Bank Industry Insights: November 2024 edition

Following Donald Trump’s election victory, we await the affect his policies will have on the US (and indeed global) economy, with voters expecting him to deliver on his promise to bring down prices. After evidence that the US GDP is growing solidly, even as inflation falls, the Federal Reserve voted (unanimously) last week to cut interest rates by a quarter point. The decision (which represents a return to "normal" after September’s larger than usual half-point cut) takes the target range to 4.5%-4.75%.

In the UK, the Bank of England’s MPC voted 8 to 1 to cut interest rates from 5% to 4.75% last ?week. It is evident from the minutes of the meeting that the BoE is taking a more cautious approach to lowering rates going forward, as it weighs up the impact of the Budget (which could possibly be seen as inflationary) and a Trump administration (whose tariff driven policies could probably be seen as inflationary)

Also kicking off this week in Baku is COP29 – or "The Finance COP" as it has come to be known – as countries clash over calls for $1tn in funding. UK Prime Minister Starmer has resisted the call for more public finance to deal with climate change, but has said that the launch of a new climate finance mechanism on the London Stock Exchange on Tuesday, was an “early example” of the role the City could play.

Finally, you may have been following the case of Johnson v FirstRand Bank Ltd (London Branch) [2024] EWCA Civ 1218 last week, where the Court of Appeal ruled that it was unlawful for car dealers to receive a commission from a lender providing motor finance to a customer, unless it was properly disclosed to the customer and they gave informed consent to the payment. It was previously understood that there was no necessity to disclose the amount of commission (on the basis of CONC 4.5.3R), so it has come as a surprise that the CoA has found quantum disclosure to be necessary. The UK lender in the case said that it disagreed with the ruling and noted that the defendants had announced they would appeal to the UK's Supreme Court, however it is risky to assume that the Supreme Court will grant permission. The case has prompted urgent talks between Banks and the UK Treasury, as the ruling appeared to widen the scope of possible cases of mis-selling that could come under review. Ashurst's consulting arm, Ashurst Risk Advisory, have been deeply involved in motor finance review and redress programmes in Australia, where this has been an issue for the regulator (ASIC) since 2016. The issues identified in Australia have direct read across to the UK, so you can take advantage of our insights here.

The UK Government just released it's guidance on the new "failure to prevent fraud" (FTPF) offence, effective from 1 September 2025. The FTPF offence is designed to targets large organisations where an associated person commits fraud to benefit the company or its clients. It also puts a framework for companies to defend themselves by proving they had reasonable prevention procedures in place. Six key principles that underpin fraud prevention procedures include top-level commitment, risk assessment, risk-based prevention procedures, due diligence, communication and training, and monitoring and review. The guidance emphasizes the importance of a holistic approach to fraud prevention, regular risk assessments, and robust governance to ensure compliance, and you can read our digest of these guidelines here.