GDPR deadline: what happens next?

Matt Brown, partner and head of commercial (Liverpool) at independent legal practice Brabners, said: “It’s fair to say that most businesses are at least on their way to GDPR compliance. The volume of requests for advice we’ve received, and the similar inundation we hear about from other law firms, certainly suggests so. But while it’s clearly on the agenda for many, at this stage this is all.

“The ICO has been at pains to acknowledge that it is unrealistic to expect everyone to be 100 per cent compliant on day one. Instead, what they will want to see is that businesses have taken the right steps forward. When it comes to dishing out fines, we’re likely to see a small number of strategic, high-profile cases that are designed to keep GDPR in the spotlight – at least to start with.

“Recent cases from the ICO have focused on the indiscriminate use of data, such as mass-marketing tactics like cold calling. This will continue, but now it will have the full force of GDPR behind it.

“We may see the ICO seek to remind businesses of the annual fees that everyone will have to pay. The default category is £2900 but this drops dramatically to £60 or £40 for medium and small businesses. Another priority should be communicating to the regulator which category your business falls into.

“If you’re a businesses that hasn’t started to prepare, or is significantly behind, for GDPR then the key is not to panic. It’s too late to. Start the process of identifying what data you hold, how it is used and whether you have a legal right to process it now. That way, if the ICO comes knocking, you will be able to demonstrate you are attempting to get your ducks in a row.”

SIA acquires card processing businesses from First Data

SIA, a European high-tech leader in payment infrastructure and services, and First Data Corporation (NYSE: FDC), a global leader in commerce-enabling technology, have signed an agreement for SIA to acquire First Data’s card processing businesses in parts of Central and Southeastern Europe for €375 million. In 2017, these businesses generated a combined revenue of approximately €100 million for First Data.
This acquisition by SIA provides card processing, card production, call center and back-office services, including 13.3 million payment cards, 1.4 billion transactions, in addition to the management of POS terminals and ATMs. These businesses are primarily located in 7 countries: Greece, Croatia, Czech Republic, Hungary, Romania, Serbia and Slovakia.
First Data remains highly committed to the European issuer processing business, maintaining its focus on serving its significant client base, primarily with its leading VisionPLUS platform.
As a result of the transaction, SIA will become a leading player in processing and services in the region. The agreement includes the transfer of about 1,400 First Data employees into SIA.
“This acquisition is in line with our strategy to become the leading European independent digital payments platform. SIA is further strengthening its position in the e-payments international market, increasing its market shares in e-money high-growth countries,” said Massimo Arrighetti, CEO of SIA.
“This transaction aligns with our focus on portfolio management. While these are solid businesses, aspects of their operations are no longer core to our strategy, and this sale allows us to deploy the proceeds to create value in line with our capital allocation priorities,” said Frank Bisignano, Chairman and CEO of First Data. “We believe we have found an excellent partner for this transaction as SIA’s integrated payment infrastructure and service offerings and presence across Europe make it the perfect home for these businesses and puts our former customers in capable hands.”
The deal is expected to close in the third quarter of 2018 and is subject to normal closing conditions.
Deutsche Bank and K&L Gates were respectively financial advisors and counsel to First Data on the transaction.
HSBC acted as financial advisor to SIA, White & Case as legal advisor and PWC as tax and accounting due diligence advisor.

