down on zero hours contracts, raising the minimum wage and championing the Living Wage would make UK labour markets resemble those in continental Europe where youth unemployment has reached up to 50 per cent in some countries.”

Commenting on the announcement on the NHS, Mark Littlewood said:

“Funding of the NHS is unsustainable in its current format and simply promising more money will do little to improve healthcare in the UK. Politicians need to be far more open minded when it comes to the gains to be had from expanding the role of the market within the provision of healthcare. The success of more market-orientated systems across Europe illustrates that combining different sources of funding does not have to be at odds with patient empowerment and high standards.”

(UK) What Will it Take for Your Party to be in the Next Government?
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(UK) What Will it Take for Your Party to be in the Next Government?

In what is being billed as the most unpredictable general election in UK history, Independent Strategist Olivier Desbarres has made working out what each party will need to gain power, easy.

Olivier, who has a background in Emerging Markets and G10 Research, has created the UK General Election Predictor, which is available to utilise via his website.

It allows the user to enter the number of seats he/she thinks the parties will win and then generate the most likely outcome(s). For first time voters especially, understanding how the election works and the many potential outcomes can be puzzling – but the Predictor cuts through the confusion and presents clear and concise conclusions.

Creator Olivier Desbarres commented: “The UK General Election Predictor is a powerful yet simple to use tool to get a handle on who will likely be in government and set policy for the next five years.

Rather than focussing too closely on opinion polls, which are fluid and to an extent an unreliable way of predicting the election result, I wanted to create a tool that gave users the freedom to input their own party-seats forecasts.”

Olivier relied upon his own knowledge and expert opinion from a vast number of sources to detail the likelihood of parties winning that number of seats and what that combination of seats would entail in terms of likely government composition. These sources include opinion pollsters, analytical models, thinks tanks such as the IPPR, party statements and sources, politically affiliated societies and official sources including the UK Parliament.

European Business Leaders Support EU and Want UK to Stay
LegalRegulation

European Business Leaders Support EU and Want UK to Stay

84% of European business leaders believe their country’s membership of the EU has a positive impact on their business, 83% believe it has a positive impact on their country and 79% believe it has a positive impact on them personally. Furthermore, 67% believe they have a role to play in promoting the EU to their country’s wider population.

The main reasons given in support of the EU were the economic advantages brought by membership, the competitive position a united Europe has against China, Russia and the US, and the importance of integration, stability and unity in the current climate. Costs and bureaucracy were the focus of the minority view.

Adrian Tripp, CEO of The European Business Awards, said: “These strong results show that for the European business community the case for the EU is clear; the benefits far outweigh the costs. From a business perspective, people see the value in the commercial opportunities; from a wider perspective, stability and integration are key.”

He continued: “At the European Business Awards we see these benefits of the EU on a day to day, firm to firm, country to country basis. It creates economic opportunities, breaks down barriers and builds understanding. A united European business community is integral to a safer future for all of us.”

The survey conducted by The European Business Awards, Europe’s largest business competition now in its 9th year, and supported by RSM since its inception, also asked business leaders whether the UK should stay in the EU.
The results show that 86% of European business leaders* think the UK should stay in the EU, with 11% saying the UK should leave. The survey also shows that the majority believe a UK exit would have a negative impact on all concerned.

84% of business leaders believe a UK exit would have a negative impact on the EU itself, 76% think it would have a negative impact on the UK economy, and 67% think it would have a negative impact on their own country’s economy.
Of the respondees who think the UK should stay in the EU, 25% were from the UK.

Jean Stephens, CEO of RSM, the 7th largest network of independent audit, tax and advisory firms, said: “The Eurozone is the biggest trading partner for the United Kingdom and the potential impact of the UK exiting the EU would be highly significant to our clients around the world. This survey clearly shows that European and UK business leaders feel strongly that Europe must maintain its competitive edge in the global marketplace and that the UK’s membership is key to doing so.”

Research Shows Two-Thirds of British People Can't Name the UK Foreign Secretary
LegalRegulation

Research Shows Two-Thirds of British People Can’t Name the UK Foreign Secretary

Online training specialist, Filtered.com has today revealed the results of a study it has conducted into the political awareness and knowledge of people in the UK. The research, which surveyed 700 British citizens across the UK at the end of March 2015, revealed that despite almost 60% of people feeling well informed about casting their vote:

– 1 in 3 lack basic political knowledge such as how many votes a candidate needs to be elected as an MP

– Over 50% don’t know how many constituencies there are in the UK

– Nearly 2 in 3 (63%) don’t know who the current Foreign Secretary is

– Almost a quarter don’t know who the current Shadow Chancellor of the Exchequer is

– 5% admit to not knowing which political parties form the current coalition government

The survey also revealed some interesting statistics about the rise in popularity of smaller parties. In contrast to the 2010 election where 91% of people voted for one of the big three parties (Conservatives, Labour or the Liberal Democrats), this year’s election shows a different picture. Mirroring similar data from the Electoral Calculus, these findings indicate many voters are still undecided, but of those who have already decided, the number of people set to vote for the traditional 3 parties has fallen to 71%. Looking at those who will vote for the first time this May, the figure is even lower with only 66% predicted to vote for the traditional big three – with 13% saying they will vote UKIP, 11% Green and 9% SNP.

