Tag Archives: Financial Conduct Authority

In April this year the shiny new CMA (Competition and Markets Authority) emerged from a union of the former Office of Fair Trading and the Competition Commission. People are watching it closely: Initial shock revelations include someone has been price-fixing galvanised steel water tanks and online review websites are not trustworthy. Well there’s a surprise. Whether or not the CMA gets around to reviewing something worthwhile such as supermarket tactics to bankrupt independent retailing remains to be seen.

Review websites often ‘lose’ poor feedback in return for sponsorship

According to the CMA some 25 million shoppers use review websites such as Amazon and TripAdvisor to ‘inform’ their purchases but many of the reviews are rigged. Review websites often ‘lose’ poor feedback in return for sponsorship, whilst manufacturers offer rewards for favourable reviews and post criticism of competitors. None of this comes as a surprise to anyone over 8 years old but encourages genuine shoppers to post outrageous comments about some products. I recommend Amazon’s eye-wateringly funny review of ‘Veet for Men Hair Removal Gel Cream’ at www.amazon.co.uk/Veet-Men-Hair-Removal-Cream/dp/B000KKNQBK 

Someone who does believe in frankness and honesty is the (Canadian) Governor of the Bank of England, Mark Carney

Someone who does believe in frankness and honesty is the (Canadian) Governor of the Bank of England, Mark Carney. Last month he gave a highly critical after-dinner speech to city bankers to coincide with publication of the ‘Fair and Effective Markets’ review by HM Treasury. His speech left the audience squirming uncomfortably on their well-padded behinds as they remembered how the (now disbanded) Financial Services Authority failed to reign them in prior to the financial crisis. Carney was not averse to a bit of self-criticism either, describing how the Bank of England allowed the crisis to develop. The Bank’s contribution fell short…and neither identified the scale of risks in the system nor spotted gaps in the regulatory architecture’ he said. Arcane governance had blurred accountability and more would now be done to strengthen control. He added: ‘and that includes 10 years in Wormwood Scrubs for any of you guys with your hand in the till’ - or something like that. Former Governor of the Bank of England Mervyn King, former FSA boss Hector Sants and former Chancellor of the Exchequer Gordon Brown chose not to comment.

The Treasury review proposes extending criminal sanctions from investment bankers to foreign exchange traders

Chancellor George Osborne also spoke at the dinner. He publicly supported Carney with: ‘The public rightly asks: Why is it after so many scandals so few individuals face punishment in the courts? Individuals who fraudulently manipulate markets and commit financial crime should be treated like the criminals they are.’ The Treasury review proposes extending criminal sanctions from investment bankers to foreign exchange traders plus harsher penalties, something shareholders in RBS and Lloyds would doubtless like applied to reckless executives. City of London Lord Mayor, Alan Yarrow said upholding professional standards should be the norm. ‘It’s like a supermarket with no security cameras – if someone takes something without paying, it’s still theft. There is no escape. People should uphold professional standards irrespective of whether the regulators are there or not.’ Well, actions speak louder than words Alan. We’re waiting.  

Pickles made few friends amongst local councils whilst spearheading local government spending cuts

Meanwhile, having won a clear majority in the general election the Prime Minister reshuffled his cabinet without needing to consult his coalition partners. Eric Pickles, plain-speaking head of the Department of Communities and Local Government was promoted to the House of Lords with a Knighthood and an ‘anti-corruption role’ which sounds a bit South American.  To replace him David Cameron promoted Greg Clark (47) to become Secretary of State for Communities and Local Government. Described as a ‘soggy left’ Conservative from Middlesborough, the former Financial Secretary to the Treasury has a hard act to follow. Pickles made few friends amongst local councils whilst spearheading local government spending cuts and the 2011 Localism Act which gave community groups the right to take over council-provided services. His enthusiasm for the ‘Big Society’ agenda bolstered a reputation as a vocal critic of local government, particularly after the child sexual exploitation scandal in Rotherham and local governments’ ineffectual response to the 2014 floods. Greg Clark faces an equally tough time at the DCLG as he now has to implement a second round of even deeper cuts to reduce the governments spending deficit. 

Canadian lobsters are now in the front line thanks to Smartphone technology

And finally: Another Canadian product has also been in the news – Lobsters. In the struggle to attract consumer spending Canadian lobsters are now in the front line thanks to Smartphone technology. Shoppers in Newfoundland can now use smartphones to scan live lobsters in fishmongers tanks to discover where their seafood is from and who caught it and when.

Tracing food back to source is not a new idea but using QR code tags to provide customers with this level of detail is

The traceable lobster program is part of thisfish.info, an initiative of Ecotrust Canada, an environmental charity. Each lobster caught by a participating member is tagged with a unique QR code which customers scan for information about the catch – when and where it was caught and by what method, plus a biography of the fisherman. Tracing food back to source is not a new idea but using QR code tags to provide customers with this level of detail is. Some Newfoundland restaurants have been serving QR-coded seafood for a couple of years and boosting sales by linking into wider consumer trends. A spokesperson said: ‘Customers love a glimpse into the lifestyle of the person who provided their supper that night. Where they live, how old they are and how long they’ve been fishing. Consumers are focusing more on where their food comes from, if it is sustainable and healthy and whether the people who catch it are paid fairly’.

