Where has all the money gone? A reply from the Government

Great to experience FOI first hand…

Anyway, a response from HM Treasury.  To date the FCA has levied £426m in fines relating to the manipulation of LIBOR.  The fines are paid over to HM Treasury.  Apparently in October 2012, the Chancellor announced that the money raised would go to “people and causes that demonstrate the best of British values” such as charities supporting the armed forces.  So far, £290m has been allocated:

  • £35m to armed forces charities;
  • £5m to refurbish WW1 exhibits at the Imperial War Museum; and
  • £10m pa for 25 years from 2015 to “military charities”.

All very good.  However, this does raise some further questions:

  1. What about the £136m not allocated so far?
  2. What about the cash benefit of £426m less £40m assumed already paid out on the first two bullets?  It would appear that the Treasury is sitting on a significant cash windfall…
  3. And perhaps the biggest question of all – “why are the fines so much less than those levied across the Atlantic?”

Potentially much more to follow on this subject.

Posted in Financial, General

Bank fines – where has all the money gone?

The extent of previous fines and those recently levied by European banking regulators for irregular setting of LIBOR, Euribor, foreign exchange rates and the like (all of which appear to be on the relative low side compared to stateside regulators but that’s a whole different issue in itself) has got me thinking… Leaving aside issues of trust and business ethics, which sit close to, if not at the heart of, most retail businesses, I wonder where and how the fines are being utilised. Cue internet research and a probable Freedom of Information request to HM Treasury. Update to follow…

Posted in General

Bravery, Calm and Kindness from The School of Life

Congratulations to The School of Life on the launch of their first collection of Virtue Dolls or figurines, designed to remind us of our better nature. Each of these Virtue Dolls, inspired by traditional Japanese dolls, embodies an exemplary virtue: Calm, Bravery, Kindness. The School of Life has collaborated with Momiji, who are known for their ‘message dolls’. Inside each one there’s a small folded card for your own handwritten message, dream or wish. You use them as follows – “place the little figures before you on the desk or shelf, and when you catch sight of them during stray moments of the day, allow their a subtle and beguiling power to remind you of your true aspirations.” The dolls are available to pre-order here.

Posted in General

Tools for Thinking

Congratulations to The School of Life on the launch of their Tools for Thinking range of retail merchandise – a range of notebooks, pencils and cards.  According to the School, the idea is to “Change and enhance your mood through art.  Our best moods are often hard to get in touch with.  At The School of Life, we believe that great works of art can put us back in touch with our better selves.”

The description for the “mood” series of notebooks goes further:

“So we’ve created some Mood notebooks lavishly illustrated with paintings across their inside covers. Each book contains one painting ideally suited to provoking a particular valuable mood and a caption highlighting its therapeutic potential.  The mood of this notebook is ‘Productive’. It is hard-backed with beautiful exposed binding detail. The inside covers reveal a vivid image of ‘Superfluous Market’ by Kathrine Campell Pederson.  Each page has space to fill with your ideas and thoughts, as well as titles to record the date, time and your frame of mind. 

Daring” and “Sceptical” are other moods currently in the line up.  Check out the full range here.

Posted in General

Useful tech!

Today sees the launch of a new app that turns abandoned shopping trollies into trees.

Members of the public can now use the Trolleywise app to take a photo of wayward shopping trollies. The app uses the phone location to identify the whereabouts of the trolley and this information is passed to a team of vans and drivers for collection within 24 hours. In return, a tree is planted for every trolley recycled.

Supported by Trees for Cities and the River and Canal trust, the app is expected to help reduce the waste created by the 400,000 trollies that go missing every year out of the two million that are in circulation.

Trolleywise hope that the app will replace the current system in which local authorities have to collect the trollies and charge the finder’s fee back to the supermarket often through fines. Users don’t get any financial reward but do get the satisfaction of helping the environment via the tree planting “reward”. The app also logs your stats so you can potentially see if you are the top “spotter” in your area.

Game on!

Posted in General, Systems

Peer to Peer lending to challenge Banks?

Websites that link borrowers and lenders directly are on the brink of hitting £500 million in loans in Britain — and the industry’s leaders believe that they pose an increasing challenge to the big high street banks according to an article in The Times.

Peer to peer lending, where a “platform” links savers and borrowers, appears to be on the up with even Google apparently dipping its toe in the water. There seem to be several attractions for the peer to peer lending model. For savers, there is the potential to achieve a much higher rate of return. Perhaps just as important, savers also get a sense of “investing” directly into the market of loans to individuals or small businesses – much more engaging than deposits with a faceless bank. For borrowers, the attraction appears to be relatively easier access to loan finance at competitive rates. Within the mix, the platform takes a cut.

However, this emerging market is struggling to get the regulatory frameworks in place that would put it on a similar footing with other investment markets, which seems a shame. Anything that poses a challenge to the existing model of bank provided finance should be welcomed. Equally, providing an alternative investment route for cash deposits, linking investment directly into smaller businesses and start ups could be a significant channel for growth in the real economy as opposed to government backed finance schemes that appear to benefit the banks more than the wider economy.

So, I do hope that the regulators and the “powers that be” provide appropriate and sensible support rather than raise barriers or drag their collective feet.

Posted in Financial, General

Wolfson action on bonus to catch on?

The chief exec of clothing and homewares retailer Next, Lord Wolfson, has donated a sizeable chunk of his bonus to his staff. The decision was widely reported and PIRC commended the act as a massive recognition of the contribution of employees to the financial success of the business. Hear hear!

