20 Aug 2015 09:18am

economia a.m. August 20

An early morning round-up of industry news

Surge of investment scams sparks alarm in City

Like others in the City of London, they rent top-priced offices in prestigious locations for their fiercely competitive trade. But unlike the rest, these companies target “suckers’ lists” of vulnerable people for investment scams from wine to oil wells before vanishing. A surge of investment fraud based in London’s financial centre has sparked alarm over the possible contamination of its brand, and authorities have begun a campaign of disruption against suspected criminals using exclusive addresses such as Tower 42 on Old Broad Street and Heron Tower. Dozens of people have been arrested as police made unannounced office visits, and at least 14 suspected criminal groups disrupted, police say. Two serviced office providers have also been fined after failing to carry out adequate checks on their tenants, in a move designed to send a message to the rest of the sector. Police set up their stall at an alternative investments fair in May for the first time — prompting several prospective exhibitors to suddenly pull out. “We saw a spike in investment fraudsters operating in the City of London. Reports of fraud were getting to the point where we were almost imploding,” said Detective Inspector Teresa Russell, of the City of London police.

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Osborne comes under pressure to cut tax on banks

George Osborne is under growing pressure to reconsider a new tax on banks, amid warnings that it unfairly penalises building societies and “challenger” banks and will stifle billions of pounds of lending. Andrew Tyrie, the Conservative chair of the Treasury select committee, has urged the chancellor to ensure that the new 8% surcharge on profits does not reduce competition and deter entrants. Tyrie told the FT that there was a danger of “unintended consequences” from the charge, which was announced in the Budget in July and will apply from next year to profits above £25m. “Anything which reduces banking competition reduces the scope for new entrants into a market that is not widely held to be sufficiently competitive and would not be in the interests of consumers,” he said. Mark Garnier, a Conservative MP who also sits on the committee, called for the government to exclude building societies. The Labour opposition will seek to amend the finance bill next month to force the government to review the impact of the surcharge on them.

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Bullying at work affects one in three, survey says

More than a third of employees believe they have been bullied in their workplace, according to research for a UK law firm. The survey - for solicitors Slater and Gordon - found that 37% of those questioned had been a victim of such behaviour. A further 21% said they had witnessed colleagues being bullied. The TUC said staff affected were more likely to take time off, and would be less productive at work. The most common forms of bullying were reported to be rudeness, bitchy or gossiping behaviour, and humiliation in front of colleagues. Others mentioned shouting, finger-pointing and swearing. About a third of those affected said they did nothing about it, often because they were worried about losing their job, or hurting their career prospects. The TUC said that office bullies should be "banished from the workplace".

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Two-thirds of savers cash in pension pots

Savers are taking advantage of new pension freedoms and cashing in their pension pots in droves, despite the tax charges, according to figures. Two-thirds of customers surveyed by Royal London, the largest mutual life, pension and investment company in the UK, took their entire pension pot as a cash lump sum following the introduction of the pension freedoms in April. The rules allow people to withdraw their whole pension pot from age 55, with the first 25% tax free and the remaining 75% taxed at the saver’s marginal rate. More than 85,000 have used the opportunity to withdraw money from their pension pots so far, according to the Treasury, and nearly a million others have visited the Government Pension Wise website to look into their options.

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Time for rate rise ‘approaching’, says Fed

Federal Reserve policymakers expressed concern about low inflation as well as threats to the US economy posed by a stronger dollar and developments in China, but deemed conditions for a rate rise to be “approaching”, according to minutes released on Wednesday. The minutes of the July 28-29 meeting of the Federal Open Market Committee include no mention of any plans to raise rates at their next meeting on September 16-17. They point to a vigorous debate within the Fed over a number of key data points including inflation and the timing of an increase. But the minutes also offer a view of a Fed that is clearly approaching decision time on raising rates for the first time since the global financial crisis with much of the bank’s internal discussions focused on how best to communicate the eventual move to markets. “Most [FOMC members] judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point,” Fed staff wrote.

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Self sufficient smaller firms shunning big lenders

Small businesses are turning their backs on external finance, preferring self-sufficiency to bank-funded growth plans or crowdfunding, a study reveals. A growing proportion of small and medium-sized companies class themselves as “permanent non-borrowers”, with business owners increasingly focused on paying down debt, improving their financial health and then growing more slowly under their own steam, according to a comprehensive bank-commissioned survey. BDRC, the consultancy that conducted the research, found that 43% of small and medium-sized companies in 2014 said that they had no interest in using external finance. This is up from 33% in 2012. Its SME Finance Monitor reveals that the proportion of small businesses using one or more sources of external finance has fallen, from 44% in 2012 to 37% last year. There were also signs that the financial position of smaller companies is gradually improving after the financial crisis, with 78 per cent turning a profit last year, compared with 69% in 2012. The external “risk rating” of these businesses is gradually declining, BDRC said. In the second half of the year, 70% of companies said that their focus was on repaying existing debts and then remaining debt free.

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Householders expect rate rise in next six months

Almost half of households are preparing themselves for an interest rate rise during the next six months, a survey has found. Forty eight per cent predicted that the Bank of England will raise rates, the highest figure since July 2014 and up from 34% last month. The proportion expecting a rate rise in the next year stands at 78%, according to the Markit Household Finance Index. Mark Carney, the Bank’s governor, indicated in a speech last month that rates could rise from the record low of 0.5% by the year end, but the Bank’s latest economic outlook pointed to no change until well into 2016. Markit’s latest figures suggested a greater squeeze on household finances across the majority of job sectors, especially education, health, social services and manufacturing. The index dropped to 43.4 in August, down from 45.1 in July. This was the lowest level this year, but above the average of 39.4 since the survey began in 2009. Construction workers, who are in short supply and can command higher rates, were the only exception, reporting the least marked pressure on household finances since January.

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Andy Murray goes on crowd funding spree

Andy Murray may be one of the world’s top tennis players but he is also trying to become an ace in the business world. The 2013 Wimbledon champion revealed yesterday that he had acquired undisclosed stakes in Tossed, the salad bar chain, and two other companies, via the Seedrs crowdfunding platform. Murray, who joined the Seedrs advisory board in June, has also made investments in Trillenium, a builder of 3D virtual reality shops that has been backed by online fashion retailer Asos, and Fuel Ventures Fund, an investor in early-stage ecommerce ventures. The world No 2 had chosen to kick off his crowdfunding investment portfolio in areas of industry that he had a personal interest in. “Healthy eating is something I have to be passionate about as a sportsman, so Tossed was immediately one to consider, and the other two businesses are really pushing the boundaries of technology,” he said. Tossed, which has 25 sites trading or about to open, including three in Dubai, was seeking to raise £750,000 for expansion but has secured more than £1m because of high demand.

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FTSE 100 index closes at lowest level in seven months

The FTSE 100 index has slipped to its lowest level since January as global investors reacted to concerns that a slowdown in China will undermine demand for oil and industrial metals in the world’s second largest economy. Weak data from the US helped drive fears that global growth is slowing and commodity prices have much further to fall, hitting mining and oil stocks in London as well as shares across Europe. The selloff began in China on Wednesday, where an initial slump of 5% in the Shanghai Composite Index was reversed as authorities signalled their continued financial support for higher prices. However, US figures revealing lower than expected inflation and a glut in oil production then hit stock markets in Europe, as investors expressed concerns that a global slowdown could accelerate.

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Helen Roxburgh