BUSINESS LIVE: Hargreaves Lansdown chair to exit; Water group profits slump; CMA price grocery findings

Investment firms dishing out shoddy advice to customers may be required to set aside extra cash to cover compensation costs, the Financial Conduct Authority (FCA) said on Wednesday.

It is proposing a so-called ‘polluter pays’ model, meaning incompetent firms should bear the cost for their failures to give stronger incentives for advisers to improve standards.

The Barclay family could be delayed from resuming control of the Telegraph if the deal with their Abu Dhabi-based backers is agreed, according to reports.

Government officials are said to be examining whether to issue an order used in corporate mergers to prevent the former owners from exerting influence over the paper until all debts on it are settled.

The chair of Hargreaves Lansdown will stand down next month amid a growing shareholder backlash over her leadership.

Deanna Oppenheimer will depart at the investment group’s annual general meeting on 8 December after almost six years in her position.

Halfords shares fell sharply on Wednesday after the group scaled back the upper end of its profit forecast.

Shares in the company, which is the UK’s biggest provider of motoring services and products, fell 20 per cent to a roughly seven-month low of 178p in early trading.

The retailer expects a full-year underlying pre-tax profit ranging from £48million to £53million, against previous forecasts of between £48million to £58million.

Supermarket loyalty pricing schemes are to be scrutinised by the UK’s competition watchdog after a probe found evidence of profiteering during the inflationary surge of the last two years.

The Competition and Markets Authority will review loyalty pricing schemes used by supermarkets like and Tesco and Sainsbury’s to determine their impact on shoppers and competition within the groceries sector.

The FTSE 100 is trading lower this morning, dragged by insurers after Deutsche Bank turned bearish on insurance majors Aviva and Prudential, while a strengthening pound compounds the selling pressure.

The life insurance sector is down 1.1 per cent in early trading, with Prudential and Avuva down 1.3 and 2.1 per cent, respectively, after Deutsche Bank reduced its price target on the stocks.

Banks have slipped 1.1 per cent following a 1.4 per cent fall in HSBC shares, weighing on the FTSE 100.

The pound hovers near a three-month high against the dollar as the greenback slipped on growing bets that the US Federal Reserve could begin cutting interest rates next year.

Halfords Group has shed 19.6 per cent after the bicycles-to-car parts retailer narrowed its annual profit forecast range and lowered the upper end of its expectations.

NatWest has revealed that even more branch closures are on the cards as a senior executive said it would not need ‘anything like’ its current number.

The comments by the state-backed bank’s finance director Katie Murray will come as a fresh blow to the High Street as it faces losing more local branches.

Mark Crouch, analyst at eToro:

‘Halfords has put in another strong performance, despite a challenging economic environment in which consumer spending on big-ticket items has softened.

‘That has knocked growth, although revenue was still up a very respectable 13.9% in the first half of its fiscal year. While profits are also up, we have seen a reduction in margins, which is largely the result of weaker sterling hedging versus the dollar, product cost inflation and lower margin tyres becoming a greater portion of revenue following its acquisition of Lodge Tyre.

‘The more challenging environment has forced the retailer to knock £5m off the top of its forecast profit range, which will disappoint investors. However, if Halfords does indeed achieve £48-53m of profit, as it expects, it would still represent year-on-year growth, which is not to be sniffed at with conditions the way they are at present.’

The Financial Conduct Authority has proposed that personal investment firms that give bad advice will need to set aside capital to cover compensation costs when consumers are harmed.

Sarah Pritchard, executive director of markets and international at the FCA:

‘We want to see a thriving financial advice market to make sure consumers can access the support they need from financially resilient advice firms that want to do the right thing. Diligent advisers are having to compensate through the levy for the bad advice of their failed competitors. That needs to change. It is important that the polluter pays.

‘We want to hear from industry and consumer groups on our proposals. Please do let us know what you think so that we can reform the way the current framework operates to ensure that those polluting the sector pay.’

Rolls-Royce shares hit a four-year high as it looks to more than quadruple profits in five years.

Chief executive Tufan Erginbilgic, who took over at the engineering giant in January, vowed to deliver profits of up to £2.8billion by 2027.

The new City minister has fired a warning shot at regulators to loosen their grip on the UK’s financial services sector, saying there was ‘no point having the safest graveyard’.

Two weeks after he was promoted by Rishi Sunak, Bim Afolami said the industry’s ‘animal spirits’ must be unleashed at a time when some fear that subdued risk appetite is holding back growth.

Halfords Group has narrowed its annual profit forecast range, lowering the upper end of its expectations by £5million as Britons cut down on discretionary spending.