First crowdfunding project to address housing crisis in UK

Abundance, Britain’s leading peer-to-peer ethical investment platform, today launches a new move into the social and affordable housing sector, building on its six-year track record of financing renewable energy and energy efficiency projects, by seeking to address the shortage of affordable rental homes in the UK.
Responding to feedback from existing customers who wanted its ‘win win investing’ approach to be applied to new sectors, including property, Abundance believes this new investment will show there is a better way to finance and build long term social and affordable homes for ordinary people. This move into financing affordable property is a bold new direction for Abundance that could in time prove highly effective at tackling the UK’s housing crisis.
The investment is called “Merseyside Assured Homes” – from pioneering housing developer Octevo Housing Solutions – and it aims to raise up to £4,250,000 to fund the construction of 21 mostly 3-bedroom, social or affordable rental homes and nine 2-bedroom supported living flats in and around Liverpool. The 3-year secured investment is paying 4.5% interest a year, which includes a 0.5% bonus from Abundance, with capital returned in full on maturity.
Once the housing is complete and ready for occupation, registered social landlord Finefair Housing will find and manage suitable tenants from those unable to afford market rents, on the basis of a lease that lasts at least 50 years. Finefair has the option to purchase the homes for £1 each at the end of the tenure.
Finefair Housing’s sister company, Finefair, already manages around 2,000 properties for public (local authority) and private landlords. Through its relationship with Octevo Housing Solutions, it will expand into Liverpool where more than 20,000 people are on council waiting lists looking for homes or in need of supported living accommodation.
Robert Macmaster, Director of Octevo Housing Solutions Limited, said: “We set out to design a viable long-term solution that will ease council waiting lists and prevent housing shortages from continuing to escalate. Our business model has been created to address the core procurement and funding barriers faced by local authorities and housing providers, and to deliver a robust new solution that can make a significant contribution to addressing local housing issues.
“We believe that the home should be the treasure chest of living. We hope investors will join us in helping to build quality homes that offer opportunities to other people to create their own homes and improve our society.”
Bruce Davis, joint Managing Director of Abundance, said: “Abundance has led the way with our win-win approach to support the transition to a sustainable, green energy economy. Now we want to use the power of crowdfunding to help address the structural problems of the UK housing market. We can change the way we finance new developments so that families and young people no longer have to bear unsustainable levels of housing costs. Everyone wins when more people get access to stable and long-term homes – tenants benefit, communities are stronger and small investors get a fair return.
“We believe that Merseyside Asssured Homes can show there is a better way to make the housing market work for everyone, a way which balances investment potential and social impact without fuelling the property bubble.”
The new homes will be built on three different brownfield sites in Merseyside, which already have planning consent. They will be built to high standards integrating sustainability and energy efficiency and aiming to foster a sense of local community.
As with all Abundance investments, Merseyside Assured Homes is raising money through tradeable Debentures, with a minimum investment of just £5, which are eligible to be held in an Innovative Finance ISA so returns can be tax-free. It is expected to be the first in a series of housing projects across the UK from Octevo listed on Abundance’s online platform.

Decrees against Scottish companies skyrocket

The number of debt decrees registered against Scottish companies sharply rose during the first quarter of 2018, according to figures released today by Registry Trust.

Registry Trust is the non-profit organisation which collects decree and judgment information from jurisdictions across the British Isles and Ireland. In Scotland it collects information on small claims, summary, ordinary cause and simple procedure sheriff’s court decrees. A decree is incontrovertible proof that debt has not been managed.

There were 750 decrees issued against all businesses in Scotland during Q1 2018, four percent more than during the same period of the previous year.

A massive 39 percent rise in the number of decrees issued against companies accounted for this increase; the number of decrees registered against the generally smaller, unincorporated businesses sharply decreased by 42 percent.

The rise in the number of decrees issued, coupled with a marginal one percent increase in average value caused the total value of business decrees to increase five percent.

During Q1 2018, 7,259 debt decrees were registered against Scottish consumers, six percent more than in Q1 2017. Despite rising in number, a 14 percent fall in average value led the combined value of all consumer decrees to drop nine percent compared to the first quarter of the year before.

A seven percent increase occurred in the number of consumer small claims and summary cause decrees issued. In contrast, the number of consumer ordinary cause decrees fell by seven percent.

Only 3.17 percent of decrees were marked as satisfied during Q1 2018, far lower than the 13.14 percent of satisfied debt judgments in England and Wales, where satisfaction rates are generally higher owing to legal differences.

Trust chairman Malcolm Hurlston CBE advised people who had paid back: “If you have satisfied a decree, tell Registry Trust and we shall let credit reference agencies know. Then you are likely to find borrowing easier and cheaper. You need to tell us, it doesn’t happen automatically. Fewer than a quarter of the people in Scotland who pay back are getting the recognition they deserve.”

£20bn custom system would “dampen the ambitions and confidence of UK SMEs”

Regarding the news that the Brexiteers’ favoured technology-based custom system could cost UK businesses £20bn a year, Specialist Finance Director at BFS, Kash Ahmad, commented “The idea that businesses may have to foot a bill of up to £20bn to trade with the EU would prove another significant barrier for UK SMEs international expansion aspirations. Effectively, it would be an enormous step backwards in the Government’s efforts to promote trade.

“A “plausible” figure of £32.50 per individual declaration is yet another burdensome cost for SMEs already feeling the squeeze. From operating on small margins and handling different payment terms, many businesses are already stretching their working capital to the maximum.

“The Government continues to ramp up the positive energy to a bright future for UK Plc, but solutions like this only dampen the ambitions and confidence of UK SMEs.”

Behind on the basics – three million people in arrears on essential bills in 2017

Analysis by StepChange Debt Charity reveals that two in five clients who received advice in 2017 were behind on at least one of their essential household bills (such as energy bills, council tax, mortgage or rent). Across Great Britain, the charity estimates the number of people behind on priority bills was over three million.

Behind on the basics: a closer look at households in arrears on their essential bills, written by Grace Brownfield, Senior Public Policy Advocate, reveals a complex patchwork of difficulty. In some cases, people may be avoiding arrears only by taking on more credit.

