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The Wendy Chowne Column

26 February, 2016Wendy Chowne

The new year has started with many useful changes and expected updates which are worth highlighting.  

First, with effect from 1 January 2016, the Financial Services Compensation Scheme limit has been reduced from £85k to £75k for deposits. The new limit is the first time that it has been revised downwards, but the underlying rationale is to ensure that the UK is in line with the European Deposit Guarantee Schemes Directive (DGSD) which fixes protection levels at Euro100k or its equivalent. When the level was originally agreed in 2010 the exchange rates were such that the equivalent sterling figure was £85k. The FSCS in July 2015 confirmed that the falls in the euro against the pound meant that a figure of £75k was more appropriate but that a transition period would operate in order for customers to ensure that their monies were covered per PRA-authorised institution.  For those concerned as to whether their monies are suitably spread, referral can be made to a list of banking brands from the Prudential Regulation authority (PRA,2015) which details the brands that are included under each PRA-authorised institution.  The ‘temporary high balance arrangement’ whereby a temporary high balance caused by a life event, remains and allows customers the potential additional compensation of up to £1million. The typical life events include insurance policy payouts, redundancy or inheritance.

Speculation abounds with regards to the forthcoming budget on Wednesday 16th March 2016. Pension experts and accountants  are poised at the possibility of the abolition of the higher rate tax benefit on pension contributions. Should the higher and additional rate tax relief on pension contributions be equalised to the same flat rate for all then there may be some quick recalculations and pension top- ups before the new tax year!

The challenger bank, Virgin Money has announced that they have attracted two senior executives from rival banks Tesco Bank and RBS. Peter Bole previously held roles within Tesco, RBS and Standard Life and will be the new Chief Financial Offer at Virgin.  Hugh Chater is currently at RBS and has prior experience at MBNA. He is to become Virgin Money’s new Chief Commercial Officer.

All change too at the Financial Conduct Authority (FCA) with Andrew Bailey, currently CEO of the Prudential Regulation Authority, being announced as the FCA’s new CEO. As such he will be taking over the reins from Tracy McDermott who has been Acting Chief Executive since September 2015. The FCA’s decision to ditch the review into banking culture, pay and practices was made over the new year and is controversial, with accusations of government intervention and the regulator bowing down to the banking giants. The FCA have countered these accusations by stating ‘There is currently extensive ongoing work in this area within firms and externally. We have decided that the best way to support these efforts is to engage individually with firms to encourage their delivery of cultural change as well as supporting the other initiatives outside the FCA.’ (Treanor, 2015)

Now, here’s another controversial issue:  can or should an employer have the right to read your private messages sent over the internet or email? According to the European Convention on Human Rights this month (ECHR,2016, point 10), employers do have the right to access messages sent during working hours on work devices. The key point is that employers have the right to verify that professional activities are being undertaken during working hours. There are lawful employee-monitoring systems and many firms make it explicit that their devices should not be used for personal matters. However with people working longer hours, flexible working and some employees being encouraged to ‘Bring Your own Device’ (Gov.uk,2015) to work, the demarcation line between work and personal life is becoming blurred. In the meantime, should you wish to keep your messages private, then perhaps the best course of action is to send it from a completely private device. 

BBC (2016) Andrew Bailey is new boss of the FCA, the City watchdog [online]. Available at: http://www.bbc.co.uk/news/business-35408302

Christie, S (2015) FSCS cash compensation limit cut to £75,000 [online] Available at:   http://www.telegraph.co.uk/finance/personalfinance/savings/11716470/FSCS-savings-compensation-rules-the-new-75000-limit.html

ECHR(2016) CASE OF BĂRBULESCU v. ROMANIA (Application no. 61496/08)    Available at: http://hudoc.echr.coe.int/fre-press?i=001-159906#{"itemid":["001-159906"]}

FSCS (2016) Deposit Limits: Time to new limit on 01/01/2016   Available at:  http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/deposit-limits

Gov.uk(2015) Bring Your Own Device Guidance   Available at:  https://www.gov.uk/government/collections/bring-your-own-device-guidance

PRA (2015) Amount of compensation [online] Available at:   http://www.bankofengland.co.uk/pra/pages/authorisations/fscs/bankingandsavings.aspx

Treanor ,J(2015) Banking culture review: Treasury defends FCA decision to scrap study[online] , Available at: http://www.theguardian.com/business/2015/dec/31/banking-culture-review-john-mcdonnell-urges-george-osborne

Virgin (2016)  Virgin Money announces two new appointments to senior executive team [online]. Available at: https://uk.virginmoney.com/virgin/news-centre/press-releases/2016/virgin-money-announces-two-new-appointments-to-senior-executive-team.jsp