It is refreshing to observe such an act, made all the more significant by its unilateral nature. Listening in on Radio 4’s Today program on the day of the announcement, the market reporter’s commentary appeared somewhat dismissive as if the whole thing was some kind of PR stunt or a moment of madness unlikely to be repeated by other CEOs.

Many chief execs have waived their bonus entitlements during the course of the recession -although many would say such actions were generally only in response to external pressure, which in turn has only intensified a sense of corporate greed and selfishness that many would say still exist and the root cause of the financial meltdown.

But Lord Wolfson’s action to share his bonus (justly earned by all accounts) comes across as a welcome example of giving credit where it’s due. Bankers take note!

Posted in Financial, General

A heavy handed Supplier Squeeze?

The Forum of Private Business (who they?) recently accused furniture and fashion retailer, Laura Ashley, of a “supplier squeeze”. BBC News reported the story, having seen a copy of the letter that sets out an immediate 10% cost price reduction. Clearly the FPB sees this as another installment along the well trodden path of “nasty retailer” bullying and exploiting “hapless” suppliers – a classic “big” vs “small” battle.

Whilst the implementation may be overly brutish, the annual negotiation of supplier terms is a classic full blooded commercial negotiation. Large retailers clearly have buying power through volume, but my experience is that the suppliers themselves are generally just as commercial. I can’t recall an instance where a supplier offered a reduction in their terms because they were suddenly much more profitable and wanted to share that gain back up the supply chain.  Before embarking on the negotiation, retailers always review the available published accounts of their suppliers.

The FBP clearly takes the stance of the “put upon” supplier that has no alternative customer / outlet and is therefore at the mercy of the nasty retailer. Any business that relies on one key customer must surely recognise the inherent commercial risk in such a position and take appropriate action to mitigate (or accept) that risk.  Equally, the de-listing threat is at times overplayed, as no retailer wants to deal with empty shelves or significant gaps within ranges – especially where continuity of supply and providing a coherent and comprehensive customer offer is core to the proposition.

Even JLP was tarred with the FPB brush although further reading indicated that JLP was implementing a sliding scale of rebate based on an increase in volume.  I am sure many businesses would be happy to trade 5 percentage points of margin to deliver a 50% volume increase.  How many marketing campaigns can claim to deliver a similar ROI?

So the reality is generally much more finely balanced than typically reported.

Posted in General

Taxman relaxes real-time PAYE requirements for SMEs

Everyone ready for Real Time Reporting? New rules from April will see real-time PAYE reporting rolled out in the UK. The change means that information must be reported to HMRC as employees are paid, rather than the current system of monthly and annual filing. HMRC claims reporting in real time will great benefits… Odd that I haven’t seen much comment from businesses about those benefits (payroll firms selling updates have clearly done well), but I have seen much commentary on the increased burden of administration.

Good news then, that the implementation date for small companies with less than 50 employees has been put back by 6 months. The ‘easement’ will be in place until 5 October 2013 in order allow smaller employers to catch up, particularly if the employers pay their employees weekly, or more frequently, but only process their payroll monthly. HMRC said it will “continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses” and “consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI”, which sounds suspiciously like “let’s see how bigger business cope first and hope no one is interested in 6 months time.”

Let’s hope that the change does go smoothly, although previous experience (CIS scheme, anyone?) and current commentary suggests not. Snap polls suggest the business world is potentially under prepared – an Accountancy Age poll (50 respondents) reported 84% felt “underprepared”, and I have seen similar survey results elsewhere. Perhaps HMRC need to resort to a bit of “Hector-ing” to get its message across.

Posted in Financial, General

Tesco is still UK’s top retail brand despite horsemeat scandal

Tesco may have arguably been the hardest hit of all the retailers in the horsemeat scandal, seeing its market share drop below 30% for the first time in eight years and becoming the butt of endless jokes. However, the supermarket is still the most valuable UK retail brand, worth £7.2bn, according to a new report from US consultancy firm Interbrand.

I do believe the grocers have got off lightly from the horse meat scandal, possibly because there was no underlying public health issue. Others have not been so lucky. Anyone able to recall the Perrier benzene contamination scare in the 90’s? Did Perrier ever recover its market share? Don’t think so…

Anyway, for me, the grocers have somehow managed to downplay the failure within their supply chains and managed to swerve the potential for full scale reputational fall out. If it says “beef” on the product, then quite rightly, consumers should expect beef, and not some other meat, or even traces of other meats. I was appalled that the focus appeared to be shifting towards unrealistic customer expectations at the value end of the market along the lines of “It’s a cheap product, what do you expect? How else do you think we can keep the price so low?” Well, that’s fine Mr Grocer, as long as you label the product correctly!

I was equally concerned when the grocers appeared to be making light of their responsibilities within their own supply chains with claims that they, the grocers, were themselves victims of underhand practice by suppliers. This also doesn’t wash with me for, once the retailer puts their brand on the product, the integrity of the supply chain remains implicit within the brand – just ask any substantial retailer about the lengths they go to to ensure “fair trade” and labour practice claims are substantiated. On this basis, if the grocers have not performed adequate risk assessment and testing within their domestic supply chain, and events appear to indicate that they have not, urgent action is clearly required to address this management weakness.

Hopefully the increased level of testing now being undertaken will repair the trust that has been damaged. But I remain slightly bewildered that the impact does not appear to have been as bad as historic examples might have indicated. Perhaps the UK consumer is more forgiving than we give them credit for!

But overall, the scandal leaves a very bad taste in my mouth, pardon the pun.

Posted in General, Supply Chain