Among renters, for example, those without rent arrears had significantly higher levels of borrowing relative to their income (77%) than those renters with rent arrears (55%).

Worryingly, an estimated 9.3 million people last year used credit to meet a household need – with 1.4 million of these using high cost credit.

Groups identified as being at higher risk of arrears on priority expenditure included lower income families, renters, people with an additional vulnerability, and younger people. This could be because they are more likely to have been affected by factors that increase the risk of arrears – namely a squeeze on income, rising living costs, insecure work, and regular income shocks.

The charity looked at the various types of bills clients were responsible for paying, and worked out the proportion of clients who had each type of expenditure who were behind on payments. Among those responsible for paying these bills, the most common arrears were on council tax (30%), water bills (23.7%), rent (21.5%) and mortgage (20.6%). Generally speaking, the lower the income of the household, the more likely they were to be in arrears.

Such arrears levels are perhaps unsurprising given that the typical StepChange client spends, on average, 60% of their net monthly household income on essential household bills plus food – while among those on the lowest net household incomes (under £10,000), an average 93% of their monthly income is swallowed up by the basics, leaving very little for other items such as clothing, school uniforms, travel, or household goods.

One particularly striking finding is that those working on zero-hours contracts, or with highly variable incomes, were twice as likely to have experienced arrears on priority expenditure in the past 12 months than those who worked full-time – and they were only slightly less likely to have fallen behind than those who were unemployed.

Peter Tutton, head of policy at StepChange Debt Charity, commented: “Our findings, while worrying, help pinpoint three positive steps that could be taken to reduce arrears through better help for people to make ends meet, reducing the need for them to turn to unaffordable borrowing.

“First, the Government must ensure that the right kind of debt support framework is in place – especially in the design of the new debt breathing space scheme, but also in the way that deductions from benefits are applied. At the moment, these can have perverse consequences.

“Second, policymakers should make it a priority to increase households’ financial resilience through helping them to build savings, to help more people cope with the “new normal” of insecure income and regular income shocks.

“Finally, there is a huge opportunity for utilities providers, local authorities, landlords and other creditors to reflect on how they can create more flexible and personalised payment schedules for people whose incomes fluctuate. For example, higher payments in some months and lower payments in others could help people to work around foreseeable financial pinch points in the year –and potentially help them to keep up their agreed payments.”

All work and no play for UK’s Small businesses

Almost a quarter of small business owners in the UK (24%) took fewer than five days’ holiday over the last year with 15% taking no leave at all, according to new research from Hitachi Capital Business Finance. Among start-ups, this figure rose to 31%, with 19% taking no leave.

At a time when most people are making plans for the long bank holiday weekend, Hitachi’s new research shows that whether by choice or compulsion, many of the UK’s small businesses will not taking a break away from the office.

Ploughing away – farmers least likely to take holiday
Half of those (50%) in the agricultural sector took fewer than five days’ holiday last year, with just over a quarter (28%) saying they took none at all. After this, the next most likely to have taken a maximum of five days’ leave were those in the retail sector (38%) or the legal professions (22%).

Women take less leave than men
More than a quarter of female small business owners (27%), took a maximum of 5 days’ leave, compared with 23% of male bosses. Men were also more likely to take more than 30 days’ holiday than women (14% vs. 11%).

North vs South
Small businesses in the North took fewer days than their southern counterparts, according to the results. Almost three in ten northern small enterprise owners (29%) took fewer than five days’ leave, compared with 24% of those based in the South. In London this figure dropped again to 19%.

By specific region, businesses in the North East were the least likely to take annual leave – 41% of bosses took less than five days’ leave. This was followed by 28% of bosses in the North West.

At the other end of the scale, there were those that did take their annual leave allowance as planned. More than two in five Scottish small businesses (41%), a third of those based in the West Midlands (35%), and 28% of company owners in the capital all took more than 26 days’ holiday last year.

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance commented: “Hitachi have carried out detailed research looking into the links between productivity and the health, happiness and wellbeing of an organisation’s employees. We completely support organisations that take this seriously, and see holidays as a key ingredient in the wellbeing mix. At the same time, we understand the pressures that small businesses face and that for many ‘time is money’.”

“Hitachi Capital helps businesses to be confident that their cash flow is well managed and their growth plans secure so that if and when they take time off, for however long they choose to do so, they are able to relax as they take their hard-earned leave.”

Over half of businesses predict a serious security breach within the next year

Research released today by Callcredit Information Group, ahead of its annual Fraud Summit in June, reveals that over half (59%) of businesses predict a serious fraud incident or security breach within the next year if they continue with their current technology, processes and tools. In addition, a further 17% of those surveyed revealed that this is something they have already experienced.

