Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
1.) Vanquis agrees to pay £2m fine; shares rise
Things are beginning to look up for credit card lender Vanquis, as it agrees to pay an FCA fine and compensation to its customers, drawing a line under a seven month-long investigation by the regulator.
Vanquis Bank, a subsidiary of lender Provident Financial, is due to pay £1.9m for failing to disclose the full price of repayment option plans (ROPs), an add-on product that allowed borrowers to freeze repayments on their credit card debt temporarily. Vanquis will also pay back the interest customers were charged on this product, worth £169m.
Director of enforcement and market oversight at the FCA Mark Steward commented that: “Most Vanquis customers chose the ROP to help manage their credit without realising instead that the product might lead to their indebtedness increasing.
“Vanquis has decided now to do the right thing by acknowledging the wrong-doing and offering to compensate its customers.”
This news follows a bleak year for Provident, who suffered a major blow to its financial results in 2017. It reported a pre-tax loss for the year of £123m, after having posted profits of £344m the year before. The lender also lost its chief executive and cancelled a dividend for shareholders during the same period, which saw it undergo one of the largest share price falls ever seen in the London market.
After such a turbulent year, settling the regulatory probe by the FCA into Vanquis has proved positive for Provident. It was also announced on Tuesday that Provident will launch a £300m rights issue, which further confirmed a turnaround period for the company, and caused a massive share price rise of 70 per cent on Tuesday.
Whilst a further regulatory investigation remains open on Provident, namely its subsidiary Moneybarn’s car financing product, recovery for the lender looks promising as it succeeds in rebuilding its levels of investor confidence.
2.) Bryan Cave Leighton Paisner to go live in March
Berwin Leighton Paisner secured its transatlantic merger this week, as partners voted through its consolidation with US firm Bryan Cave on Monday.
The combined firm – Bryan Cave Leighton Paisner – will house 1,600 lawyers with offices in 32 cities across 11 countries, and become one of the 50 largest firms in the world with combined gross revenues of around $900 million. When the new firm goes live on the 31st March, it will represent 191 clients in the Fortune 500 and 30 of the world’s 50 largest banks.
The merger builds on many commonalities between the two firms. Aside from strong practices in M&A and Real Estate, Bryan Cave Leighton Paisner will also become the first firm to be led by two women – Bryan Cave’s chair Therese Pritchard and BLP’s managing partner Lisa Mayhew, who will become co-chairs of the new firm.
Both firms have also been recognized for their innovative approaches to legal service delivery. Launched in 2007, BLP’s Lawyers on Demand was the original legal outsourcing business, and now stands at 600 lawyers, whereas Bryan Cave’s BCX Component offers expertise in data analytics, software programming and project management to clients in order to provide more efficient legal services.
The firm will also be fully financially integrated to incentivise the sharing of work between partners. “Clients will benefit from our combined legal expertise; our shared values and culture and our approach to innovation in their interests,” said BLP’s Lisa Mayhew. “Different to most other international firms, ours will be fully financially integrated from day one. This will enable us to work in teams whose only focus will be to provide a first class service to clients.”
Baker McKenzie also announced this week that it is to integrate eight of its EMEA offices – including London – into a single profit pool, in a step towards greater financial integration of the firm, which has been criticised in the past for its loosely-combined ‘franchise’ model.
3.) Movers & Shakers
Macfarlanes investment fund finance head Bronwen Jones has left the firm after 14 years to join Reed Smith’s London office
Ashurst hired former Clyde & Co intellectual property (IP) head David Wilkinson for its London disputes team.
Corporate partner Benjamin Aller joins the firm from asset management consultancy MJ Hudson.
Mergers & Alliances
Office Openings & Closings