Perhaps unsurprisingly given people’s dissatisfaction with the big three parties and their lack of political engagement in general, just 10% of people feel ‘very happy’ about the work of their local MP. There is a massive range in the importance of political issues with the economy (26%), cost of living (22.5%) and the NHS (15%) ranking top three and foreign affairs (1%), the environment (2%) and crime (2%) at the bottom.

Looking ahead to May, this latest survey shows there is a clear opportunity for political parties to engage more with voters to help them improve their political knowledge. 83.6% say they will vote in May but 36% are still undecided on their vote. In what might be seen as a clear indication that political parties should engage more with online media, 2 in 3 believe we should be able to vote online.

As the election approaches, online learning specialist Filtered.com has launched a free online course to help improve political knowledge ahead of 7th May 2015. The course covers all the crucial areas of politics such as the electoral process, the 2010 election, the parties and their leaders, and key political issues from the economy to education, immigration and unemployment. The engine behind the course uses the company’s adaptive algorithm which removes any content the learner doesn’t need. The result is an individually tailored syllabus which accelerates learning and saves time.

Commenting on the findings of the survey, Marc Zao-Sanders, Managing Director and Co-Founder of Filtered.com explains: “With only weeks now to go until May 7th, it’s concerning that vast swathes of the British electorate have such large gaps in their political knowledge. There are many reasons for low engagement with politics and one of the most important but least discussed of these is education.”

“Learning about the political issues that most concern an individual needn’t be complicated or onerous.” Zao-Sanders continues. “As our survey shows, not all political issues are important to everyone. So our message to voters is simple: acquaint yourselves at least with the issues important to you, and especially now the manifestos are published.”

“It would also help if the political parties did more to describe and explain their policies more clearly and with less bias. Schools and universities should support the process by equipping young people with a grounding in politics, the ability to analyse policy critically and imbue more of a sense of citizenship. Providing relevant resources for teachers to teach or at least signpost is also essential. To see a dramatic change in voter knowledge and engagement, investment needs to be made in the core curriculum, resources and broadcasting required to truly engage people in political discussions as informed citizens.”

Cyber Security Insurance: New Steps to Make UK World Centre
Global ComplianceRegulation

Cyber Security Insurance: New Steps to Make UK World Centre

The report, ‘UK cyber security: the role of insurance in managing and mitigating the risk’, has been produced in collaboration with the UK’s insurance market and a number of top UK companies. It aims to make the UK a world centre for cyber security insurance. In particular, it highlights the exposure of firms to cyber attacks among their suppliers with a key agreement that participating insurers will include the government’s Cyber Essentials certification as part of their risk assessment for small and medium businesses.

Read the report: UK cyber security: the role of insurance in managing and mitigating the risk.

Cyber threats are estimated to cost the UK economy billions of pounds each year with the cost of cyber attacks nearly doubling between 2013 and 2014. The report found that, while larger firms have taken some action to make themselves more cyber-secure, they face an escalating threat as they become more reliant on online distribution channels and as attackers grow more sophisticated. It issues a call to arms for insurers and insurance brokers to simplify and raise awareness of their cyber insurance offering and ensure that firms understand the extent of their coverage against cyber attack.

Companies are recommended to stop viewing cyber largely as an IT issue and focus on it as a key commercial risk affecting all parts of its operations. The product of collaboration between government and the sector following a summit held last November, the report recommends that firms examine the different forms of cyber attacks they face, to stress-test themselves against them and to put in place business-wide recovery plans.

The report also notes a significant gap in awareness around the use of insurance, with around half of firms interviewed being unaware that insurance was available for cyber risk. Other surveys suggest that despite the growing concern among UK companies about the threat of cyber attacks, less than 10% of UK companies have cyber insurance protection even though 52% of CEOs believe that their companies have some form of coverage in place.

On 23 March, Francis Maude, Minister for the Cabinet Office with responsibility for the UK Cyber Security Strategy, is hosting an event at the Cabinet Office for chairmen and senior executives of insurers and top UK companies on the role of insurance in managing growing cyber threats.

Francis Maude, Minister for the Cabinet Office and Paymaster General said:

“It is part of this government’s long-term economic plan to make the UK one of the safest places in the world to do business online. The UK’s insurance market is world renowned and we want it to be the same in relation to cyber risks. The market has extensive knowledge and experience of more established risks to help businesses manage and mitigate relatively new cyber risks.”

“Insurance is not a substitute for good cyber security but is an important addition to a company’s overall risk management. Insurers can help guide and incentivise significant improvements in cyber security practice across industry by asking the right questions of their customers on how they handle cyber threats.”

A Positive Budget for the Energy Sector
AccountancyRegulation

A Positive Budget for the Energy Sector

What a difference four years has made. The windfall tax introduced at 2011’s budget was widely criticised by industry and commentators who suggested it would stifle investment and add cost to an already high cost basin. After four years the Chancellor has reversed the windfall tax (after a slight reduction at the Autumn Statement), reduced the petroleum revenue tax on older fields, introduced an investment allowance and put money aside for seismic surveys to boost exploration. These measures are welcome and come at a time when government support is essential if we are to fully maximise the potential of the UK continental shelf (UKCS).

