The Financial Conduct Authority (FCA) has escalated its efforts after filing charges against nine individuals in May over an unauthorized trading scheme endorsed by so-called financial influencers, often referred to as “finfluencers.”

In recent years, the FCA has expressed growing concern over the surge of influencers leveraging their social media influence on platforms like TikTok and Instagram to endorse various products and risky get-rich-quick schemes.

In July of the previous year, the authority warned that a “considerable number” of such promotions were illegal or non-compliant, highlighting that some influencers lack sufficient knowledge about the schemes they advertise. In March, the FCA issued new guidelines governing adverts that promote financial services on social media.

In its latest efforts, the FCA is undertaking “targeted action” to address the issue. In addition to interviewing 20 influencers voluntarily under caution, the regulator has also issued 38 warnings on its website regarding social media accounts associated with finfluencers that may be publishing illegal promotions.

Data from the FCA indicates that nearly two-thirds of individuals aged 18 to 29 actively follow social media influencers, with 75% of them expressing trust in the influencers’ recommendations. Furthermore, around 90% of young people reported being motivated to alter their financial behavior due to influencer guidance.

Steve Smart, the FCA’s joint executive director of enforcement and market oversight, stated: “Finfluencers hold significant trust among their followers, many of whom are young and potentially vulnerable, drawn in by the lavish lifestyles portrayed online.”

He added, “Finfluencers must verify the legitimacy of the products they promote to prevent legal violations and safeguard their followers’ financial well-being and long-term savings.”

In a notable example, celebrity Kim Kardashian faced a $1.26 million fine from the US Securities and Exchange Commission two years ago for failing to disclose that she was compensated $250,000 for promoting a cryptocurrency.

The FCA encourages individuals to consult its warning list before making any investment decisions.

The winery, supported by billionaire Lord Spencer of Alresford, had put itself up for sale in June as part of a strategic evaluation aimed at drawing interest from investors and international wine producers.

However, the company has determined that “no transaction would yield superior long-term shareholder value compared to Chapel Down remaining a standalone entity listed on Aim.”

Founded in 2002 and recognized as the largest winemaker in England, Chapel Down emphasized its commitment to only consider offers that would enhance shareholder value while continuing to drive the growth and consolidation of the English wine sector.

After transitioning from the Aquis exchange to London’s junior Aim market last year, the company specializes in sparkling wines and operates over 1,024 acres. Chapel Down aims to raise approximately £30 million to support its expansion plans, which include establishing new vineyards, constructing a dedicated winery near Canterbury, and developing a visitor center at its Tenterden location in Kent.

In an update to its investors, Chapel Down reported that the initial growing conditions in its vineyards were promising this year but deteriorated in September and October. The adverse weather conditions led to “some pressure from mildew and consequently reduced yields, given our strict quality focus.”

The company anticipates the grape harvest for 2024 to be around 1,875 tonnes, which is roughly half the output of 3,811 tonnes from an “exceptional” 2023. Coupled with expenses related to the strategic review, Chapel Down expects a shift from last year’s operating profit of £2.3 million to a pre-tax loss for the current fiscal year.

This announcement initially triggered a nearly 20% drop in Chapel Down’s stock price, which settled at a downturn of 5.5p, or 12.4%, closing at 41.5p on Friday.

The Joseph Rowntree Foundation, a think tank dedicated to improving the economic standing of low-income families, has revealed that its studies project the living standards of the most impoverished households in the UK will still be 0.8 percent lower in five years compared to their status in 2019.

At the same time, middle-income and affluent households are expected to see an increase in disposable incomes, highlighting a potential widening of economic inequality if the government does not intervene.

According to researchers, single parents and working-age households receiving benefits have experienced the most significant declines during the ongoing cost of living crisis. Specifically, disposable income for single parents is approximately £690 lower in October compared to October 2019, while working-age households have seen a reduction of about £700.

The think tank remarked, “The pandemic and cost of living crisis have resulted in a loss of nearly half a decade in living standards.” It is predicted that average household incomes are unlikely to recover to 2020 levels until the end of the decade.

The foundation is advocating for the Chancellor to implement a “minimum floor” for universal credit payments, effectively introducing a form of universal basic income.

Next April, households receiving universal credit are expected to see a modest 1.7 percent increase in their welfare payments, while pensioners are set to benefit from a significant above-inflation pension increase, exceeding £400 next year.

The foundation also pointed out that rising housing costs, particularly driven by increased mortgage rates, are likely to hinder growth in average real income. Currently, mortgage payments have surged by £1,300 compared to five years ago, with this amount projected to rise to £1,800 by 2029.

