Volkswagen fined £5.4m for mistreating customers; UK interest rates ‘to fall to 2.75%’ next year – as it happened
German carmaker Volkswagen’s financial services arm has been fined by UK competition regulators for mistreating customers in financial difficulties,The Financial Conduct Authority (FCA) has fined Volkswagen Financial Services (UK) Limited £5,397,600 for failing to treat its over 100,000 customers in financial difficulty fairly,VWFS has agreed to pay over £21,5m in redress to around 110,000 customers who may have suffered harm because of its failings,VWFS is one of the UK’s largest motor finance providers, and provides a range of products to help customers buy several well-known motor brands, including Volkswagen, Skoda and Porsche.
The FCA has found that it failed to treat customers in financial difficulty fairly and communicate information to them in a clear and fair way, if they fell behind on their repayments.The FCA says:This included in some instances (a) exacerbating stress and anxiety for customers who were already struggling with their mental well-being; (b) failing to understand individual customer circumstances resulting in cars being taken away from customers, some of whom used their cars for work; (c) further distress and upset caused to vulnerable customers who may have felt unsupported and unheard; and (d) forgoing other priority payments due to demands to pay arrears on car finance.The FCA’s ruling cites one customer who fell into arrears, and explained their complex and worsening physical and mental health difficulties to VWFS.They received no empathy, but were “sarcastically” reminded how many days are in a month by VWFS’s agents, the FCS says.In a second case, a customer took out car finance but later could not afford the repayments.
They were told it would cost them £20,000 to give the car back,Therese Chambers, joint executive director of enforcement and market oversight at the FCA, says:“For many, a car is not a nice to have but a necessity for work or for family life,Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need,It is right it compensates those who suffered,This fine and redress should send clear signals to lenders that they need to properly support those in financial difficulty.
”Time for a recap….Volkswagen has been forced to pay customers £21.5m in compensation on top of a fine of £5.4m for failing to treat struggling customers fairly, including repossessing vehicles from people who had attempted suicide or were caring for sick relatives.The UK financial regulator, the Financial Conduct Authority (FCA), said 110,000 customers had suffered detriment because of the unfair actions of Volkswagen Financial Services (VWFS), which is wholly owned by the German carmaker.
Goldman Sachs has predicted that UK interest rates are on course to fall to 2.75% by next Autumn as the Bank of England reduces the cost of borrowing at each of its nine next meetings.Economists at Goldman Sachs said their assessment of the long-term level of interest rates consistent with achieving the Government’s 2% inflation target meant the markets were under-estimating the likely extent of the action by Threadneedle Street’s nine-strong monetary policy committee.In a research note, Goldman said:“Our findings suggest that Bank Rate remains notably restrictive and – together with rapidly falling inflation and dovish MPC commentary – reinforces our view that the Bank of England will ultimately lower rates more than priced.”China’s banks have lowered their key lending rates, as Beijing tries to stimulate its economy and hit its growth targets.
Gold has hit a new alltime high, of $2,740 per ounce, lifted by geopolitical fears and the possibility that Donald Trump wins the presidential election.The number of UK homes being sold is up almost a third, year on year, so far this month, although the traditional autumn price bump has failed to emerge due to buyers being spoilt for choice, Rightmove has reported.The owner of TikTok has sacked an intern for allegedly sabotaging an internal artificial intelligence project.Transport for London (TfL) could be forced to pay back millions of pounds in low emission zone fines issued to Dutch lorry drivers after agreeing they had been issued unlawfully.Just in: a closely-watched survey of the US economy has deteriorated.
The Conference Board Leading Economic Index (LEI) for the US declined by 0.5% in September 2024 to 99.7, following a 0.3% decline in August.The U.
S.Leading Index, officially known as the Leading Economic Index (LEI), is a composite index compiled by the Conference Board that tracks a set of economic indicators to predict future economic activity.Justyna Zabinska-La Monica, senior manager for business cycle indicators at The Conference Board, says:“Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists.Additionally, the yield curve remained inverted, building permits declined, and consumers’ outlook for future business conditions was tepid.Gains among other LEI components were not significant enough to offset weakness among the four gauges mentioned above.
Overall, the LEI continued to signal uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025.“Stocks have opened cautiously in New York at the start of the new trading week.🇺🇸 The Dow $DOW Jones has dropped 31.50 points or 0.07% to 43,244.
41 post-market open,S&P 500 is down by 7,79 points, or 0,13%, at 5,856,88 after the market opening.
The NASDAQ declined by 30.36 points, or 0.16%, resting at 18,459.19 after market open.#Dow $DOWJones…Back in the financial markets, the oil price has rallied by around 1.
