The Shorthand – will we see a banking 'Big Bang'?

Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.

And all that in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. MPs call for a banking ‘Big Bang’

What’s happening here?

The All-Party Parliamentary Group (APPG) for Challenger Banks and Building Societies has published their results and recommendations following an investigation into how challenger banks, building societies and other fintechs could help ‘level up’ the UK.

Calling for a far-reaching overhaul of the banking sector, the APPG’s report stated:

A lack of effective competition in the UK banking sector means poorer availability of lending for both consumers and small businesses, particularly outside London and the South East, which acts as a significant brake on levelling-up the economy.

The report was highly critical of existing regulations, which are said to “enshrine the dominance and market share” of major high-street banks, stopping challenger banks from competing on a level playing field.

It also criticised the “over-centralisation” of banking skills and expertise in London and the South East, which leads to credit policy being set through a “London lens” without consideration of regional differences.

Why should you care?

According to the APPG, banking regulations would need to undergo a drastic transformation in order to level out the playing field. But a regulatory ‘Big Bang’ could incentivise regional challenger banks and devolve credit policy decision-making.

This report comes just two weeks after a government survey revealed that both personal and small business account holders prefer challengers like Monzo and Starling Bank to high-street heavyweights such as NatWest and HSBC. So for small businesses across the UK, the APPG’s recommendations could lead to increased choice, more regionally focused credit options and an overall better banking experience.

2. Tough new security rules for telecoms networks

What’s happening here?

New telecoms security regulations are being brought in to provide better protection against cyber attacks that could cause network failure or the theft of sensitive data.

Commenting on the importance of secure telecoms networks, Cyber Underwriter Matt Elliott said:

Telecoms networks have become part of our critical infrastructure. Information created by the use of mobile devices – and therefore obtained by telecoms companies – is vulnerable data pertaining to individuals and businesses.

Our reliance on mobile devices, as well as the sheer amount of data produced by them, opens up the sector to a world of problematic cyber issues.

Said to be among the strongest in the world, the new regulations are set to be introduced in October. They will require broadband and mobile providers to:

• Protect any data processed on their network
• Secure their network’s critical functions
• Protect software and equipment used to monitor and analyse their network
• Have a deep understanding of potential security risks
• Identify and report any abnormal activity.

Ofcom will be responsible for monitoring and enforcing the rules. Any company that fails to meet the new standards could be issued a fine of up to 10% of their turnover – and £100,000 per day for continued breaches.

Why should you care?

These new rules will have the most significant impact on telecoms companies. At the moment, providers are responsible for setting their own security standards – but the government’s review found that there’s often very little incentive to adopt industry best practices, so many will need to make changes in order to become compliant.

Furthermore, broadband and mobile companies will need to consider how these regulations will affect their business insurance and whether they’d be covered in the event of a fine.

These new measures will also affect any business that uses the internet or a mobile phone. By taking an important step towards securing the UK’s digital supply chains, they provide business owners with an extra level of protection against internet downtime, data theft and cyber attacks.

However, telecoms networks are only one entry point for cyber hackers, and cybercrime is a significant issue for all UK businesses – with 39% of businesses identifying an attack in the last year. Small business owners therefore need to remain vigilant, understand how they could be targeted by hackers and take steps to protect their businesses from cyber attacks.

3. Investigating the tax status of remote workers

What’s happening here?

The taxation of UK employees working from home or abroad is about to come under greater scrutiny, as the Office of Tax Simplification (OTS) launches a review of how companies are adapting to the rise in hybrid and remote working.

The OTS stated:

Whilst many are now returning to a fixed workplace, others are not; or are moving to hybrid arrangements.

This potentially creates a range of tax and social security issues for both the employer and the employees, such as tax residence, cross-border taxing rights, and simple understanding of their rights and obligations.

Investigating trends in hybrid and overseas working, the review will consider the implications for Income Tax, National Insurance and Corporation Tax from the perspectives of employers and employees. It will also consider trends among self-employed hybrid workers.

Why should you care?

Less than half of UK workers (46%) travel to their workplace every day – with 42% of employees saying they would like to work remotely from abroad.

Some large companies already have systems and policies to support their staff with remote work – one of the most well-known being Airbnb’s Live and Work Anywhere initiative.

But many smaller businesses don’t have the knowledge or resources to properly manage the tax implications of changing work patterns. The OTS' review should provide some much-needed clarification, making it easier for employers to understand their tax obligations, set policies and plan accordingly.