Barclays blasted over 'catastrophic' theft of thousands of customer files

Barclays is under scrutiny by regulators and could face a hefty fine after thousands of confidential customer files were stolen in a data breach described as catastrophic by an adviser to the business secretary, Vince Cable.

The files, containing details on 2,000 individuals including their names, addresses, phone numbers, passport numbers, mortgages and levels of savings, were allegedly sold for use in boiler-room scams, in which vulnerable savers are snared into fraudulent investments.

"This is catastrophic, just awful," the Liberal Democrat MP Tessa Munt, who is parliamentary private secretary to Cable and has campaigned on mis-selling by banks, told the Guardian. "What protections have Barclays got in place? Are the police going to pursue this, are they going to prosecute, and is someone going to go to jail for this? They should do."

"We are learning not to trust our banks and that is a pretty sad thing. It is a culture of just make money in any way and that probably breeds a contempt among those who are bankers towards those they are meant to serve."

Barclays said it would be writing to the customers concerned. The bank, which claims not all of the individuals named in the files were its customers, has begun an immediate internal inquiry and reported the theft to the police and to regulators.

The Financial Conduct Authority (FCA), which can impose unlimited fines, and the information commissioner, who oversees data protection and can fine organisations up to £500,000, are looking into the matter.

"Barclays have contacted us and we will be working with them to understand exactly what has happened and what steps consumers may need to take," a spokeswoman for the FCA said.

"Consumers rightly presume their data is safe with their bank, and this should serve to remind all firms how important it is they have the correct procedures in place to ensure data is secure and used appropriately. We will continue to investigate the issue with Barclays over the coming days."

The security breach was first reported by the Mail on Sunday, which was approached by a whistleblower who claimed the files were just a sample from a haul of stolen data containing the details of 27,000 individuals. The whistleblower said he was prepared to give evidence to police, and claimed he was given the data to sell on by an unnamed firm of rogue brokers whom he worked with.

The memory stick he handed over also contained national insurance numbers, details on dependants and highly personal information on whether people had undergone surgery or were on medication. Those affected include doctors, scientists, business people, a musician and a cleaner.

They are believed to have been customers of the now defunct Barclays Financial Planning business, which was fined £7.7m in 2011 and ordered to pay up to £59m in compensation for mis-selling investment funds to more than 12,000 customers.

Like those Barclays customers affected by the mis-selling scandal, many of those whose names appear on the stolen files are elderly. The whistleblower said the information was used to scam about 1,000 people, who were persuaded to invest in rare earth metals that did not exist. Between December 2012 and September 2013, a select group of brokers at the firm concerned were given the files, which they used to cold call their victims.

These were customers who had originally sought financial advice from Barclays. As part of consultations with advisers, they filled out questionnaires about their savings, physical health and revealed their attitude to risk using psychometric tests.

"The data is a gold mine for traders because it is so incredibly detailed. It gets them inside the customer's head," said the whistleblower. He added: "This illegal trade is going on all the time in the City. I want to go public to stop it getting bigger."

He described a world in which scammers worked from so-called "spank shops", renting offices and peddling products that were either fraudulent or sold at inflated prices to unsuspecting, often elderly or inexperienced investors.

With interest rates at an all-time low since the banking collapse, people have been withdrawing their money from the comparative safety of savings accounts chasing higher returns on investments. Many of them are seen as soft targets for rogue brokers.

When investors of the firm concerned began to suspect they had been duped, the trading floor was shut. According to the whistleblower, computers were wiped, paperwork destroyed, and the desks cleaned with bleach to remove DNA traces. The whistleblower, a former commodities trader, was asked to sell on the data, which he said could fetch up to £50 a file from those operating boiler room scams.

Barclays said: "Our initial investigations suggest this is isolated to customers linked to our Barclays Financial Planning business, which we ceased operating as a service in 2011. Based on what we have seen, this appears to be data from 2008 or earlier.

"This appears to be criminal action and we will co-operate with the authorities on pursuing the perpetrator.

"We would like to reassure all of our customers that we have taken every practical measure to ensure that personal and financial details remain as safe and secure as possible."

The Information Commissioner's Office, which can fine organisations up to £500,000 for failing to protect private data, said in a statement: "It's crucial that people's personal information is properly looked after. We will be working with the Mail on Sunday this week to get further details of what has happened here, as well as working with the police."
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Britain's tax system 'not fit for purpose

Britain's tax system is not “fit for purpose” and must be overhauled if companies are to pay their “fair share” of tax, leading UK chief executives have warned.