By 2029, it is estimated that working-age households reliant on benefits will find themselves about £1,000 worse off compared to 2019, as benefits adjustments lag behind increases in housing costs. The local housing allowance—which determines housing benefit for private renters—should be aligned with the current rental rates in the tenant’s locality, the foundation proposed.

The foundation concluded by stating, “Our argument in this paper is straightforward: while the pressures on public finances are significant, the most pressing legacy for the new government is the severe decline in living standards across society.”

The Treasury responded, asserting, “We will ensure long-term security for working individuals and provide necessary support to low-income families.”

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Mercedes-Benz has reported a staggering 53.8 percent decrease in profit, totaling €1.72 billion for the third quarter, leading the company to reduce its full-year profit margin expectations. Sales in the Chinese market dropped by 17 percent, while German sales experienced a decline of 25 percent.

The automaker indicated that group sales decreased by 6.7 percent year-over-year, from €37 billion to €34.53 billion, with their battery electric vehicle sales also suffering a significant setback, falling nearly one-third to 42,544 units.

The crucial profitability metric for the company, its adjusted return on sales, fell to 4.7 percent in the third quarter, which is significantly below its minimum target of 8 percent and represents the lowest figure since its separation from the truck division in late 2021.

Harald Wilhelm, the chief financial officer at Mercedes-Benz, commented that the results for the third quarter “do not meet our ambitions” and emphasized that the company will intensify efforts to enhance efficiency and reduce costs throughout its operations.

Looking ahead, the company stated that fourth-quarter sales are expected to be similar to those in the third quarter. For the full year, anticipated sales are projected to be slightly lower than those in 2023, with battery electric vehicles expected to constitute around 18 to 19 percent of total sales.

In a separate statement, Porsche, which had already lowered its annual forecasts in July, announced it is considering cost cuts and a reassessment of its vehicle lineup due to a significant drop in sales of its sports cars in China, which led to a substantial profit decline.

Porsche’s deliveries in China during the third quarter reached their lowest level in ten years, which resulted in a 27 percent drop in operating profit for the first nine months of 2024, falling to €4.04 billion compared to the same period last year. Revenue also saw a weakening, declining by 5 percent to €28.6 billion in the third quarter.

Rachel Reeves, the Chancellor, indicated in her remarks at the government’s investment summit this week that tax hikes for businesses are essential, emphasizing that political and economic stability take precedence over tax rates for business investment.

Reeves clarified that Labour never committed to avoiding increases in employers’ national insurance contributions. While the party has excluded raises in the primary rates of income tax, VAT, and personal national insurance, it did not extend this pledge to business national insurance, maintaining that it focused on protecting working individuals from key tax hikes.

She stated, “Businesses understand the necessity for tax increases to maintain fiscal balance.”

“I do not see it as a choice between stabilizing the economy and attracting investment,” she told reporters. “Economic and fiscal stability is essential for drawing investment into the country.”

Leader of the opposition, Sir Keir Starmer, responded to suggestions of a capital gains tax rise to 39% by claiming that such assertions are inaccurate, but he reaffirmed that tax increases wouldn’t hinder investment in the UK.

Recent reports have indicated that UK gambling companies may face up to £3 billion in tax increases, prompting a decline in shares for gambling firms.

Reeves has confirmed a commitment to enhance public spending in real terms, signaling a move away from austerity. This, she suggested, may likely be facilitated by tax hikes and additional borrowing.

Claims by Labour regarding a £22 billion deficit left from Conservative fiscal policies have notably impacted business and consumer confidence, despite a significant growth projection from the Organisation for Economic Co-operation and Development (OECD) for the UK this year.

Let’s explore some potential budgetary decisions that the Chancellor may consider.

National Insurance

Business Secretary Jonathan Reynolds hinted at the possibility of increased national insurance contributions for employers. Although Labour’s manifesto excluded hikes in income tax, VAT, or national insurance for individuals, Reynolds stopped short of confirming that these principles also apply to employer contributions. Starmer also did not rule out the potential for such an increase amidst questioning from Rishi Sunak during Prime Minister’s Questions last week.

An increase of one percentage point in employers’ national insurance contributions could potentially generate approximately £8.9 billion annually.

Non-Domiciled Tax Status

John Caudwell, billionaire founder of Phones4U and a former Conservative donor turned Labour supporter, has urged caution regarding modifications to the non-domiciled tax status, a system exempting foreign income from UK taxation.

