With his counterpart at the Financial Conduct Authority (FCA) incurring George Osborne’s wrath over the leaking of its market-sensitive plans to probe the insurance industry’s “zombie” funds, Prudential Regulation Authority (PRA) boss Andrew Bailey could be excused for feeling a sense of relief.
Admittedly, the regulator, which is tasked with promoting stability in the financial system and overseeing some 1,700 firms, has seen its annual budget trimmed by 4 per cent – compared with a 3.3 per cent hike for the FCA – but the Bank of England says this is because the watchdog has been managing its finances and ended the financial year with a £19.6 million surplus.
These funds, which are generated from levies on regulated businesses, will be refunded to firms as part of this year’s fee-collection process.
The PRA will have to work hard for its money, as its tasks for the year ahead include ushering in the reforms recommended by the Parliamentary Commission on Banking Standards. These measures include fines for reckless bankers and ring-fencing retail banking from riskier investment operations to protect finance for households and small firms in a future crisis.
In a recent speech, Bailey insisted that the banking sector was in better financial health than before the PRA came into being a year ago, despite the woes suffered by the likes of Co-op Bank, which is facing an investigation into the £1.5 billion capital shortfall that forced its mutual owner to cede control to powerful bondholders.
He also has bankers’ bonuses in his target, and one suggestion put forward by the Bank of England deputy governor could see bankers waiting for between five and seven years before their bonuses pay out to make sure money could be clawed back.
Bailey rightly stresses that bankers need to realise their awards could be at risk if past misbehaviour comes back to haunt them.
As Martin Wheatley at the FCA endures his spell in the spotlight, Bailey needs to get on with the job and make sure another regulator doesn’t, in the Chancellor’s words, end up “damaging… the UK’s reputation for regulatory stability and competence”.
French fancies prompt M&S expansion
Marks & Spencer is hoping that demand for British delicacies such as tea cakes and digestive biscuits will help fuel its ambitious plans to open 250 stores around the world over the next three years.
Buoyed by a successful return to Paris more than two years ago, chief executive Marc Bolland said the high street stalwart plans to open 20 standalone food stores in the French capital, along with lingerie and beauty outlets in India and the Middle East.
The expansion comes as M&S struggles on its home turf, with fashion and homewares sales sliding 2.1 per cent over the crucial Christmas season, and analysts expect further declines for the fourth quarter will be confirmed in next week’s trading update.
Profits at M&S are set to be overtaken by rival Next for the first time, and the chain is also facing pressure from online fashion retailer Asos, which has a long-term target of £2.5bn in annual sales. Bolland’s international push has been welcomed by investors, but growth at home is still proving elusive.