Sparking the start of a fightback on tax by businesses, PwC’s Annual CEO Survey has revealed that 73pc of UK bosses believe the present tax system is unfit for the 21st century, and 72pc say efforts to reform it will be in vain.

Business leaders believe it is up to politicians to sort out the system but have little confidence that processes backed by Prime Minister David Cameron will bear fruit.

Globally, the PwC survey revealed that 75pc of CEOs questioned believe that paying a “fair share” of tax was important to their company.

“There’s been a lot of criticism around the tax arrangements they [companies] have put in place,” Ian Powell, UK chairman of PwC, told The Telegraph on the eve of the annual World Economic Forum in Davos.

But actually, it’s become a political question, because as long as countries are trying to use tax rates as a way to bring jobs into their own country, you are going to get tax arbitrage.

“What CEOs are asking for is: can we get some clarity on this, and can we get more consistency on tax arrangements, which would make it a lot easier for them to handle their affairs.”

More than two-thirds of UK chief executives said they believed current OECD attempts to reform the international tax system would be unsuccessful in the next few years, far higher than the average of 40pc across the globe.

Multi-national companies such as Amazon and Google have come under fire in recent years and have been criticised by MPs for how they handle their international tax affairs and for a lack of transparency.

However, the survey showed that 66pc of UK chief executives believed that companies with international divisions should be required to publish the revenues, profits and taxes paid for each territory in which they operate.

Google boss Eric Schmidt has made it clear that his company abides by all tax laws and that it is up to politicians to change the rules - an opinion backed by the survey.

Mr Cameron made tax reform the centrepiece of both his appearance at Davos last year and the most recent G8 summit in Northern Ireland, of which the UK was president.

Although the UK survey results were based on a small sample of 43 CEOs, it highlights that tax policies and competitiveness of tax regimes are becoming increasingly important issues and that CEOs want them to be urgently addressed.

“Virtually every business that operates on an international basis now operates through the internet,” said Mr Powell. “The tax arrangements that are in place at the moment make it virtually impossible to allow companies to know where they should be paying tax, not what tax they should be paying.”

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EU backs move to boost numbers of female non-executive directors

Legislators back rules demanding firms choose women when men are equally qualified – but stop short of quotas

The European parliament has backed rules that would give women preference for non-executive posts at companies, after plans for a mandatory quota to get women into top jobs were scrapped.

The rules demand that companies give non-executive directorships to women where there is no male candidate who is better qualified, until they reach a target of four in 10 being women.

"The parliament has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs," said EU justice commissioner Viviane Reding, who launched the proposal.

Although the draft law envisages possible fines for firms that ignore selection rules, it has been softened from imposing a quota with a penalty. Nor do the rules help women aiming for top management roles, such as chief executive. They also exempt smaller companies and those that are not listed.

Only about 17% of non-executive board members in the EU's largest companies are women. In Britain, women hold 17.4% percent of directorships, up from 12.5% in 2010; only four CEOs at FTSE 100 companies are women.

If endorsed, the rules will take seven years to come into full force. Countries are now required to sign off on the law but are divided on whether pan-European rules on positive discrimination are necessary.

Britain and Germany have argued against mandatory quotas.

Men dominate boardrooms in the region, and many women who have risen through company ranks resent quotas because they can be seen as suggesting that women have not been promoted on merit.

Only Norway, which is not a member of the bloc, has enforced a 40% quota since 2009, although critics say this has been achieved in part thanks to a small number of women holding non-executive positions in multiple companies.

"It is essential for listed companies to evolve so as to include highly skilled women in their decision-making processes," said Rodi Kratsa-Tsagaropoulou, a member of the parliament who is playing a central role in shaping the law.

Article Source : http://www.guardian.co.uk
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RBS boss faces results test as break-up looms

Release of third-quarter figures comes amid questions over whether government will recommend hiving off "bad" bank

Ross McEwan, the new boss of Royal Bank of Scotland, will present his first set of results to City analysts this week amid speculation about the future structure of the bailed-out bank.

McEwan, who replaced Stephen Hester at the start of the month, will oversee the release of third-quarter figures on Friday which are likely to be overshadowed by questions about whether the government will recommend hiving off a "bad" bank.

His presentation will come days after the Lloyds boss, António Horta-Osório, also presents third-quarter results amid focus on the share price. The Portuguese banker stands to collect 3m shares – worth £2.4m at current prices – next month if the share price remains above 73.6p until the middle of the month.

