Santander blamed its decision this week to lift the annual fee on its 123 current account from £24 to £60 a year on falling savings rates and increased regulatory costs. Feeling the squeeze, lenders can’t wait for the Bank of England to begin increasing interest rates because it will boost profits. It is a move that looks further off after the US Federal Reserve kept its powder dry on Thursday.
When money does eventually become more expensive, the floodgates will open. Just as the fluctuation in the price of wholesale energy drives sharp rises in gas bills but only gentle price cuts, expect costs to flow faster than the customer benefits, in this case the extra value derived from interest-bearing savings accounts.
The same arbitrage from macroeconomic factors has been seen in the supermarket aisles. Grocery prices rose under cover of a spike in inflation. If the budget retailers had not shaken up the market with a price war, all the savings from the falling oil price might have fallen straight to someone’s bottom line.
Because interest rates have remained at rock-bottom since March 2009, there is a fear that twentysomething consumers who haven’t experienced a rising-rates environment will somehow struggle to cope. What doesn’t change is that consumers should play their own game of arbitrage to find the best deal in any sector.
Banking is a special case. Roll on next year when the Competition and Markets Authority concludes an inquiry that is likely to enforce more transparency over fees, including overdraft charges, and make account-switching easier.
HP transforms, tortoise style
Everything is bigger in California, even the job cuts. News that Hewlett-Packard is to cut up to 30,000 more posts as it prepares to split in two is a reminder of how big even the declining technology giants still are. For a fast-moving industry, the leading players are sometimes guilty of doing their best tortoise impressions.
HP might have spun off its low-growth personal computer and printer business four years ago if chief executive Meg Whitman hadn’t scrapped the plan formed by the man she replaced, Leo Apotheker, who is best known on these shores for paying top dollar for the big-data software company Autonomy.
What HP will be left as is a company selling software, not hardware, which means it starts to look a lot like IBM. The only difference is that IBM sold its computer arm to the Chinese company Lenovo a full decade ago, and then last year disposed of its servers division to the same buyer.
Never mind the tortoises. Harriet Green, the former Thomas Cook chief executive who was announced this week as the boss of IBM’s new “internet of things” division, is running with the hares again.
Governance points the way ahead
The quiet men and women of the boardroom are staging a fightback, Simon Osborne explained to me over lunch on Thursday. Mr Osborne is chief executive of the Institute of Chartered Secretaries and Administrators, a mouthful of a name for an organisation that traces its roots back to 1891 – and even further if you think of the clerks and stewards who first emerged in the Middle Ages.
ICSA trains and represents company secretaries who ensure the smooth running of boards, including compiling minutes and overseeing compliance. Their role can stretch to cover human resources and advising the chairman on board effectiveness. Just over a quarter of FTSE 100 company secretaries are ICSA-qualified and members. The job has been squeezed by the rise of in-house legal teams who dispense a lot of overlapping advice. Since the Companies Act 2006, private businesses are no longer legally required to employ a company secretary, although the workload has not disappeared.
Mr Osborne’s aim is to raise ICSA’s profile to attract more people to its training courses and arrest a decline in membership. Over time it will change its name to the much snappier Governance Institute. That makes sense: corporate governance has been a booming industry as checks and balances have had to be tightened in areas of pay, appointments and audit. The “comply or explain” regime of UK Corporate Governance Code is updated every two years and is keenly watched overseas. Mr Osborne is mindful of that, refreshing ICSA’s colonial links to build chapters in East Africa and beyond.
Over the past decade, shareholders have gained a more powerful voice, pressing for tougher internal controls and for boards to be squeaky clean. Now it is time for the company secretaries, the guardians of governance, to strike back.
Carr is armed and ready
There is something inevitable about the suggestion that Sir Roger Carr will become chairman of the BBC should the BBC Trust be scrapped, as expected, at the end of next year. Sir Roger has done it all, from roles on the Court of the Bank of England to chairing Cadbury Schweppes when it was bought by Kraft. His limited exposure to the media industry, other than the press maulings meted out to Centrica when he chaired the energy giant, should not matter.
Where he might be able to help is boosting creative exports. As the comedy writer Armando Iannucci lamented in his Edinburgh International Television Festival speech last month: “If the BBC were a weapons system, half the Cabinet would be on a plane to Saudi Arabia to tell them how brilliant it was.” Sir Roger, who already chairs BAE Systems, Britain’s largest defence contractor, is ready for take-off.