“Measures that appear unattractive to foreign businesses and wealthy individuals can deter them from investing here,” he cautioned on the BBC. “While I am not overly concerned about losing a few non-doms, we must tread carefully with our policies.”

Income Tax

The Treasury is projected to collect over £1 trillion in taxes this year, with income tax contributing about £303 billion, making it the largest source of revenue for the government.

The Chancellor has the option to boost this revenue without increasing the main income tax rates by lowering the income thresholds at which these rates (20%, 40%, 45%) apply.

According to the Institute for Fiscal Studies (IFS), reducing the personal allowance or basic-rate limit by 10% could potentially yield £10 billion and £6 billion in additional revenue respectively.

Income tax thresholds have been frozen for several years, a strategy initiated by Rishi Sunak in March 2021, which has led to higher taxation as individuals receive pay increases.

Pensions

Labour is expected to abandon considerations for a tax increase on pension contributions following warnings that such changes could disadvantage a substantial number of public sector workers.

Pension contributions currently receive income tax relief up to a designated limit. Critics argue that some pensioners benefit from higher tax relief rates than they ultimately pay in tax.

Limiting tax relief on pension contributions to the basic rate could generate about £15 billion annually. An alternative proposal suggests imposing national insurance on employer pension contributions, generating approximately £12 billion over five years, according to the Resolution Foundation.

Capital Gains Tax

The Chancellor might consider increasing the primary capital gains tax rate, currently set at 10% or 20%, or expanding the range of assets subject to the tax. Such adjustments would better align capital gains tax with income tax but could discourage investment.

Any rate increase could be adjusted for inflation to avoid taxing merely inflation-driven gains.

Businesses are reportedly increasingly considering selling as concerns over potential capital gains tax increases grow, with surveys indicating that nearly 29% of business owners have accelerated their plans to sell due to tax fears.

Inheritance Tax

At £8 billion annually, inheritance tax constitutes a minor element of UK taxation, affecting only about 4% of estates, yet it is often criticized for its nature as a form of double taxation.

The IFS notes that reforming exemptions regarding pensions, business assets, and agricultural land could raise around £2 billion per year.

Reeves could also consider ending IHT exemptions for company shares held for over two years before death, potentially generating around £1.1 billion.

Thinktank Demos has suggested implementing a banded system for inheritance tax based on asset values and closing loopholes that let households transfer estates without capital gains tax.

Individual Savings Accounts (ISAs)

Reeves may face pressure concerning record-high ISA deposits, with some analysts warning that reducing tax relief could stifle essential investment. Recent Bank of England data indicates ISA holdings have surged to £375 billion, the highest since their launch in 1999.

Economists have highlighted that lowering the £20,000 annual tax-free allowance could raise revenue, but it might also dampen the low investment levels in the UK.

Fuel Duty

Conservative chancellors historically deferred fuel duty increases. Had duty risen in line with retail price index inflation since 2011, it could yield an additional £19 billion yearly for the Treasury.

Reeves is likely to continue this trend, potentially generating £6 billion, which is already factored into the OBR’s forecasts.

She might also integrate incentives for electric vehicles into this strategy, redirecting motorists away from petrol vehicles.

Property Taxes

There is broad agreement on the inefficiency of stamp duty in the UK. Economists from the OECD and IFS have called for its repeal, which would come at a cost of around £13 billion.

Stamp duty currently exempts properties sold for £250,000 or less, with rates climbing to 12% for high-value properties. The IFS argues that the tax is a major impediment to economic efficiency, adversely impacting both the housing and labor markets.

Private Equity Profits

The Treasury recently sought input from private equity firms regarding the taxation of profits made by private equity executives, who are currently taxed on ‘carried interest’ at the capital gains rate of 28% instead of the higher income tax rate.

Shifting the taxation of carried interest to that of income tax could theoretically yield an additional £2 billion, although such changes might influence executive behavior and tax returns.

Tax on Gambling Companies

Shares for UK bookmakers experience a decline in light of potential tax hikes on gambling firms, with suggestions that Reeves may consider increases totaling up to £3 billion.

Additional Avenues

Banks may be subject to a one-time tax aimed at reclaiming profits earned through the Bank of England’s interest rate hikes. While Reeves has dismissed implementing a wealth tax, there remains speculation about the potential for new taxation based on existing frameworks, similar to the health and social care levy established under previous administrations.