That price, which must be maintained for 30 consecutive days, is regarded as the level at which the taxpayer breaks even on its stake. It has traded over that price since mid-October. The government sold off the first tranche of its stake in the bank in September.

George Osborne has commissioned bankers at Rothschild to consider the merits of splitting up RBS into a bad bank containing problem loans and a good bank that can be more easily privatised.

As much as £120bn of the bank's loans is said to have been considered in the review which was sparked by the parliamentary commission on banking standards. Osborne signalled the review in his Mansion House speech in June, seeming to contradict his previous position on a potential break-up of RBS.

In an interview a week ago the chancellor said: "We are looking at the case for a bad bank, and if not a bad bank what is the alternative strategy that really gets on top of the problems in that bank and goes on being what I want it to be which is a bank supporting the British economy."

McEwan has already prepared staff for the outcome the Rothschild review, telling them that the organisational structure of the bank is less important than their day-to-day role in handling customers.

While the chancellor commissioned the report, the board of RBS will have to decide on its implementation. The bank has warned that the government could be prevented from creating a bad bank by other RBS shareholders, who would need to approve any such move.

McEwan is not expected to use the third quarter results to set out his vision for RBS, a bank he joined a year ago to run the high street operations before being promoted. His strategy update is expected to take place in February.

Article Source : http://www.guardian.co.uk
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Autumn brings a chill for BlackBerry

Bleak results, rushed out early, and another huge round of layoffs signal that the mobile pioneer's time is running out

With the fall of Nokia looming over him, this weekend will be an uncomfortable one for Thorsten Heins, chief executive of BlackBerry. While the Finnish firm sold its mobile phone business to Microsoft for €5.4bn (£4.5bn) this month, questions are swirling as to how long BlackBerry – which signalled its distress in August by putting itself up for sale – can survive, and in what form.

Things are so bad that on Friday night, market rumours forced Heins to announce the top-line quarterly results a week early. And they are grim: an operating loss of up to $995m (£620m), including $960m of inventory writedowns on its new Z10 handsets released in January, a net loss of more than $250m, revenues half what analysts expected at $1.6bn, and phone shipments of 3.7m – which Apple will comfortably exceed with its new iPhones this weekend alone.

For a company that once dismissed the iPhone for having no keyboard (a key selling point for BlackBerry phones), it's a humiliation. The low shipment figure exposes Heins's claim in April that the new Q10 phone – the first keyboard-equipped model using its new BB10 software – would sell "tens of millions". It might have sold a million.

Now the question is turning to how long BlackBerry has to go. On Friday, the company said it will cut 4,500 jobs, roughly 40% of its 11,000 total worldwide, adding to 7,000 jobs cut in the two previous financial years. It will reduce its future phone portfolio from six to four.

One former insider asks: "How would BlackBerry win? There's no answer to that at the moment. A buyer? I don't see how they would make the case."

This weekend was meant to be a new start for the company, with an attempt to turn back the clock to when it was the star of the tech world by offering its famous BlackBerry Messenger (BBM) software free for iPhones and Android phones. But rivals such as WhatsApp are already on both, with more users, while BlackBerry's base is dwindling both among consumers and businesses. BBM's arrival on the other platforms is two years too late, says the insider.

Friday's bad news drove the stock down by 20%, to a market cap of just $4.5bn. Broken up, BlackBerry might be worth more: last quarter, it valued its patent portfolio at $3bn, and says it has $2.6bn of cash and no debt. The services business has around 35m business customers, who could fetch up to $4.5bn.

But who would buy it now? Silver Lake, the private equity company that facilitated the recent $24.8bn buyout of Dell, appears uninterested – and Michael Dell has said his company won't go back into smartphones. Reuters reported last week that while Canada's Fairfax Financial Holdings, a 10% shareholder, might try to stage a buyout, interest from other private equity players is muted.

So where did BlackBerry go wrong? Was it the PlayBook tablet, unveiled 18 months after Apple's iPad in September 2011 with the slogan "Amateur Hour Is Over"? That has devoured $750m in write-offs, but the insider says its software was essentially that used in BB10. So, costs aside, it wasn't a distraction.

Instead, Mike Lazaridis, who devised the first BlackBerrys, and Jim Balsillie, who ran the company with him, failed to grasp how quickly the change ushered in by the first iPhone in 2007 would overwhelm the smartphone industry. According to the former insider, BlackBerry underestimated the speed at which businesses would start letting staff connect their own smartphones to company servers for email and more. "BlackBerry didn't move fast enough on that, nor get BBM out soon enough," the insider says.

