Weekly Media Briefing - 12 May 2022

This week’s topics: 

• Queen’s Speech
  • Employment rights
  • Levelling-up and the delivery of new affordable housing
  • The new Financial Services and Markets Bill
• Record number of cyber attacks last year

PwC commentary on the Queen’s Speech:

Employment rights - what was and wasn’t in the Queen’s Speech?

As widely predicted, the Queen's Speech made no explicit mention of an Employment Bill, however other updates did relate to employment rights.

John Harding, head of employment tax at PwC UK, comments:

• The proposed Employment Bill, which was first referred to in the Queen's Speech in 2019, has long been expected to cover a range of issues, including the establishment of a Single Enforcement Body in relation to workers' rights, as well as enhancing rights to flexible working and ensuring that employers pass all tips to their staff. 
  
• The repeated assurances from Ministers in recent months that the Employment Bill would be introduced when Parliamentary time allows, suggests that this could be introduced in 2023. However, employers and employees will continue to be left in limbo as to what the Government's intentions are going forward until then.  
• However, the Queen's Speech was not devoid of content in relation to employment rights, with the Government confirming its intention to introduce legislation to ensure that seafarers working aboard vessels visiting UK ports be paid not less than the national minimum wage (NMW), by ensuring that ports have powers to refuse access to ferry services that do not pay an equivalent of the National Minimum Wage to seafarers while in UK waters. The Government has launched a consultation on the proposals.
• The Government has also repeated its commitment to review the Apprenticeship Levy, including whether it is doing enough to incentivise businesses to invest in the right kinds of training.   

Levelling-up and the delivery of new affordable housing

James Bailey, housing director at PwC, said:

• Around 70% of respondents to our Future of Government survey identified a focus on housing as the most effective way to deliver levelling up. The government’s announcement of its intended measures, including those which help to align planning with greater input from local communities, should at this stage be seen as a positive step in the right direction.
  
• With no net new funding for affordable housing envisaged, consideration into how responsible private capital can be brought into the sector should be accelerated. This could be through for profit registered providers (RPs), investment partnerships with not for profit RPs.  Longer term consistency around rents, in particular, is also needed. Alleviating some of the delivery pressures on housing associations who are grappling with building safety and the decarbonisation challenge should help to make sure the country continues to deliver the levels of affordable housing necessary.
  

Financial Services and Markets Bill - firms may be surprised that Buy Now Pay Later remains out of regulatory scope

Isabelle Jenkins, Leader of Financial Services at PwC UK, said:

• The new Financial Services and Markets Bill reinforces the approach we have seen to financial services regulation in the UK  post-Brexit - one characterised by a focus on international competitiveness, technological innovation and the role the financial services sector can play in supporting consumers, particularly the most vulnerable in society. 
  
• Measures on access to cash and reimbursing victims of push payment fraud underscore the shift to a more interventionist consumer protection agenda. However, firms may be surprised not to see more detail on how and when plans to bring  Buy Now Pay Later products within the regulatory perimeter will be enacted.
• HM Treasury has confirmed its proposals to update the objectives of the UK regulators to ensure a greater focus on growth and international competitiveness. If properly implemented, this has the potential to reinforce the vital role financial services plays in the UK economy. 
• Plans to overhaul requirements for insurers, freeing up capital to invest in vital infrastructure and green projects, and reforms to improve the efficiency of wholesale markets are also a good start. 
• Financial services are going through a period of profound change, powered by innovation. So the focus on issues like crypto and the reliance of financial services firms on large tech firms is welcome, as ever though the regulatory approach will need to be proportionate to prevent the stifling of innovation.

Record number of cyber attacks last year

PwC has produced the latest edition of its annual 'Year in Retrospect' report. The findings are a consolidation of the most impactful threat activity and trends observed over the past year across PwC’s incident response, Managed Cyber Defence, and threat research services around the world.

Richard Horne, Cyber Security Chair, PwC UK said:

• Cyber exploits appeared in record numbers last year. And, without question, ransomware remained the most significant cyber threat faced by most organisations in 2021.
• The majority of incidents were financially motivated; the number of victims almost doubled; and double extortion (i.e. the leaking of stolen data, or the threat to do so), was standard procedure, adding privacy, regulatory, and reputational risks to the crisis of business disruption caused by data encryption.
• The past year has seen a shift in that the impact of cyber attacks are now being felt by many millions of ordinary people around the world. From queues at gas stations in the US, to the disruption to Irish citizens’ access to healthcare, to the impact to education experienced by many students in the UK, the consequences of cyber attacks are now being felt in all walks of life.
• While no sector is immune to ransomware, our research found that just six sectors accounted for 60% of all publicly reported incidents: Manufacturing, retail and consumer, technology, construction, FS, and professional services.
• And, while supply chain attacks weren’t a new trend in 2021, they continued to be an integral part of how sophisticated threat actors operate. The threats in this area often target third parties, masking backdoors with legitimate digital certificates, directing malicious traffic through trusted companies, and using established organisations to spread malware.

Something to read: 

Globally, M&A in technology, media and telecommunications saw high levels of activity in 2021. A blog from deals leader for TMT Nick George and TMT transaction partner Jonathan Cooper explore how new market opportunities, tech convergence and an abundance of capital will sustain deal activity in the sector.

Something else to read: 

As decision-making is increasingly complemented or supplanted by tech, organisations need the right skills to understand its capabilities and risks. Read our Wired article to find out how the right balance of human intervention and tech allows you to move at speed with confidence. #RethinkRisk

Something to listen to: 

In the latest episode of PwC’s Risk & Regulation Rundown podcast, guest host Tessa Norman discusses the FCA’s business plan and strategy with Andrew Strange and Conor MacManus, Directors in PwC’s Financial Services Regulatory Insights team. We look at how this year’s plan has been shaped by the challenging political and economic context, what the plan tells us about the regulator’s priorities and expectations, and the practical steps firms can take in response.