Competition watchdog cracks down on Nationwide over PPI breach
The PPI story keeps rolling on and on and on…
This time the Competition and Markets Authority has ordered Nationwide to refund more than 7,000 customers who either did not receive or were sent inaccurate information reminders about payment protection insurance.
It meant people didn’t have the proper info to help them decide if they wanted to continue paying PPI, or were misled into thinking their PPI was cheaper than it actually was.
The CMA has also told Nationwide to make sure it has the proper procedures in place to make sure similar problems don’t happen again.
The watchdog said:
Nationwide has broken the rules by not sending essential PPI reminders to their customers. 8 years on from our legally-binding order, it is simply unacceptable that the CMA is having to remind Britain’s biggest banks of their legal obligations.
Nationwide has failed its customers by denying them important information, and the directions we’ve issued today will lead to affected customers receiving the refunds they deserve.
Such breaches are serious and, if we had the extra powers we’ve proposed to the government, could have resulted in fines.
This come comes more than six weeks after the PPI complaints deadline at the end of August.
Intercontinental Hotels Group is one of the worst performers on the FTSE 100 (down 2.8%) after the Holiday Inn-owner reported a 0.8% drop in Q3 revenue per room.
It blamed lower business bookings in China and the ongoing protests in Hong Kong for the drop.
And there’s a link to economic growth here, with the slowdown in global expansion impacting business travel worldwide.
Rival Hilton recently warned that revenue would be hit by lagging Chinese growth and the US-China trade war, while AccorHotels narrowed its full year profit guidance on similar concerns.
The pound is now flat against the US dollar at $1.288 but its temporary lift this morning was chalked up to comments from Bank of England deputy governor Dave Ramsden.
In an interview with Bloomberg, Ramsden took a slightly more hawkish tone than some of his colleagues, saying that he still saw a case for gradually increasing interest rates…that is, if the UK manages a smooth exit from the EU:
The kind of guidance we’ve been giving – in the world of a deal it still applies.
Referring to the BoE’s long-standing guidance on rates, Ramsden added:
We’re not saying over what timeframe, but limited and gradual (rate increases) is a reasonable qualitative framing.
While some analysts are betting that China’s central bank, the PBOC, will be more willing to ease monetary policy on the back of weaker GDP, we’ve got some contrarians in the mix.
Case in point: Stephen Innes, AxiTrader’s Asia-Pacific market strategist. He says:
While the weaker China GDP suggests an economic pull to ease monetary policy to support the real economy… a 6 % GDP won’t necessarily add to the case for urgent stimulus, as the 6.0-6.5% range is with the government’s annual target, and so far China is facing limited risk in breaching this for the year.
If there’s one thing China’s massive army of retail equity investor like it’s the thought of easy money from the PBOC. Unfortunately for China stock market investors, the PBOC are not so willing at this stage.
Innes adds that, away from the stock markets, many traders appear less concerned about the Q3 GDP figures:
Currency and rates traders aren’t getting bent out of shape by backwards-looking data. Instead, they remain focused on what lies ahead, which is hopefully the US administration scrapping some of those tariffs which would be an unmitigated positive for global growth.
After hitting a five-month high against the US dollar on Thursday amid Brexit deal hopes, the pound is continuing to hover at $1.29.
Versus the euro, sterling is trading at €1.158.
But Naeem Aslam of Think Markets reckons the rise won’t last long (depending on the outcome of Parliament’s much-anticipated vote on Johnson’s withdrawal deal on Saturday, of course)
Sadly, traders aren’t going to get much pleasure to enjoy the Friday feeling or get any sleep over this weekend because of the chaotic Brexit situation.
We think this could be a chance to go short on Sterling. If the deal is rejected in Parliament, sterling is likely to fall off the cliff due to a no-deal Brexit threat.
On the flip slide—only if a miracle happens—the deal gets green light in parliament, the sterling-dollar is going to shoot above the 1.35 mark—something we said yesterday.