The research, which asked 105 fraud prevention managers and directors about their attitudes and techniques, also found that fraud prevention priorities have shifted since 2017. This year, one of the biggest focuses in the fight against fraud is developing a fraud response strategy, according to 91% of those surveyed, compared to 80% last year.

John Cannon, Managing Director, Fraud & ID, Callcredit Information Group, commented: “Our research suggests that for most businesses, a security breach is now considered an almost inevitable occurrence, so it’s no surprise that fraud leaders see prevention as the key tactic in the fight against fraud. It’s encouraging to see that businesses are increasingly adopting robust prevention tactics, but the challenge is far from over.

“With the ever-evolving fraud threat, businesses are having to continually adapt their strategies to tackle the problem. Technology plays a central role in that, and is constantly developing, with cutting-edge techniques like machine learning and artificial intelligence complementing more traditional methods. In fact, over half of the fraud leaders we surveyed (58%) believe machine learning and pattern-recognition will be vital to our future fraud prevention activities.”

The research highlighted a significant uplift in the adoption of identity verification measures and fraud prevention technology, with 90% of those surveyed stating these were amongst their top priorities this year. Unsurprisingly, compliance with the latest regulation also remains a key focus for nine out of 10 fraud leaders, as they adapt to the changing landscape and more stringent regulatory requirements.

Cannon concluded: “Collaboration is essential when it comes to fighting fraud. Businesses need to come together to share insights and best practice across all sectors if they want to stay a step ahead of the fraudsters. Ongoing fraud has had a damaging impact on trust in businesses and it’s now crucial that they work to win back consumer confidence, so they need a broad understanding of the tools that are available to ensure they are keeping their business, and their consumers’ data, safe.”

FCA robo-advice review comment

Following the FCA’s statement on robo-advice, which required many providers to make ‘significant changes’, Robbie Constance, Head of Financial Services Regulatory, DWF, commented: “It is no surprise that robo-advisers and ‘online discretionary investment managers’ are having teething troubles, especially when we take into account the complex regulatory regime these services operate under. Rather than allow for cheap and simple alternative services, MiFID II expressly requires that direct to consumer digital investment businesses achieve the same high standards as face-to-face advisers.

“Robo-advisers that are already in operation have some urgent work to do to ensure that they are compliant with the current guidelines. Those still in ‘build mode’ – particularly banks – will no doubt take stock of the FCA’s statement, and add it to their long list of regulatory and other risks to worry about.

“If they haven’t already done so, firms should critically assess the FCA’s article, carry out an urgent ‘gap analysis’ against their own proposition and reconsider their product governance in light of this – and the MiFID II rules. It’s the perfect time for an independent third party to work with digital investment businesses to develop best practice.

“Unusually – but understandable given the FCA’s enthusiasm for fintech and need to encourage solutions to fill the ‘advice gap’ – there is no dire warning of enforcement action or remedial timeline imposed. Firms will welcome the softly sofly approach of feedback and a reminder of the need to get things right. In less favoured sectors of financial services, the FCA’s findings would probably have resulted in ‘Dear CEO’ letters, skilled persons’ reviews, variations of permissions, remediation – and worse. For now the FCA has shown willing to wait and see.”

ASTL quarterly results show continued strength

Figures compiled by the ASTL’s auditors from its bridging lender members for Q1 2018 have exceeded the outstanding figures for Q4 2017, when for the first-time quarterly completions exceeded £1 billion. Annual completions are now close to £3.8 billion.

The value of loans written for the quarter ending 31 March 2018 revealed an increase of 1.5% compared to the previous quarter. Annual completions rose by 29.9%. In comparison to the same quarter last year, the value of loans written in the quarter has increased by 32.5%.

Total loan books are continuing to climb, with a rise of 13.1% compared to Q4 2017. Compared to the end of Q1 2017, the value of loan books has risen by 35.6%, to £4.2 billion. All figures highlight the current strength of the ASTL’s bridging lender members.

The pace of increases in applications reversed recent declines and increased by 28.9% compared to a decrease of 11% in Q4 2017. On an annualised basis, applications are up by 23.2%, making up a total of £19.7 billion. Although applications do tend to be unreliable indicators and are dependent on how many lenders are offered the same deals, this is still a staggeringly large figure.

Benson Hersch, CEO of the ASTL says: “Our figures highlight the fact that the bridging finance industry is in good shape and is ready and willing to meet the challenges and opportunities of today’s market.”

“The bridging sector is now a well-established part of the property finance market and, barring any black swans, should continue to grow.”

These figures are taken from the responses from ASTL members, which include most of the key lenders in the bridging market.