While the fall the oil price helped push the issue of UKCS taxation and the future of the basin up the political agenda it is not the reason why action on the fiscal regime last week was essential. The 2011 windfall tax was justified because oil prices were around £120 per barrel. However the assessment that these high oil prices meant the industry could bear a higher tax rate – a marginal rate of more than 80% in some fields – was incorrect.

The UKCS is a mature basin and operators are facing ever higher costs as infrastructure ages and fields become more difficult to develop. Add to this the global nature of the oil and gas sector and the finite capital available to the sector to invest and it’s easy to see how the windfall tax could damage confidence and drive much needed investment abroad. Even with a high oil price the CBI was critical of the UKCS tax regime. In our paper Fuelling Growth in 2013 we said “in seeking to understand how best to enhance recovery in the North Sea the CBI believes taxation is crucial and identifying further opportunities to improve the competitiveness of the tax framework is essential.” As a global commodity the price of oil is consistent across the globe but the costs associated with exploration, development and production are specific to each basin. Government must do all it can to help reduce these costs if we are to attract the private sector investment needed.

We need a stable and competitive fiscal regime that prioritises consistency and whose ultimate goal must be the economic maximisation of resources. The price of oil is volatile and that is a lesson global commodity markets have reminded us of in recent months. Future governments should always think about the UKCS both in terms of the costs associated with operating there and its competitiveness with other regions. Budget 2015 is a good start but the next government, and all future governments, will need to take a long-term view of the UKCS and think hard about how to provide further support to avoid causing unnecessary damage.

Elsewhere in the budget

The Budget also outlined the government’s intention to bring forward the small-scale Feed-In Tariff component of the compensation package for energy-intensive industries to the earliest point at which State Aid approval is received in 2015-16. This fell short of the CBI’s calls to bring forward the full compensation package (covering FITs and the Renewables Obligation), but will provide some relief to these industries. We will continue to press the importance of competitiveness with a new government, and look to ensure a more strategic approach to supporting these industries is taken.

The Chancellor announced that the government has decided to enter in to the first phase of negotiations on a Contract for Difference for Swansea Bay Tidal Lagoon.

Government Creates New Business to Save Up to £105 Million in IT Costs
Corporate GovernanceRegulation

Government Creates New Business to Save Up to £105 Million in IT Costs

In the past, individual departments paid different amounts to either build their own centres or outsource the service as part of their own locked-in IT contracts. This deal will, for the first time, provide a cross-government approach to buying data hosting services and will save up to £105 million for the taxpayer by utilising the government’s combined buying power. It will also allow government to tap into the latest advances in industry and improve energy efficiency – using data centres that are equipped with the latest technological advancements such as real time dynamic cooling and unique monitoring systems, all within secure compounds.

The new service will be available to the whole of government and the wider public sector. The 3 initial customers are the Department for Work and Pensions, the Home Office and the Highways Agency (operations), and each will be able to use the service on a ‘pay for what you use’ basis which will avoid the risk of being locked into long-term, inflexible contracts.

Minister for the Cabinet Office Francis Maude said:

“As part of this government’s long term economic plan, we’re determined to utilise our unique buying power and become a more intelligent customer. It doesn’t make sense for departments to host their servers in different ways and at different costs, and in the past Whitehall wasn’t even sure how many of these centres there were.”

“With this new joint venture, we will save millions and be able to access the necessary commercial and technical skills in the market to create a thriving new business that will deliver better services and allow government to share in its future success.”

Steve Hall, CEO at Crown Hosting Data Centres said:

“The joint venture company will simplify the data centre services selection process in government and further drive the unbundling of large legacy contracts.”

“It provides publicly-funded, mandated and regulated organisations with a pre-approved contract that leverages the buying power of the whole of government for the fastest, simplest access to secure data centre services.”

Minimum Wage Workers Will Be Hit by Chancellor's Cuts
LegalRegulation

Minimum Wage Workers Will Be Hit by Chancellor’s Cuts, Says TUC


“For the low paid to get a fair share of the recovery, this was a year in which we could have had a much bolder increase in the minimum wage.

“With one in five workers getting less than a living wage, this is nowhere near enough to end in-work poverty. Britain’s minimum wage workers should be very fearful of the billions of pounds of cuts to government help for the low paid that the Chancellor is planning if re-elected.

“Apprentices will welcome the increase to their minimum wage, which will reduce the shortfall in their minimum pay relative to 16 and 17 year-old employees. But there really shouldn’t be a gap at all. The TUC will continue to call on the Low Pay Commission to recommend a future increase that will match the apprentice rate to that for 16 and 17 year-olds.”

Simplification
Corporate GovernanceRegulation

Simplification, Not Regulation Is the Solution for Tax Avoidance, says IEA

“Successive governments have developed loopholes specifically designed to reduce tax bills, so it’s hardly surprising to see companies use the very schemes politicians have created. Politicians need to stop moaning and reform the system they set up.

“The UK corporation tax system is monstrously complex, with profits taxed not in the hands of shareholders, but according to very complex rules in particular jurisdictions. It’s inevitable this system is gamed by multinational corporations; for as long as it’s legal it’s unsurprising that companies don’t pay more tax than is due.

“Tax avoidance occurs because our system is overly complex and because rates are too high. If the government wants to reduce tax avoidance it should reduce and simplify taxes.”