EU goods start facing new US tariffs today
While China’s economic growth is suffering the effects of a trade war with the US, the EU is from today facing a new set of tariffs on American-bound exports.
As my colleague Jasper Jolly writes:
British manufacturers of products ranging from Scotch whisky to biscuits and Savile Row suits are braced for a significant financial hit after US tariffs came into effect in retaliation for subsidies given to aerospace manufacturer Airbus.
Tariffs of 25% came into effect at midnight on the US east coast (5am BST), damaging small businesses with few links to a 15-year aerospace industry battle between Airbus, the European champion, and American rival Boeing.
A broad variety of products across the EU have been hit by the tariffs, including French wine, Italian parmesan and Spanish olives.
Read the full story here:
It’s been a pretty lacklustre start to the Friday session across European markets:
- FTSE 100 -0.15%
- CAC 40 -0.42%
- DAX +0.07%
- FTSE MIB +0.25%
Connor Campbell, a financial analyst at SpreadEx, said it’s an understandable reaction to the Chinese growth figures:
As the pound holds its breath ahead of ‘super Saturday’, the markets dealt with another disastrous – well, relative to the country’s usual performance – figure out of China.
Coming in at a worse than forecast 6.0%, China’s third quarter GDP reading saw growth at its lowest for nearly 3 decades… The country is clearly continuing to feel the trade war squeeze, putting all the more pressure on the so-far insubstantial – and uncertain, given the dispute over Hong Kong – ‘partial trade deal’ announced last weekend.
Over in Europe, carmakers are taking a hit after Renault cut its sales guidance and profitability forecasts.
Renault made the admission after yesterday’s close and markets are now getting a chance to react to the news, sending shares down -11% and making it the worst performer on the CAC 40.
The company said yesterday that sales were likely to drop between 3-4% this year, while its operating margin was set to come in at 5% compared to its previous target of 6%.
Carmakers have been struggling with falling demand in key markets like China, while straining to meet European emissions requirements and invest in new tech to producer cleaner car models.
It’s the latest challenge for Renault, which recently ousted its CEO Thierry Bollore as part of a leadership overhaul. The company has been trying to draw a line under a scandal linked to former boss Carlos Ghosn, who is alleged to have misused company funds.
The knock on effects of Renault’s sales warning has sent Fiat Chrysler shares down -2.4% and Daimler down nearly 2%.
Chinese stocks haven’t fared well in the wake of the GDP data, with the Shanghai Composite Index dropping by -1.2%
Elsewhere, Hong Kong’s Heng Seng fell -0.46%, while Japan’s Nikkei 225 rose +0.18%.
Introduction: China’s economic growth misses forecasts
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
While uncertainty over Boris Johnson’s Brexit deal hits front pages in Europe, China’s slowing growth is dominating news out of Asia.
Fresh figures released overnight show Chinese GDP grew just 6% between July and September. That’s less than economist forecasts for 6.1%, slower than the 6.2% expansion recorded in the previous quarter, and is the lowest level recorded since the early 1990s.
While that’s still within the Chinese government’s 6.0-6.5% target range, it’s a stark reminder that Beijing’s superhuman growth can’t last forever.
Unsurprisingly, the country’s trade war with the US has taken a toll on the Chinese economy, which is also struggling to drum up enough domestic demand to support its growth.
There was a notable improvement in Chinese industrial production in September, which grew 5.8% year-on-year in September compared to 4.4% in August while retail sales came in at 7.8% compared to 7.5% a month earlier.
But the headline figure for third quarter growth has still raised the likelihood that Beijing will resort to interest rate cuts or other stimulus measures to give the economy a bit of a boost.
You can read more here:
Meanwhile, the EU summit continues in Brussels, and across the pond, IMF and World Bank meetings in Washington start to wrap up.
- 09:30am BST: UK government debt and deficit figures for June
- 09:30am BST: UK construction statistics
- 6:45pm Bank of England governor Mark Carney speaking at “Governor Talks” IMF event