No lobsters were available for comment.


Some years ago a mate of mine was Sales director of an Engineering Company in the Midlands. The Company had grown off the back of supplying ‘gondola’ display racking to supermarkets. A big roll of galvanised steel went into one end of their factory and lots of uprights and shelves came out the other. Supermarkets were expanding like crazy and he’d shaved the margins when bidding for a mega-deal for 10 miles of racking for 40 new stores. He was understandably delighted to be invited to a contract-signing at a certain Supermarket’s head office but when shown into the boardroom found several competitors sitting at the table, all looking very hacked-off. Then in walked the Supermarket Head of Procurement who announced they would each be given an office, a telephone and one hour to reconsider their price. This was not a nice way to be treated. He lost the contract and his Company had too many eggs in one basket so went belly-up a couple of years later. Lesson learnt – the hard way.

Half-year profit forecasts to investors were being overstated by some £250m.

Quite a lot of hard-done-by suppliers may be taking quiet pleasure from Tesco’s problems at the moment – well the ones who can find another customer anyway. Back in September a whistleblower in Tesco’s finance department thought the new Chief Executive, Dave Lewis should be told that half-year profit forecasts to investors were being overstated by some £250m. When this profit warning was announced the institutional shareholders reacted in horror and the share price plunged. If you can’t trust the published accounts of a FTSE 100 Company then who can you trust? An internal enquiry was launched, payments withheld to former executives and others politely asked to step aside. Tesco has now handed the results to the Financial Conduct Authority amidst allegations that a small group of people in Britain’s biggest retailer deliberately misled its auditors to boost the trading accounts.

Tesco also confirmed withholding pay-outs worth millions of pounds to former Chief Executive Philip Clarke and former chief financial officer Laurie Mcilwee. The Serious Fraud Office is taking a keen interest and Tesco could face ‘significant fines’ and claims from investors says Mr Lewis. He is also wondering why he answered that job advertisement.

Screwing your suppliers is standard practice for any supermarket but Tesco seems to have refined the art. The allegation is they credited ‘product supplier discounts’ to an earlier accounting period than when actually received. This is naughty and contrary to the Groceries Supply Code of Practice as well as proper accounting standards. You can get away with it if sales turnover is rising and increased revenue in the next period cloaks it – but not if sales turnover is falling which is what’s happening at Tesco. These ‘discounts’ are demanded by Supermarkets in return for the retailer placing the suppliers product on the best shelf. ‘Eye line is buy line’ and all that – a bit like paying key money to get the best pitch next to your Market entrance.

Tesco’s share of the UK groceries and household goods market share has fallen from over 30% to 28%.

This little accounting irregularity is the icing on the cake for Tesco. Sales have been falling for several quarters largely due to German discounters Aldi and Lidl. Tesco’s share of the UK groceries and household goods market share has fallen from over 30% to 28% and the share price was already on the slide before this announcement. Chiselling £250 million or so out of your suppliers every 3 months is no mean feat but it seems likely someone told the auditors the discounts were already in the bank, not an anticipated receipt. Tesco shares which were nudging £5 a couple of years ago now stand at under £2.

So it looks like our Dave may need to raise cash to pay a hefty fine and reimburse shareholders who bought-in on fraudulent figures. Someone may even do porridge. Dave has now penned a long apology to Tesco Suppliers which looked good in the press and stopped them looking round for other retail outlets. It also softened them up for the next round of supply negotiations which are bound to follow. He might have to sell-off of an asset or two such as Tesco Banking or a juicy overseas operation. Cost-cutting in the UK such as a halt on new store openings had already been implemented by his predecessor Philip Clarke who switched to store refitting with posh coffee shops, restaurants and digital businesses. And falling sales.

Dave Lewis says he is a fan of ‘brand archaeology’ i.e. returning Tesco to its original roots. That sounds like he’ll focus on becoming Britain’s cheapest retailer once more and taking-on Aldi and Lidl. It’s the suppliers I feel sorry for.

Meanwhile the 5-yearly commercial property revaluation used to calculate business rates has been postponed yet again.

The last revaluation was due in 2013 but HM Government postponed it until 2015 claiming it would cause ‘uncertainty for businesses’. It’s now been postponed yet again until 2017 i.e. after the next election and assessments continue to apply based on pre-2010 rental values. The total revenue ‘take’ collected by the Treasury is supposed to remain the same but because many High Street businesses have collapsed thanks to online shopping etc the burden is going to fall on those that remain. The British Retail Consortium has kicked-off big time about the effect on their Supermarket members and the PM has promised a long-overdue review of this archaic system. To do so he’ll have to fight his way past all the HMRC District Valuers. Good luck.