Soaring prices of everything from energy to food are forcing consumers to curtail non-essential spending, as they try to make ends meet, while businesses are looking to rein in costs and stay afloat by wooing customers with offers and discounts.

Halfords, which has been shifting focus to steadier revenue streams such as motoring services, said it would accelerate investment in that operating model in 10 towns in the rest of its financial year.

CEO Graham Stapleton said:

‘Despite the challenging and volatile trading environment and slower than expected recovery in some of our markets, we have made a good start to the year, with substantial sales and profit growth, and increased market share across the business. At the same time, we supported our customers through the ongoing cost of living crisis by delivering great value – when they need it most.

‘In the face of continuing economic uncertainty, we remain fully focused on optimising every element of the business, and I’m particularly pleased with the very strong performance of Autocentres, where we are delivering significantly improved returns. In light of this, we are accelerating capital investment in the garage services operating model and customer experience in ten towns in the balance of this financial year.

‘It goes without saying that we simply could not deliver this performance without the hard work and dedication of our fantastic colleagues across the business. I am immensely grateful for their continued support through these very challenging times.’

Britain’s competition watchdog has found that around three-quarters of branded grocery suppliers hiked prices beyond inflationary cost pressures over the last two years, thereby boosting profits.

The Competition and Markets Authority did say, however, that shoppers could find cheaper alternatives in most cases.

It did find one area of concern, however, with the CMA saying ineffective competition in the baby formula market could be leading to parents paying higher prices.

The CMA said: ‘In all but one of the relevant product categories the CMA looked at, as food prices have risen, many consumers have switched away from brands towards own label alternatives, or reduced their consumption, leading to a decline in brands’ market shares and profits. This switching is positive for competition and allows those able to switch, to lessen the impact of high food price inflation.’

One of the world’s most legendary investors has died at the age of 99. Charlie Munger was Warren Buffett’s right-hand man as vice-chairman of Berkshire Hathaway.

Munger died yesterday at a California hospital, the US investment group announced.

In a statement, Buffett, 93, said: ‘Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation.’ Buffett once said: ‘We think so much alike that it’s spooky.’

Pennon profits slumped in the first half as the water group was drained by higher input costs, but pricier consumer bills lifted revenues.

The parent firm of South West Water posted an adjusted pre-tax profit of £9.1million pounds for the six-month period ended 30 September, compared with £22.5million last year.

Bristol Water, which was bought by South West Water earlier this year, saw pre-tax profits slump from £400,000 last year to a loss of around £100,000.

Susan Davy, Pennon group chief executive, said:

‘Pennon has continued to make progress in the last six months on delivering for customers and shareholders, improving operational resilience across the group through an 87% step up in investment, supported by a healthy balance sheet.

‘We are executing on our twin track strategy of organic and acquisitive growth in UK water, creating long term value and making progress on what matters most to those across our regions.

I’ am very clear that if we serve our customers well, we serve our shareholders well, which is why we are focused on improving environmental performance, keeping bills as low as possible, developing new water resources, and investing in renewable energy generation.

‘This has helped us deliver a 100% bathing water quality assessment for the third year running and reduce serious pollution incidents this year, but we know there is more to do.

‘Our twin track strategy of both organic and acquisitive growth in UK water ensures we continue to drive long term value, with the Bristol acquisition benefits on track, alongside a growing portfolio of complementary services delivered through our business to business retailers and growing renewable energy business.’

A Chinese fast fashion giant is closing in on a stock market listing in New York.

Shein – a staple for many British young women, with tops and dresses from £5 – has filed papers for an initial public offering (IPO), according to Reuters.

Goldman Sachs, JP Morgan Chase and Morgan Stanley have been hired as lead underwriters.

Deanna Oppenheimer will step down as chair of Hargreaves Lansdown after six years in the role, following investor pressure on the investment platform’s performance during her tenure, and will be replaced by Dechra’s Alison Platt.

It follows intense investor pressure from the likes of HL co-founder Peter Hagreaves and reports that shareholders were preparing to vote against Oppenheimer’s reelection at the group’s next AGM.

She said: ‘I’m honoured to have overseen the Board during a period of significant change for the industry and for HL. HL is in a strong position for growth and has skilled leadership which will ensure the company’s future success.

‘Over the last six years our client numbers have doubled to 1.8 million and our share of the direct-to-consumer market has grown significantly from 35% to 42%.

‘I’m delighted to hand over to Alison, whose broad and relevant experience across different sectors will be of great benefit and support to the HL team as they move forward.

‘I would also like to thank Roger for his service and dedication to HL and for staying on over these last few months to support the Chair selection process.’