Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1. CMA announces findings into Banking Probe
Recommendations of the UK’s Competition and Markets Authority (CMA) two-year investigation into high street banking were met with criticism upon their release on Tuesday.
Intended to kick-start competition in the sector, where only 3% of personal and 4% of business customers switch to a different bank each year, many hoped the inquiry would break the stranglehold of the ‘Big Four’ on high street banking, who continue to control 77% of the current account market and more than 80% of small business accounts.
Short of this move, the core recommendations of the CMA centred on the use of technology to enable customers to see hidden charges applied to their accounts, making it easier to compare financial products and shop around for the best deal. Dubbed the ‘Open Banking Regime’, the CMA want banks to set common standards for the exchange of product and customer data so that third-party developers can create apps in which customers can see all their financial products regardless of provider.
The recommendations also addressed the £1.2 billion banks make per year in unarranged overdraft charges by making banks set a monthly cap on such charges and sending alerts when customers become overdrawn.
However, criticism has been levied at the CMA for not going far enough in its duty to protect consumers, especially in relation to the unauthorised overdraft limits banks can levy. By leaving this amount to the banks discretion (rather than setting an industry standard) and continuing to allow banks to charge large fees for unauthorised overdrafts, the CMA is arguably neglecting the consumers that need help from them the most.
The report has also drawn heavy criticism from challenger banks for failing to ease capital requirements for these institutions and not forcing banks to publish the charges associated with “free-when-in-credit” accounts. Even the banking lobby group, the BBA, while welcoming much of the report, questioned whether it had done enough for these institutions.
Finally, many challenge the core precedent of the regulator’s findings that new technology will prompt greater competition. The fact that bank’s often struggle to keep their own systems running, let alone make data accessible to third parties, have led many to suggest a ‘technological smokescreen’ has been deployed by the CMA to distract from its failure to back a break-up of the Big Four.
The eleventh inquiry launched into the British banking system in the past 17 years, it is hard to see how the CMA’s recommendations will bring about wholescale change and greater competition to the sector in this instance. The onus will still very much be on “challenger banks” to devise new and innovative ways to draw customer’s way from the traditional Big 4, however, with many of the challengers already having technology at the centre of their organisations they perhaps may be better placed to deliver change.
2. Brexit Aftermath: All attention on Ireland
Following on from the June 23rd decision to leave the European Union, all attention was on Ireland this week as Legal Business revealed high numbers of applications to the Irish bar continued, with Freshfields and Eversheds making up the bulk of admissions.
The total number of admissions to the Irish Law Society currently stands at 319 for 2016, already trebling last year’s total of 101, with the body receiving approximately 30 queries a day from UK solicitors since the referendum. Of this, Freshfields has registered approximately 130 lawyers so far this year, whilst Eversheds has had about 100 lawyers admitted.
Many of the top UK and international firms with strong EU and Competition law practices have rushed to admit their UK qualified solicitors in Ireland in order to maintain their legal privilege to argue before EU tribunals by ensuring their qualification in a member state.
However, it is also understood that a number of UK firms are considering a Dublin base following Britain’s decision to leave the EU, with financial services and funds being two areas becoming especially lucrative following the Brexit vote.
Yesterday saw the announcement that Pinsent Masons were on the hunt for office space in Dublin to complement its existing offering in Belfast and provide a full UK and Ireland presence for the firm. This is likely to be achieved through a targeted greenfield site as opposed to a formal merger, with Pinsents already having referral relationships with a number of firms in Dublin.
Eversheds meanwhile, who already have a full-service offering in Dublin, announced the expansion of its consulting business in Ireland to allow continued service to EU clients.
3. Movers & Shakers of the Week
Burford Capital hires ex-Fried Frank competition head as new MDLitigation funder Burford Capital has hired former Fried Frank Harris Shriver & Jacobson competition head Craig Arnott as its new managing director.
Clyde & Co makes Trade Finance hire from Reed SmithPartner Robert Parson returns to Clyde & Co from Reed Smith to strengthen their trade finance practice
Squire Patton Boggs recruits Communications and Competition Law expertFrancesco Liberatore joins Squire Patton Boggs in London from Jones Day
Alternative legal services provider Halebury brings on three in-house lawyersJan Hawgood (Chevron), Katherine Kennedy (VocaLink) and Neeta Mashru (BBC) join Halebury’s 31-strong team
RPC recruits RBS consultant for general counsel consulting arm RPC PerformSpecialist in management consulting, Varun Srikumar joins RPC Perform to advise on strategy, external legal spend assessments, cost reduction programmes and legal technology.
Allen & Overy hires Simmons IP head in LondonHead of IP Marc Doering set to joins Allen & Overy, as the firm labels the practice a priority
Mergers & Alliances
Kennedys mergers with marine boutique Waltons & Morse
Japan’s MHM merges with Thai firm C&T in first international overseas merger of its kind
White & Case to launch in Australia