In the meantime as a ‘Small Business’ which occupies only one premises you’ll hopefully remain clear of liability thanks to the Small Business Rates Relief Scheme. But this is due to expire in March 2015. It will be interesting to see if Chancellor George Osborne extends that to 2017. He’s bound to – isn’t he?

Happy Christmas!

News-Image Holiday

Everyone looks forward to Christmas (e.g. Payment Card Processors) but maybe not the New Year (e.g. Market Stallholders). This year a fair few are dreading the first quarter of 2014, so maybe now’s the time to make an early resolution to see off the gloom of the ‘Kipper Season’.

Two possibilities are (a) take a tax-deductible buying-trip-cum-holiday somewhere warm and get an edge over your competition, or (b) improve your plastic payment margins. If cash is tight then option (b) might be the only choice.

Some of the charges to SME’s (‘Small and Medium-sized Enterprises’) are outrageously high – anything up to 10%.

According to a report by SagePay – the World’s third largest Payment Provider – the remorseless rise of a cashless society continues, like it or not. Payment Providers such as SagePay, WorldPay and PayPal are the middlemen who process in-store and online EFT debit and credit card transactions for a percentage charge on each. Banks and Credit card issuers like Amex do the same and the fee is variable dependent on the volume of your turnover and the value of the transactions. Some of the charges to SME’s (‘Small and Medium-sized Enterprises’) are outrageously high – anything up to 10% – so (according to SagePay) because Shoppers now carry only £20 cash some £33m of turnover walks away each day when they are told: ‘Sorry mate – I only take cash’.

Such SME’s are (also according to SagePay) short-sighted as once they take cards they see sales turnover increase by 30%. That more than justifies the transaction charges.

Providers may be offshore and dodge paying UK tax.

OK the increased turnover is true enough but that’s not the entire picture. HM Government is concerned that once the cash economy has disappeared altogether then retailers will continue to be overcharged if rates are not opened-up to competition. Oh yes, and the Providers may be offshore and dodge paying UK tax. As SME’s are often portrayed as ‘the engine house of the economy’ the Government is proposing a new FCA regulator to supervise retail payment systems – but don’t hold your breath waiting for it to appear and charges to fall.

In the meantime why not spend the Kipper Season fishing around for a good deal? Some rates are coming down as new Providers emerge and the Federation of Small Businesses – http://www.fsb.org.uk – offers very competitive rates to set up a new Merchant account and process your transactions. In return for a modest membership fee they also offer assistance with Vat, tax inspections and insurances tailored to small businesses. Alternatively try Cardswitcher – http://www.cardswitcher.co.uk – who claim to reduce the cost of card transactions for SME’s by up to 40% by comparing a range of providers. Their online service provides multiple quotes and shows how to switch between Providers. And finally, if you’re on a Open Market stall and reliant on a Mobile phone for card transactions rather than a hardwired data line go to http://www.chipandpinsolutions.co.uk to see if they can help. All their websites are worth a good long look and don’t forget to tell your bankers what you’re doing – and why – and ask them if they can assist. It helps the healthcheck rating they apply to your account.

Of course if you want to stay cash-only then so be it, but you might want to consider moving to Totnes in Devon where they have a thriving independent retail sector supported by their own currency.

The High Street is Totnes is doing rather well thanks to a strong core of independent retailers and few shop voids. This is largely due to the efforts of a grassroots community network, ‘Transition Town Totnes’ – http://www.transitiontowntotnes.org – founded in 2006 by Rob Hopkins and Ben Brangwyn. Their intention was to encourage economic and social resilience in the local economy in response to dwindling oil reserves and climate change. The timing was spot-on. ‘What we are modelling here is not just about the survival of the High Street, it is about strengthening the local economy in the widest sense’ they say. That included a vigorous campaign to see off a proposed Costa Coffee ‘…as we already have plenty of independent alternatives and we simply don’t need it’.

To strengthen the local economy they established a community energy company and community brewery and encourage local people to buy local produce with the ‘Totnes pound’.

The notes can be purchased locally, 1: 1 for sterling and accepted in local shops and to purchase local services. Because they are only accepted locally the ‘money’ stays within the local economy and supports local employment rather than being sent off to distant suppliers and shareholders in London. Add some changes to Shoppers parking tariffs and it seems to be working for their High Street. Mary Portas please note.

The Bank will print banknotes on plastic, not paper as they last longer and are more difficult to fake.

The Bank of England doesn’t view the Totnes Pound as a threat yet but is moving towards plastic in a different way. It now seems likely the Bank will print banknotes on plastic, not paper as they last longer and are more difficult to fake and don’t fall apart in the washing machine. Canada and Australia already use these funky, transparent and difficult-to-counterfeit designs. The Bank seems intent on avoiding the 1940-45 crisis when expert German forgers flooded Europe with fake £5 notes to undermine overseas confidence in sterling. A repeat would make it far more difficult to sell British goods to countries in the EU.

It’s good to see the Bank outwitting the Euro and the evil empire of Frankfurt.