Fiscal Considerations

Labour insiders have indicated that Reeves may adjust fiscal policies to facilitate investment funding, suggesting that minimizing the influence of the Bank of England’s bond sales on public finances could generate roughly £15 billion.

The Chancellor is committed to balancing the current budget and lowering the debt-to-GDP ratio within the upcoming years outlined by the OBR forecast.

Furthermore, she is contemplating switching to alternative debt measures that consider a wider spectrum of the government’s assets, potentially expanding fiscal space to approximately £60 billion.

Economists predict that this approach could compel Treasury officials to justify investment expenditures regarding benefits to supply-side growth.

According to the Office for National Statistics (ONS), retail transactions rose by 0.3 percent, following a previous increase of 1 percent in August. Analysts had predicted a decline of 0.4 percent.

Consumers showed a preference for technology products, yet shopping at supermarkets declined. Overall, retail sales are still 0.2 percent lower compared to pre-pandemic levels.

In the three months leading up to September, sales recorded a growth of 1.9 percent, marking the joint largest quarterly rise since July 2021.

Hannah Finselbach, a senior statistician at the ONS, commented: “Retail sales saw growth in September largely due to a significant boost from technology stores. This growth was partially countered by disappointing sales in supermarkets, where bad weather and a trend of reducing expenditure on luxury food items affected sales negatively.

“When considering the overall trend, retail sales have shown an upward movement across the entire third quarter, with positive growth noted in all major retail sectors.”

Erin Brookes, who leads the European retail and consumer division at Alvarez & Marsal, observed: “Retailers have celebrated three consecutive months of sales growth. Unusually high levels of rainfall and an early onset of winter prompted demand for warm attire, complemented by a rise in non-food sales from computer and telecommunications vendors.

“Even though consumers are still cautious with their spending, their financial situations have improved somewhat compared to last year. Nevertheless, consumer confidence remains delicate, particularly with the impending autumn budget announcement this month, leading to uncertainty regarding household finances.”

Oliver Vernon-Harcourt, head of retail at Deloitte, noted that a “back-to-school boost” contributed to increased sales of computers, clothing, and footwear. However, he added that many consumers refrained from purchasing larger items, with smaller luxury goods helping to sustain sales values.

The recent uptick in consumer expenditure arrives ahead of Rachel Reeves’s first budget announcement on October 30, where significant tax increases and spending cuts amounting to £40 billion are anticipated. Both Reeves and Sir Keir Starmer assert that difficult decisions are needed to manage the unexpected rise in spending inherited from the previous Conservative government.

This week, both leaders faced criticism from their colleagues after outlining potential budget cuts.

Surveys suggest that the combination of impending tax increases and the somber narrative surrounding the UK economy since the government’s change in leadership in July has dampened consumer confidence. The GfK consumer confidence index fell to minus 20 in September, down from minus 13 in August.

Should economic conditions improve, the retail sector may see further growth in the coming months. The Bank of England is expected to reduce interest rates in November and December by 25 basis points, potentially lowering the base rate to 4.5 percent, following a decline in inflation to a three-year low of 1.7 percent in September.

However, Kris Hamer, director of insight at the British Retail Consortium, cautioned: “While the sales growth is encouraging, retailers are anxiously anticipating the budget, fearing potential increases in costs such as changes to employer national insurance contributions, as well as a rise in inflation-driven business rates scheduled for next year. Such changes could impose more strain on an industry already facing extensive taxation.”>

“The chancellor should utilize this budget opportunity to create a fairer economic playing field by implementing a retail rates correction, which would involve a 20 percent reduction in business rates for all retail properties. This would promote investment and stimulate economic growth, ultimately benefiting jobs, shops, high streets, and local communities.”

Last week, a group of investors representing 17.3% of PRS Reit’s shares called for an extraordinary general meeting. They aim to replace Stephen Smith, who is 71 and serves as chairman, and non-executive director Steffan Francis, who is 69.

The shareholders have proposed Robert Naylor, aged 49, and Christopher Mills, 71, to take over these positions. Mills previously chaired Hipgnosis Songs Fund, which was sold to Blackstone for £1.27 billion.

This group of requisitioning investors includes Waverton, CCLA, and Alder investment management groups, in addition to CG Asset Management and Harwood Capital, which is Mills’ own company. They also have the support of Ruffer AIFM and Asset Value Investors, representing another 1.6% of shares.

Frustrations among shareholders have arisen due to the substantial discount to the group’s net asset value, which has averaged around 35% over the last year, alongside the board’s contentious decision to extend Sigma, the investment manager’s contract, until 2029. This extension comes despite the near-completion of PRS Reit’s portfolio, which consists of 5,400 rental homes.

