Watchdog plans price caps to stop £4bn loyal customer rip-off. Radical reforms aim to stop insurance, mortgage, phone and broadband firms overcharging. The competition watchdog has laid down a set of radical reforms to how the insurance, mortgage, mobile phone and broadband markets operate after finding that loyal customers are being overcharged by £4bn. Following a “super complaint” by Citizens Advice, the Competition and Markets Authority investigated concerns that firms penalise existing customers by charging them higher prices than new customers. It found that consumers in those markets, as well as in cash savings, are “exploited” and face a “loyalty penalty” of around £4bn a year. It also found that vulnerable people, including the elderly and those on a low income, may be more at risk of paying the loyalty penalty. The CMA inquiry uncovered “damaging practices” by firms, including continual year-on-year stealth price rises; costly exit fees; time-consuming and difficult processes to cancel contracts or switch to new providers; and requiring customers to auto-renew or not giving them sufficient warning that their contract would be rolled over. The CMA is recommending regulators crack down on harmful practices using enforcement powers, stating the principles businesses should follow and holding firms to account for their actions. Most radically, it also suggests “targeted price caps” should be put in place to protect those worst hit.
GSK plans break-up after £10bn Pfizer deal. US firm to buy into consumer healthcare portfolio and pave way for long-term spin-off of drugs business. GlaxoSmithKline (GSK), one of the world’s biggest drugs groups, is to be broken up after the company agreed to spin off its consumer healthcare business in a £10bn joint venture with US rival Pfizer. GSK, whose consumer brands include Sensodyne and Panadol, will have a controlling stake in the partnership of 68%, with Pfizer owning the remainder. The FTSE 100 drugmaker said that within three years of closing the deal, it will demerge and float the consumer health business, splitting GSK into two distinct businesses: one focused on consumer, the other on pharmaceuticals and vaccines. Shares in GSK rose 5% in early trading, to £15.22
Barclays (BARC) has been slapped with a $15m (£12m) fine by a New York regulator over attempts by chief executive Jes Staley and senior management to unmask a whistleblower. The New York state department of financial services said its investigation found “shortcomings in governance, controls and corporate culture relating to Barclays’ whistleblowing function”. The fine and ruling ends the final investigation over Staley’s efforts in 2016 to identify a whistleblower who wrote to the bank’s board over the hiring of Tim Main as head of the bank’s financial institutions group in New York. Staley tried to track down the author of the letters using the bank’s internal security unit. The New York regulator said the CEO was trying to protect a senior executive, who was a friend and former colleague at JP Morgan, “from unwanted and unfair publicity”. It added that he was defending his right to recruit high-level hires “of his choosing”.
Donald Trump has stepped up his pressure on America’s central bank to shelve plans for an expected increase in interest rates to prevent the bleakest December for Wall Street since the US was in the throes of the Great Depression. After days of heavy stock market falls, Trump tweeted before New York trading opened on Tuesday to warn the Federal Reserve that it would be compounding previous mistakes if it continued to ratchet up US borrowing costs. The broadly based S&P 500 share index has lost more than 7% of its value since the start of the month, leaving it on course for a fall not surpassed since the near 15% drop in 1931.