Politicians Shouldn't Focus on Regulation to Make UK Labour Market Work Better
Corporate GovernanceRegulation

Politicians Shouldn’t Focus on Regulation to Make UK Labour Market Work Better, Says CIPD

With less than 100 days to go until the General Election, the CIPD, the professional body for HR and people development, is warning that regulatory changes shouldn’t form the cornerstone of labour market election promises. According to new research, the UK’s flexible labour market is generally working well in comparison with our international peers, suggesting there isn’t a strong case for the next Government to either de-regulate further or to strengthen employment rights.

The report, Employment Regulation and the Labour Market, indicates that the UK is highly unlikely to get much benefit from more employment regulation or from significant deregulation of the labour market, as it already performs well in comparison to many of its OECD counterparts on a number of measures. The link between the stringency of regulation and labour market outcomes such as productivity or job quality is in many areas either weak or complex and thus difficult to predict. Instead, the CIPD is urging policymakers to focus efforts on improving productivity through a much stronger focus on improving workplace practices while increasing awareness of existing rights and enforcing them more effectively.

The report,commissioned by the CIPD, and compiled by The Work Foundation, considered the impact of employment regulation on broad labour market measures. The Nordic countries (Denmark, Sweden, Finland and Norway) and the Netherlands score consistently well and the UK sits comfortably mid-table or above on most indicators. However, there are some economies in Southern and Eastern Europe, such as Spain, Italy and Greece, where the data does suggest that labour market outcomes could be improved by greater liberalisation.

The report indicates that despite the UK rating below average among OECD countries on measures of employment protection, the quality of employment in the UK compares more favourably with other countries than is often thought to be the case:

-In comparison to other OECD countries, the UK has a high share of permanent employment – 79% of UK workers in 2013 were on a permanent contract, compared to 77% in Germany and 65% in Italy

-Compared with the European average, the UK has a larger proportion of ‘good’ jobs and a smaller proportion of ‘low quality’ jobs. Overall 65% of jobs in the UK are rated as good jobs*, compared to just 54% in Italy, 50% in France and 49% in Germany

-The average weekly hours worked by employees in the UK in 2013 was 36, which was in line with the OECD average. However the UK does have a comparatively high proportion of long hours jobs (those involving 50 hours or more a week) with 12% falling into this category

-In all, 84% of UK workers say they are satisfied with their working hours (EU 28 average 80%) and 77% report they are satisfied with their work-life balance (EU 28 average 74%). UK workers don’t seem much more fearful of losing their jobs than workers in countries with stricter employment protections (12-14% across UK, Germany, France and Italy) and over 40% said they were either optimistic or very optimistic they could find another job at a similar wage.

Ben Willmott, head of public policy at the CIPD said: “The public debate can often seem polarised between calls for greater regulation and employee protections from trade unions and, at the other end of the scale, employer organisations that want to reduce regulatory burdens on business. Our report shows that more or less regulation is not the issue. Overall, UK workers are more satisfied with their jobs, working hours and ability to progress than their counterparts in France, Germany and Italy. The solution to some of the challenges we face in the UK such as poor productivity and the high proportion of low paid jobs in the economy doesn’t lie in quick legislative fixes. We don’t need yet another employment bill or another zig-zag between more and less regulation. Instead, what we need is a fundamental review of the UK’s skills policy to understand how we can generate more high-skilled jobs and better progression routes for those in low-skilled and low-paid jobs. We also need a much greater focus on improving workplace practices in the areas of leadership, management and HR capability to increase demand among employers to invest in workforce development.”

While the UK performs well overall, it performs comparatively poorly in three important areas – productivity, low pay and the integration of young people into the labour market.

-The UK performs poorly on productivity compared to many of its international peers, however, there seems little association between labour market regulation and productivity. Between 1985 and 2013, relative productivity compared with the US fell in relatively lightly regulated UK, New Zealand and Canada. Among the more highly regulated economies, relative productivity fell in Italy and increased slightly in France and Germany

-While the UK doesn’t have the highest share of low-paid jobs in the OECD, it does sit uncomfortably in the top quarter. The UK, US and Canada all have 20-25% of employment in low-paid work compared with 18% in Germany and 10% in Italy

-The UK sits in the lower half among OECD countries in terms of its youth unemployment rate and in the bottom quartile among EU 28 countries on the youth unemployment ratio.

Willmott concludes: “It’s clear that the UK struggles on productivity, low-pay and unemployment among young people, but the wider picture is much more positive. The stage seems set for a good performance but something is missing in the delivery. We have good investment in ICT, above-average shares of knowledge-intensive industries and better quality employment than many European economies, including some with much higher productivity levels. Rather than meddling with regulation, a renewed focus on enforcing and improving awareness of existing rights among employers and workers is needed to help curb any abuses of employment rights where they do occur, as well as a much more explicit policy focus on the workplace to improve practice and productivity.”

The CIPD has suggested the creation of a Workplace Commission to help support a more strategic approach across government to developing policy on the workplace with the objective of improving productivity and enhancing job quality where poor practice exists.

UK Regulators Network (UKRN) Publishes Report on Affordability
Corporate GovernanceRegulation

UK Regulators Network (UKRN) Publishes Report on Affordability

The report focuses on the energy, communications and water sectors. On average, energy and communications household spend is at 5%1 and 4%2of total household spend, respectively. In water, 1.4%3 of household income is going towards paying for this service.