5% today,Brent crude has risen by over $1 per barrel to $74,19/barrel, which recovers most of Friday’s losses,The gains follow this morning’s cuts to China’s borrowing rates, which could lead to higher demand for energy, and the head of Saudi Aramco saying he remains ‘bullish’ China’s oil demand,Fears of supply disruption due to the crisis in the Middle East are also a factor.
In another boardroom shake-up, Disney has named that banker James P.Gorman as its next chairman.Gorman, the executive chair of Morgan Stanley, will take up the role on 2nd January next year.Top of Gorman’s to-do list will be to finalise the choice of Disney’s next chief executive, to succeed Bob Iger.He is currently chair of the Disney Board’s Succession Planning Committee, which is working to pick the next CEO – although a decision is still more than a year away!Gorman says:“A critical priority before us is to appoint a new CEO, which we now expect to announce in early 2026.
This timing reflects the progress the Succession Planning Committee and the Board are making, and will allow ample time for a successful transition before the conclusion of Bob Iger’s contract in December 2026,”Disney Will Name Bob Iger CEO Replacement In 2026, Taps Banker James Gorman As Chairmanhttps://t,co/2SoBxakw2P pic,twitter,com/WDwZWI8TTiDeutsche Bank’s economists have also had a look at the path of UK interest rates.
They estimate that the short-term neutral rate (i.e.r*) may be anywhere between 3.75% to 5%, with the medium-term neutral rate (i.e.
R*) hovering around 2.25% to 3.75%.What does this mean for policy? Well, they say:Bank Rate remains restrictive.Based on the above estimates, our suite of policy rules suggests that Bank Rate should be closer to 4.
25% – in line with our average estimate for the short-term neutral rate.This implies that Bank Rate has much further to fall given our expectations of inflation, growth, and unemployment.GSK is investing £50m in a five-year partnership with the University of Cambridge and university hospitals, where scientists and artificial intelligence/machine learning (AI/ML) experts will work together and apply new techniques.This includes single cell technologies to understand how genes are expressed in individual cells, to provide “the right treatment for the right patient”.Bringing together patient data and AI/ML, the researchers will focus on hard-to-treat diseases which affect the kidneys and lung.
Kidney disease affects 850 million people, 10% of the world’s population, while chronic respiratory diseases affect 545 million people.The ambition is to more precisely treat immune-related diseases with existing therapies and develop new ones more quickly.Tony Wood, GSK’s chief scientific officer, said:“By bringing together Cambridge’s expertise and our own internal capabilities, including understanding of the immune system and the use of AI to accelerate drug development, we have an opportunity to help patients struggling with complex disease.”This comes ahead of GSK chief executive Emma Walmsley co-chairing the Life Sciences Council on Tuesday, a forum for discussion where ministers and pharma bosses meet.The company also has a collaboration with the University of Oxford, focused on neurological diseases.
Banks are already anticipating cuts to UK interest rates, by making their savings rates less generous.The average savings rate on accounts requiring notice to be given before the account can be unlocked was 4.21% at the start of this month, its lowest level since October 2023 new data from Moneyfacts today shows.The average notice Isa rate fell to 4.03% – also the lowest level since October 2023.
Moneyfacts also reports that average mortgage rates are flat today, saying:The average 2-year fixed residential mortgage rate today is 5.41%.This is unchanged from the previous working day.The average 5-year fixed residential mortgage rate today is 5.09%.
This is unchanged from the previous working day,Goldman Sachs’ forecasts implies that the Bank of England will cut UK interest rates by a quarter of one percentage point at its next nine meetings,The Bank’s Monetary Policy Committee meets eight times a year, so a 25 basis point cut at each one would bring Bank Rate down to 2,75% by November 2025,Goldman Sachs have cut their forecast for UK interest rates, and now predict that Bank rate will have fallen to 2.
75% by next November.The forecast comes in a new research note in which Goldman tries to estimate r* – the neutral real rate of interest which is expansionary nor contractionary while the economy is at full employment with inflation at target.Goldman’s analysis has concluded that r* has trended down strongly in recent decades and has risen moderately since the Covid-19 pandemic.Their estimates suggest r* is around 0.75%, which implies a nominal neutral rate of around 2.
75% with inflation at the 2% target,Goldman’s economists suggest rates will fall to 2,75% by November 2025, down from 5% today,Goldman says:Our findings suggest that Bank Rate remains notably restrictive and—together with rapidly falling inflation and dovish MPC commentary—reinforces our view that the BoE will ultimately lower rates more than priced,We remain comfortable with our forecast for consecutive 25bp cuts and lower our terminal Bank Rate forecast to 2.
75% in November 2025 (from 3% in September 2025), notably below current market pricing.The money markets are today indicating there’s a 98% chance that the Bank cuts rates at its next meeting in November, from 5% to 4.75%.By next November, the markets suggests rates could be 3.75% or lower – ahead of Goldman’s new forecast