Our Weekly Newsletter
Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.
Give new tech regulator power to impose heavy fines, urges CMA
The UK’s competition regulator has urged that a new technology regulator should have the power to fine Google, Facebook and other large firms billions of pounds if they break a new code of conduct. The Competition and Markets Authority has stressed the importance of the new regulator having the power to impose significant fines on Big Tech firms to incentivise them to behave in a manner that strengthens competition in the market. The recommendations come as Facebook is facing two major lawsuits in the US over alleged anti-competitive behaviour. (The Guardian, 8 December 2020)
Private equity could boost savers’ pensions
Private equity could boost savers’ pensions to help them better fund retirement, according to a new study. Savers have been hit hard by record low returns on assets that typically represent a large proportion of pension funds’ portfolios – such as gilts and corporate debt. Alternative assets including private equity funds have performed well amid the market volatility caused by the coronavirus pandemic, suggesting they could raise the value of savers’ pensions over the long term. The study comes as investment manager Vanguard has introduced a private equity investment option to clients saving for retirement. (Private Equity News, 9 December 2020)
Banks planning to backtrack on fraud refunds
Banks are reportedly holding discussions behind closed doors about whether there is scope to remove existing rules that guarantee online shoppers get their money back if they are scammed. As the most common type of fraud, this would lead to around 90,000 claims a year being rejected and would cost consumers £67m. Banks came to an agreement only last year to a refund code to ensure that innocent scam victims wouldn’t be out of pocket, but this has now allegedly caused issues with some paying more than others. Consumers campaigners are also involved, arguing that scammers are becoming even more sophisticated so no shoppers should be left vulnerable. (The Times, 6 December 2020)
Active fund investors told to be patient on underperformance to get the best returns
New research has suggested that investors in active funds should be patient and tolerate longer periods of decline, as even the best active funds have had long periods of underperforming the market. Investors notoriously have limited tolerance for sustained underperformance, in particular when it is so frequent, but the message they give is that patience does pay off in the long run to achieve higher returns. (Financial Times, 4 December 2020)
One-off wealth tax could raise £260bn for Treasury
A new report has recommended the Government introduce a one-off wealth tax on net assets above £500,000 to help mend the damage the coronavirus pandemic has inflicted on the UK’s public finances. The levy could raise over £260bn for the Treasury, according to the report. Introducing a wealth tax may be a viable alternative to increasing taxes on employment and transactions to ensure firms are not put off from hiring staff and consumers are not disincentivised to spend, crucial elements to the UK’s economic recovery. (From BBC News, 9 December 2020)