The report considers:

-How affordability issues are approached in different regulated sectors.

-What data gathered from regulators and other sources show about the nature of affordability issues in these sectors.

-The drivers of affordability issues and the role of regulators in addressing these issues.

Work will now begin on the second phase report which will consider how to address vulnerability across regulators. It will also look at what could impact bills in the future, particularly as a result of infrastructure investment. UKRN members will work closer than ever to tackle some of the issues identified in the report and align their work to support vulnerable consumers.

Elevate Integrates Seal Contract Discovery and Analytics to Expand Legal Management Services Portfolio
LegalRegulation

Elevate Integrates Seal Contract Discovery and Analytics to Expand Legal Management Services Portfolio

Seal Software announced a partnership with Elevate Services, Inc., a next generation legal service provider. Leveraging Seal’s Contract Discovery and Analytics solution as part of its legal service offerings enables Elevate to deliver a more robust and efficient contract review and management process, in turn delivering more streamlined results for its clients.

Elevate provides a wide range of services to its clients, including consulting, legal support services and technology. Within its extensive document review offering, the company uses a variety of review methods to serve its clients as efficiently as possible. To better manage the varying nature of contract review projects, Elevate partnered with Seal Software to automate the discovery, extraction, and analysis of relevant unstructured contracts, resulting in a quicker, comprehensive, and more accurate review process, and delivering results that could not be achieved using traditional manual methods.

“Elevate has many clients with a wide range of use cases including contract management, migration, contract standardization and clause library creation,” said Kevin Colangelo, vice president, Client Relations and Strategic Communications at Elevate. “Seal Software provides a comprehensive system for contract discovery and analytics that enables us to deliver a more robust and cost-effective service to our clients.”

Seal Co-Founder and CEO Ulf Zetterberg said, “Elevate is a key player in the contract services market, and this strategic partnership will allow the company’s contract review team to manage a larger scale of contract document review more efficiently. By utilizing Seal’s Contract Discovery and Analytics platform, the company will be able to offer better visibility into its clients’ corporate transactions.”

To learn more about Seal Software solutions visit the website, download the latest e-book, “The Business Case for Seal Software,” or read the IDC Technology Spotlight “Contract Discovery and Analytics: Driving Value from Within Your Contracts,” which examines the intricate issue of managing the hidden data within business contracts in a time of ever-changing government regulations and compliance, disparate systems, and an exploding number of contracts across all aspects of business.

Elevate is a global legal service provider helping law firms and corporate legal departments operate more effectively. Elevate provides practical ways for clients to improve efficiency, quality and outcomes through consulting, managed services, talent and technology. For more information, visit elevateservices.com. Follow Elevate on Twitter @ElevateServices and on LinkedIn at www.linkedin.com/company/elevate-services.

Seal Software’s Contract Discovery and Analytics platform helps companies maximize revenue opportunities and reduce expenses and costs associated with contracts, and contract management systems and processes.
Seal Contract Discovery locates contractual documents within minutes wherever they reside within an organization and is rapidly deployable; extracting key contractual terms and clauses, rendering them for easy review, and populating corporate repositories, including Customer Relationship Management (CRM), Contract Lifecycle Management (CLM), and Enterprise Resource Planning (ERP).

Seal Contract Analytics empowers clients to analyze contracts by discovering specific language and clause combinations that are most relevant to your business.

New Rules Credit Brokers Rules Will Protect Consumers
Global ComplianceRegulation

New Rules Credit Brokers Rules Will Protect Consumers, Says FCA

New Financial Conduct Authority (FCA) rules will ban credit brokers from charging fees to customers, and from requesting customers’ payment details for that purpose, unless they comply with new requirements ensuring that customers are given clear information about who they are dealing with, what fee will be payable, and when and how the fee will be payable. The rules come into force on 2 January 2015.
Martin Wheatley, chief executive of the FCA, said: “The fact that we have had to take these measures does not paint this market in a particularly good light. I hope that other firms will take note that where we see evidence of customers being treated in a blatantly unfair way, we will move quickly to protect consumers from further harm.”
The new rules have been made without prior consultation because the FCA considers that the delay arising from the time it would take to consult would be prejudicial to the interests of consumers. The FCA also believes that enforcement action alone is not sufficient to protect consumers from the poor practices identified in the market.

The FCA’s concerns relate to:

• a lack of transparency, resulting in consumers often not realising they are dealing with a broker rather than a lender;
• fees being taken without informed consent, for example where terms and conditions are hidden or misleading;
• consumers being misled as to the purpose of giving their payment details;
• firms passing on consumers’ details, including their payment details, without informed consent, to other firms who also take a fee; and
• consumers facing difficulty in identifying the firm that has taken a fee, and in obtaining a refund from the firm or a response to their complaint.

Today’s announcement is part of a package of measures which will also require credit brokers to:

• include their legal name, not just their trading name, in all advertising and other communications with customers;
• state prominently in all advertising that they are a credit broker and not a lender; and
• report quarterly to the FCA listing their website domain names, if they charge fees to customers.
• Consumers will also have a 14-day right of cancellation where credit broking contracts are entered into as distance contracts, for example online.