The key failing was that BB10 was two years too late. Lazaridis and Balsillie saw that BB7, which powers older BlackBerrys, was outdated, but the new version was not released until January this year.

Heins was installed in January 2012 after the board ejected the two founders, but he does not escape criticism either. He was the chief operating officer and so "had the reins of the smartphone business", says the insider. That means the delay in releasing BB10 can be laid in part at Heins's door.

Yet if BB10 had taken off, it would have cut the company's throat. That's because phones using that software don't generate any service revenues from sending emails, data and web pages – which amounts to between a fifth and third of revenues, and rather more of profits.

All eyes are on BlackBerry now. But the message is not a positive one. The turmoil in the smartphone industry is brutal; more casualties may follow.

Article Source : http://www.guardian.co.uk

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Japan turns off last nuclear reactor amid fears of surge in gas prices

A survey by the business group the CBI found that around 95% of British business leaders are worried about the cost of energy

Japan will switch off its last nuclear reactor on Monday, amid fears that a growing dependence on gas imports there could push up electricity bills in the UK.

Kansai Electric Power's only functioning reactor was scheduled to be disconnected from the power grid and then shut for planned maintenance, ending hopes that an industry that until three years ago provided 30% of the electricity to power the world's third largest economy would stage a quick recovery.

Continuing problems at the Fukushima plant, where radioactive water has continued to spill into the sea, and a reluctance by voters to back what looks like a badly managed industry, have led to more than 50 nuclear plants being closed, sending Japanese imports of liquefied natural gas (LNG) back to levels last seen after the 2011 tsunami.

Energy analysts said that Japan's shutdown, combined with Germany's commitment to end nuclear power production by 2022, was pushing up gas prices on the international markets.

Rising demand for gas combined with the cost of subsidies for renewable energy, much of which is added to household and business bills, is expected to push up energy prices in the west.

According to the CBI, there is a growing unease among UK businesses that energy costs look likely to rise.

A survey and report published by the business lobby group the CBI found that around 95% of British business leaders are worried about the cost of energy and that more than three-quarters of them have little faith that matters will improve in the next five years.

The pessimistic view about government policy – and inaction – may be related to the way in which energy has overtaken transport as the chief area of concern among the 526 executives polled by the CBI and the business services firm KPMG.

"The huge number of businesses concerned about energy supply and costs is alarming," said John Cridland, the CBI's director general. "The government must get the energy bill on to the statute books and bring forward secondary legislation to give potential investors the certainty to deliver the energy infrastructure we need to keep our lights on."

German businesses have complained that they pay the highest energy bills in the EU following the pioneering decision to subsidise renewable production. Much of the subsidy cost is passed on through higher bills, forcing major manufacturers BMW, Mercedes and Siemens to pay double the cost of electricity in the US. The German chancellor, Angela Merkel, has promised to cut subsidies to solar and wind farm operators, but has yet to specify the size of the cut or the timescale.

It is also unclear what will replace the more environmentally friendly forms of electricity if operators are discouraged from further investments by lower subsidies. At the moment Germany and the UK have dramatically increased their consumption of coal and gas to make up the shortfall from nuclear production. At their conference in Glasgow, the Liberal Democrats said the prospect of rising gas prices meant it was necessary for the UK to back further investment in nuclear power.

The UK's trade deficit widened in 2003 when the country became a net importer of oil and gas, and the situation is projected to deteriorate as production falls over the next 10 years.

Japan, which ran huge trade surpluses until the Fukishima disaster, has seen its balance of payments thrown into reverse by the costs of purchasing LNG.

Japan consumes about a third of the world's LNG and it is likely that demand will grow to record levels over the next couple of years. LNG imports rose 4.4% to a record 86m tonnes, and 14.9% in value to a record 6.21tn yen (£39bn) in the year to March.

Imports are likely to rise to around 88m tonnes this year and around 90m tonnes in the year to March 2015, according to projections by the Institute of Energy Economics Japan, based on 16 reactors being back online by March 2015.

Thirty months on from the Fukushima disaster, such is the level of public concern about nuclear safety that the government is struggling to come up with a long-term energy policy – a delay that is having a profound impact on the economy and underlining just how costly a nuclear-power-free future may be. "There's talk the Abe administration is putting heavy pressure on the regulator [to restart reactors]," said Osamu Fujisawa, a Japanese-based independent oil economist.

"It's obviously the economy the administration is [concerned about] [rather than safety]. Otherwise, the business community will look away, [which would be] an end to the Abe administration."

Article Source : http://www.guardian.co.uk

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