This week’s news includes; Topshop owner avoids collapse, Johnson & Johnson settles $10 million lawsuit, PwC fined £4.5 million for poor audit, Amazon releases credit card for poor credit consumers
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- Legal Cheek – How lawtech looked in the 90s.
- City A.M – Don’t believe the hype, Apple is no better at privacy than any other tech company
- BBC News – Why is building so slow and expensive?
1. TORY LEADERSHIP ELECTION
Boris Johnson has won the first round of the Tory leadership election by landslide. Johnson won the round with 114 votes, followed by Jeremy Hunt and Michael Gove with 43 and 37 votes respectively. Mark Harper, Andrea Leadsom and Esther McVey have now all been eliminated. The following day, health secretary Matt Hancock dropped out of the race after coming 6th out of 7 with just 20 votes, leaving just six candidates remaining. The remaining candidates are; Boris Johnson, Jeremy Hunt, Michael Gove, Dominic Raab, Sajid Javid and Rory Stewart.
Johnson’s lead is so large, there has allegedly been some discussion about potentially fast-tracking Boris Johnson to the premiership. This has not been verified but the rumours have already been criticised by many Tory members. Channel 4 held a TV debate on Sunday but Boris Johnson did not attend. Another debate is due to take place later this week.
The next round of voting is set to take place this Tuesday.
2. ARCADIA AVOIDS COLLAPSE
Arcadia has been saved in a rescue deal but at the cost of thousands of jobs. Sir Philip Green’s retail empire, which includes big high street names such as Topshop, Miss Selfridge and Wallis, was on the brink of falling into administration. Landlords have now agreed to the company voluntary agreement (CVA). The CVA will see rents cut and a total of 48 store closures with over 1000 job losses. The Arcadia group has been struggling along with many other high street giants. Group sells fell by 9% in 2018-2019. Arcadia’s brands have failed to keep with fast fashion chains and online players. Many analysts believe that the CVA and a £50 million cash inject will not be sufficient to turn the business around. Only a substantial overhaul and fresh ideas will help change the fortunes of the group. (BBC News)
3. JOHNSON & JOHNSON SETTLEMENT
Johnson & Johnson (J&J) and Colgate-Palmolive Co. will pay out nearly $10 million to a woman who contracted a rare cancer from the companies’ talc-based products. This case is just one of 14,000 lawsuits against J&J arising from talc-based powder cancer claims. The trials are from all over the US but J&J is requesting all cases to move to Delaware.
The claimant here, Patricia Schmitz aged 61, had been using the companies’ talc-based products her entire life. She contracted mesothelioma, a cancer typically comes from asbestos exposure. Her claims alleges that J&J and Colgate were liable for her illness as they failed to warn that their talc-based products contained asbestos.
The jury found J&J, Colgate and Avon responsible for Schmitz’s illness. J&J and Colgate were both responsible for $4.8 million respectively. Avon Products Inc was responsible for $2.4 million but was not named as defendant so these damages are unlikely to be recovered. Punitive damages were not as the companies’ conduct did not constitute malice or fraud. (Bloomberg)
4. FREE PENSIONER TV LICENSES SCRAPPED
The BBC has scrapped free TV licenses for over-75s, sparking outrage. Nearly 3.7 million pensioners will lose out on free TV, only up to 900,000 low-income households on pension credits. BBC claims that the cost of free licences will cost the company £745 million, roughly 20% of its total budget. The BBC warned that continuing the free licenses could see the closure of; BBC Two , BBC Four, BBC News Channel, BBC Scotland Channel, Radio 5live and other local radio stations.
52% of people in a 190,000-person consultation were in favour of the reform/abolition of free TV licenses. The decision has however, faced staunch criticism. According to age UK, 25% of over-65s rely on TV as their main form of companionship. This decision by the BBC is likely to cause further isolation and distress for affected pensioners. TV licenses cost £154.50 per year.
5. PWC FINE
PwC has been slapped with a £4.5 million fine over it’s audit of IT firm Redcentric. The Financial Reporting Council found a “serious lack of competence” in the firms audit. A £20 million black hole was found in Redcentric’s books 3 years ago and PwC failed to pick up on this. The IT firm subsequently had to write down it’s £5.4 million profit to a £4.2 million loss. The FRC deemed PwC lacked a basic level of professional scepticism. The partners in charge of the audit were also hit with fines of £140,000 each.
This case just add to the list of notable Big Four audit failures. There are calls for giants to be split up amongst other initiatives but the firms have pledged to reform.
6. THREE TO LAUNCH 5G
Mobile network provider Three will launch 5G internet in London this August. This will provide super-fast internet and Three claims it will offer speeds up to double that of its rivals. EE launched the UK’s first 5G network last week and Vodafone will offer its own service in July. Three has invested £2 billion in its own network development. The service will be rolled out to 25 other UK cities by 2020.
7. BARRISTERS SECURE PAY DEAL
Criminal barristers have secured a number of “interim measures” after opting to stage a national walkout on July 1. The measures will increase fees for both prosecution and defence lawyers. For prosecution, all fixed fees will be increased to level of the Advocates Graduated Fees Scheme. Refresher fees will also be paid a day soon and continuation fees for long running trials will no longer be reduced after day 41. These measures will be introduced for trials from 1 September 2019. The Ministry of Justice is still considering measures for defence fees. The full list of the measures is available here.
Amazon has teamed up with Synchrony Bank to launch a secured credit card for consumers with bad credit. The Amazon Credit Builder Card can only be used for Amazon purchases but will be available for shoppers with low credit scores or no credit history. There will no annual fees but customers must pay a refundable security deposit of at least $100. Their deposit is their credit limit. Repayments are made monthly and are reported to credit bureaus so as to help customers build their credit rating. The APR is 28.24%. (Investopedia)
Morrisons has also struck a deal with Amazon, allowing them expand their UK same-day delivery service nationwide. Morrisons will also now become a retailer on Amazon. This deal should prove a boost for the supermarket as competition within the sector heats up.
9. CHINA CAR SALES DIP
Car sales in China have fallen by the steepest amount ever amid weaker economic growth. Sales fell by 16.4% in May, the largest year-on-year decline ever and the 11th consecutive month of decline. This is partly due to China clamping down on pollution through strict emissions rules. The trade war with the US has also had a significant impact and with tensions escalating, the slowdown in China is likely to continue.
10. PENNINGTON MANCHES MERGER
Law firm Penningtons Manches is set to merge with Thomas Cooper. Thomas Cooper is a renowned shipping law specialist and this merger will allow Penningtons to expand into the sector. The merged firm will be called Penningtons Manches Cooper. The two firms will have 141 partners and combined revenue of £90 million. Penningtons Manches was only formed in 2014 through the merger of Penningtons and Manches.