Over 40 per cent of consumer credit complaints received by the FCA relate to credit brokers, 80 per cent of which relate to firms who charge upfront fees. The FCA has also received relevant intelligence from consumer groups and others who are seeing increasing complaints from people who have had money taken from their accounts unexpectedly and often by more than one broker.

The FCA is investigating a number of credit broking firms; seven firms have been stopped from taking on new business and, to date, three further cases have been referred for enforcement action.

The key changes for credit brokers are as follows:

Information notices and customer confirmation: a ban on credit brokers charging fees, or requesting payment details for that purpose, unless:

• the broker has provided an explicit notice to the customer (an ‘information notice’), setting out:

     o the firm’s legal name;
     o a statement that the firm is, or is acting as, a credit broker (not a lender);
     o a statement that a fee will or may be payable;
     o the amount or likely amount of the fee;
     o when and how the fee will be payable; and

• the customer has acknowledged receipt of the notice, and awareness of its contents (the ‘customer confirmation’).
Each broker will have to send its own information notice, and receive its own customer confirmation, before being able to charge a fee. The information notice and customer confirmation must be on paper, by email, or in another durable medium, and the broker will have to keep records of them.

Transparency: credit brokers will need:

• to include their legal name (as it appears in the Financial Services Register) in all financial promotions and communications with customers;.
• to state prominently in all financial promotions that the firm is, or is acting as, a credit broker and not a lender; and
• in the case of fee-charging brokers, to notify the FCA quarterly of their domain names.

Right to cancel:

1. Clarification that consumers have a 14-day right of cancellation and right to a refund where credit broking contracts are entered into as distance contracts (e.g. online).
2. Policy statement 14/18: Credit broking and fees.
3. On 1 April 2014, the FCA became responsible for approximately 50,000 consumer credit firms, including credit card providers.
4. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
5. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.

Chase De Vere Fined for Life Settlement Product Sales Failures
LegalRegulation

Chase De Vere Fined for Life Settlement Product Sales Failures

The Financial Conduct Authority has fined independent financial advisers Chase de Vere £560,000 for failures surrounding sale of Keydata Products.

Between August 2005 and June 2009 Chase de Vere’s advisers sold Keydata life settlement products to 2,806 customers who invested a total of £49.3 million. The Financial Services Compensation Scheme has paid compensation to eligible customers up to the scheme limit, which was £48,000 per customer at the time. 139 customers invested a total of £4.4 million over the scheme limit and the majority of these customers may not recover the full losses arising from their investment.

Chase de Vere did not research the Keydata products well enough to understand the risks they posed to customers and did not ensure that its advisers understood those risks. As a result, the advisers did not explain the risks of investing in Keydata products properly to customers, and the firm made this worse by ceasing to provide standardised wording to advisers to help them describe the risks to customers.

As a consequence of this, Chase de Vere failed to disclose to its customers certain distinctive features and risks of the Keydata products in a way which was clear, fair and not misleading.

Tracey McDermott, FCA director of enforcement and financial crime said:

‘Firms need to ensure that they fully understand and explain to customers the risks of investing in the products they are offering. That includes researching the products thoroughly before they decide to offer them and ensuring advisers have the tools they need to explain the risks to customers. Chase de Vere failed to do this, leaving its customers without a full understanding of the risks they were taking by investing their money in Keydata products.’

The FCA considers that had Chase de Vere researched the Keydata products properly from the outset, it would have realised that they had distinctive features and risks requiring additional controls and restrictions on sales, particularly to customers with a cautious attitude to risk.

The firm has agreed to review its sales to any customers who have not already made a claim to Chase de Vere or the Financial Services Compensation Scheme about Keydata, and to provide redress where appropriate.

Chase de Vere agreed to settle at an early stage of the investigation and therefore qualified for a 30% Stage 1 discount. Without the discount the financial penalty would have been £800,000.

ASEAN Development
AccountancyRegulation

ASEAN Development

The establishment of the ASEAN Economic Community (AEC) 2015 is a “very ambitious project”, one which will need thousands of skilled finance professionals who can work across borders, agreed a panel of experts at an ACCA (the Association of Chartered Certified Accountants) session at the recent Malaysian Institute of Accountants conference held in Kuala Lumpur.

When asked “what is the one thing accountants need to do to ensure they are ready for the AEC?” PwC’s Mr Soo Hoo Khoon Yean said: “The obvious one is to upscale skills, but more importantly to have a change in mindset. Instead of looking at it as a glass half empty, we should be looking at the AEC as a glass half full. Today, it’s about our readiness to prepare to be mobile because your company or clients will move towards regionalisation. And we must be able to rise up to the challenge to contribute in tandem with their progress.”

Steve Heathcote, ACCA’s executive director of markets, said: “The ten member countries of the AEC have a total population of 626 million and a combined GDP of USD 2.4 trillion. The GDP for the region is expected to double by 2020, according to the Boston Consulting Group. As such, this large-scale economic plan depends on capacity building. ACCA, with its partners across this wide region, all work to ensure the talent pipeline for accountants remains strong and well supplied.

“ACCA’s presence across the ASEAN region, with offices in Cambodia, Indonesia, Malaysia, Myanmar, Singapore and Vietnam, and with students and members in all other markets – Brunei, Laos, Philippines and Thailand – means that we can ensure this economic programme has the finance professionals it needs to make it a success.”

Heathcote also emphasised that partnerships and joint working are important, adding: “ACCA has signed Memoranda of Understanding (MoUs) and has a close working relationship with national accounting bodies and regulators across ASEAN. This enables us not just to meet the intense demand for qualified finance professionals in this region, but also to anticipate it and deliver it with our partners. ACCA regularly participates in the ASEAN Federation of Accountants (AFA) council meetings to strategise how to build capacity and strengthen the finance profession across ASEAN to meet the demands of the AEC, and to achieve the wider economic ambitions and social development goals of the region.”

SEC Investigates Pimco ETFs
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SEC Investigates Pimco ETFs

Hit by internal squabbles and under performance from its funds in recent months, it is the latest trouble to hit the world’s largest manager of bonds.

Saying that it was fully co-operating with the SEC, Pimco said:

“we take our regulatory obligations and responsibilities to our clients very seriously.”

The firm went on to state that its pricing polices were appropriate and aligned with industry standards.

The statement was released by the firm after the Wall Street Journal reported the investigation by the US federal agency.

It is understood that investigators from the commission have interviewed a number of executives at Pimco, including its chief executive and founder Bill Gross. It is also understood that the investigation, which Pimco says is a ‘non-public’ affair, has been going on for a number of months.

The investigation by the commission is examining whether Pimco gave clients investing in its Total Return ETF an inaccurate picture of the performance of the fund.

It is also looking at whether the firm is guilty of buying products at a lower price only to make its profit calculations based on a lower valuation.

Indian Supreme Court Cancels Coal Mining Licences
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Indian Supreme Court Cancels Coal Mining Licences

The action has been taken following a corruption scandal surrounding how licences were handed out.

With tens of billions of dollars thought to have been lost as a result of the scandal over the illegal awarding of licences, the court has scrapped 214 of the 218 permits that were issued.

The only four licences that have been upheld are those associated with large state-backed projects.

Shares in major coal firms such as Hindalco and Jindal Steel have slumped on the court’s announcement.

The issue was first brought to attention by federal auditors in India in 2012. According to the team investigating the matter, India had lost out on around $33bn (£20bn) due to the cheap price the coalfields were sold for.

After earlier saying that the transactions had been illegal, the Attorney General of India, Mukul Rohtagi advised reporters of the cancellations.

Only forty-six of the fields have seen any work take place however, with these being given six months to wind down all operational activities.

The remaining 168 fields have not seen any work take place as yet. These have all been told to shut down immediately.

The court said that after a six month abatement from the decision being made a new bidding process can commence for all coalfield permits.

Rockefeller to Divest From Fossil Fuels
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Rockefeller to Divest From Fossil Fuels

The fossil fuel divestment is a change in direction for Rockefeller – Photo sourced from Shutterstock.

According to reports the Rockefeller Brothers Fund (RBF) will play an integral role in the forming of a coalition to divest over $50bn (£31bn) of assets in fossil fuels. With the Rockefeller fortune largely made from oil, it is a significant statement – made ahead of the UN summit on climate change opening today, Tuesday 23 September.

The fund was formed in 1940 by the sons of John D Rockefeller. A philanthropic organisation, it had investment assets amounting to around $860m at the end of July this year.

Made up of a number renowned philanthropists, the coalition the fund will be a key part of is understood to be formed of over 830 individual institutional investors.

The director of RBF, Stephen Heintz, said in a statement:

“We are quite convinced that if he [John D Rockefeller] were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy,”

The climate change summit at the UN headquarters in New York opened earlier this morning with US President Barack Obama, British PM David Cameron and more than 120 heads of state and senior government officials in attendance.

The summit is being hosted by Secretary-General of the United Nations Ban Ki-moon who is hoping the world’s leaders can make significant inroads to agree a universal climate agreement.

Ban Ki-moon hopes the agreement will be signed by all nations by the end of next year.

White House Launches Tax Inversion Crackdown
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White House Launches Tax Inversion Crackdown

The White House wants to limit US tax inversionPhoto sourced from Shutterstock

The action, being taken largely in response to US-based firms looking to redomicile to countries with lower corporate tax rates, is targetting those seeking mergers and acquisitions with overseas firms.

However, the tax avoidance tax practice has been a long-held target of President Barack Obama and his administration. He has subsequently charged a new department within the US Treasury to make tax inversion less appealing to corporates.

Removal of hopscotch loans

The plans being put in place will make it more difficult for profits made in other countries to be accessed by US firms inverting their tax base.

The removal of ‘hopscotch loans’, lending facilities set up between foreign business units and the US business, will be the main route of approach for this.

Another step to limit tax inversion will see the new treasury department introduce further restrictions for US owners of inverted firms. Once the plans are brought into place, newly inverted firm owners will only be able to own up to 79% of the company.

Not adding up financially

As a result, the department says, there will be some inversion deals that simply do not add up financially.

Applauding the actions being taken by the treasury and the treasury secretary Jack Lew, President Obama said in a statement.

“We’ve recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I’m glad that [the treasury secretary] is exploring additional actions to help reverse this trend,”

A recent high profile inversion deal saw US fast food chain Burger King acquire Canadian coffee and doughnut firm, Tim Hortons. The firm is now able to benefit from Canada’s corporate tax rate of 26.5%, nearly a full 10% under the US rate of 35%.

Tesco Launches Inquiry and Suspends Execs Over Profit Exaggeration
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Tesco Launches Inquiry and Suspends Execs Over Profit Exaggeration

Tesco’s overstatement was more than a little – Picture sourced from Shutterstock

The firm, which is understood to have suspended its UK managing director Chris Bush as one of the four, overstated its profit guidance by £250 million, a quarter of its announced profits to date.

Chris Bush will be replaced throughout the duration of the investigation by Robin Terrell, the multi-channel director for Tesco.

Disappointment would be an understatement

Launching the investigation being led by Deloitte, the CEO of the firm, Dave Lewis said that to say he was disappointed would be an understatement. Mr Lewis, who only took over at the top of the firm at the start of September said:

“It doesn’t take away from what I’m able to build at Tesco”.

Mr Lewis also went on to say that the suspensions were not as part of any disciplinary action being taken by the firm or should be perceived as an admission of guilt in regards to the individuals involved.

Uncertain for investors

With shares in Tesco falling by over 8% in morning trading on the London Stock Exchange, market analyst Robert Gregory told the BBC Breakfast programme:

“Investors are really uncertain about Tesco at the moment and its future direction.”

Clive Black, an analyst at Shore Capital said:

“Such an announcement is not the stuff of a well operated FTSE-100 organisation.”

At the end of August, the retailer said its expected trading profit for the first half of 2014 was around £1.1bn. In its latest statement to the stock market however, Tesco said this overstatement was largely as a result of an:

“accelerated recognition of commercial income and delayed accrual of costs”.

It also apportioned some of the blame to accounting issues with its suppliers.

Alerted to the error by ‘an informed employee’, Tesco said that the Financial Conduct Authority, the financial regulator for the UK, had been informed.

GSK Hit With Fine for Bribery in China
LegalRegulation

GSK Hit With Fine for Bribery in China

GSK Building, Brentford – Courtesy of Flickr

One of the biggest drug producers in the world, GSK has come under a lot of scrutiny from the Asian super power. This has culminated in court action with the UK-based pharmaceuticals company hit with the fine after allegations the firm bribed medical staff and institutions to promote its products.

GSK’s firmer head of operations in the country, Mark Reilly, has also been handed a suspended prison-sentence of three-years and will be deported. Further executives at the firm have also received suspended jail terms.

Saying that it had published an apology to the Chinese authorities and its people, the boss of GSK, Sir Andrew Witty, said in a statement:

“Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK,

“We have and will continue to learn from this. GSK has been in China for close to a hundred years and we remain fully committed to the country and its people,”

He went on to add that the firm will continue to invest in China, saying:

“We will also continue … to support the government’s health care reform agenda and long-term plans for economic growth.”

Analysts of the Chinese marketplace said that GSK will now be able to draw a line under the episode but should expect a dip in its operations in the country for some time.

FTSE Business Leaders Targeted for Pay Reforms
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FTSE Business Leaders Targeted for Pay Reforms

Courtesy of Shutterstock

The council, which administers financial reporting rules in the UK, has said that the salaries of top staff at firms in the country should be geared towards the long term – to better support future growth and prosperity of their companies and staff.

Updated Governance Code

In practice that would mean longer periods of deferral before they received their full remuneration. The FRC also see the proposals as instigating a shift from cash bonuses to shares and stocks, further contributing to a long-term vision.

The new rules were issued on Wednesday by the FRC under its UK Corporate Governance Code. The updated code said:

“Boards of listed companies will need to ensure that executive remuneration is aligned to the long-term success of the company and demonstrate this more clearly to shareholders,

“Executive directors’ remuneration should be designed to promote the long-term success of the company. Performance-related elements should be transparent, stretching and rigorously applied,”

The code is enforced through a ‘comply or explain’ process, whereby companies not complying with the rules have to provide supporting evidence of how they ensure good governance instead.

The updated rules, which has also asked firms to introduce processes allowing for pay to be recovered if deemed necessary, apply to all 916 ‘premium-listed’ UK companies.

OECD Demands New Tax Rules for Biggest Firms
Global ComplianceRegulation

OECD Demands New Tax Rules for Biggest Firms

Courtesy of Shutterstock

The plans have been announced to target corporate tax avoidance on the world stage, which sees many of the world’s multinational companies reducing their tax bills by moving profits from one country to another.

Recent accusations have seen the likes of Amazon, Google and Starbucks accused of employing such practices, though all firms are resolute in saying they operate within the law.

Announcing the proposals in Paris yesterday the head of tax at OECD, Pascal Saint-Amans, said that they would:

“change the rules of the game”

M. Saint-Amans went on to explain that it the plans would ensure companies pay taxes in the country in which they have been generated. He went on to say that all of the 44 nations which contribute 90% to the world’s economy are in favour of the plans.

Under present rules, firms are able to exploit rules in place to prevent double taxation and benefit from double deductions against their tax instead.

Many also use internal billing processes to see that profits are registered in countries offering lower corporate tax rates.

The plans would see such practices prevented, obligating firms to declare staffing levels, revenues and profits in each jurisdiction they operate in.

The proposals will be set before the G20 finance ministers when they meet in Australia this weekend.