Tom Treanor, a director at Asset Value Investors, criticized the board’s decision, labeling the contract extension as unconscionable and potentially detrimental to shareholder interests. He expressed concern that the involvement of Rothschild might indicate conflicts of interest, questioning whether the board is prioritizing the shareholders or the management’s interests.

A spokesperson for PRS Reit, currently valued at £518 million, stated that Rothschild has long been recognized by the board, emphasizing their reputation as leading real estate and debt advisers in the industry. The board has engaged Rothschild to provide strategic advice aimed at maximizing shareholder returns.

This cautionary statement was issued on Wednesday, amid increasing bipartisan resistance to Nippon’s ambitious $14.9 billion bid for the American steel giant, particularly as the November presidential election approaches. This development was initially reported by The Wall Street Journal.

Vice President Kamala Harris expressed her desire for US Steel to remain “American owned and operated.” In contrast, her Republican opponent, Donald Trump, has vowed to obstruct the deal if he assumes office. Reports suggest that the White House is nearing a decision to prevent Nippon Steel’s acquisition of US Steel due to national security issues.

US Steel indicated that a failure to secure approval for the merger would result in the company not making the same financial investments it had planned. The steel producer has previously reduced its workforce, including layoffs in Michigan.

Nippon Steel announced last week its commitment to invest over $2.7 billion in unionized facilities, specifically at Mon Valley Works in Pennsylvania and Gary Works in Indiana, aiming to bolster the manufacturing sector in these regions.

Nippon also noted that should the deal proceed, the principal senior management and a majority of the board members of the American subsidiary would be U.S. citizens.

The acquisition plan has successfully secured all necessary regulatory approvals from jurisdictions outside the U.S., as well as endorsements from US Steel’s shareholders. It is currently undergoing regulatory scrutiny within the United States.

David Burritt, CEO of US Steel, stated, “We want elected leaders and other key decision-makers to recognize the benefits of the deal, along with the unavoidable consequences if the acquisition does not materialize.”

He further elaborated that without the merger, “US Steel will largely pivot away from its blast furnace operations, putting thousands of well-paying union jobs at risk and adversely affecting multiple communities across various operational locations.” Burritt concluded by saying that the failure of the acquisition would pose “serious questions about US Steel’s future headquarters in Pittsburgh.”

I usually spend about a fiver. I prefer paying with cash, although many places no longer accept it.

Which credit cards do you prefer?

I don’t have a specific preference as long as my card functions properly.

Do you classify yourself as a saver or a spender?

I’m somewhat in the middle; I neither save extensively nor spend excessively. When I was younger, I indulged in boutique shopping. During my Boney M years, I constantly sought outfits to enhance our appearance. In 1979, we were asked last minute to participate in a Royal Variety Performance for the Queen, leading us to purchase four exquisite outfits, along with shoes and jewelry, totaling £10,000 each. While management reimbursed us, the cost ultimately came from our royalties. My most significant expenditure recently was funding my trip to Jamaica for my father’s funeral; we ensured he had a beautiful send-off.

Do you own property?

Yes, we own a spacious detached family home in Caversham, Reading. My husband, Thomas, and I purchased it over 30 years ago for approximately £400,000, a considerable sum for us at that time. Now that my children and their families are grown, they often come to visit, and having ample space is wonderful. My childhood home in Harlesden bears a blue plaque today.

Are you in a better financial position than your parents?

That’s a good question. I am one of six children and spent my early life in Jamaica. My father emigrated to England for work as a laborer after my birth, making £6-7 a week, while my mother, Lowess, now 95, joined him shortly after. They were part of the Windrush generation. I reunited with my parents at the age of 11 in Harlesden where they purchased a home for about £2,000. While I may have more financial resources today, I feel my parents were better off in some respects as they lived within their means, unlike many today who rely on credit cards for purchases beyond their reach.

What was your income last year?

Honestly, I’m not sure—my husband manages those details [chuckles].

What was your first job?

My first job was in a Lyons office where I earned £7 a week. However, after auditioning successfully for the production of Hair in West Berlin—where I had a friend performing—I saw my pay increase to around £10 weekly. Following that, I joined the German pop group Les Humphries Singers, before being invited in 1976 to become a member of Boney M, which was formed by producer Frank Farian, who passed away this year. Our first major hit was “Daddy Cool” in 1976, and life changed dramatically thereafter.

When did you first feel a sense of wealth?

I’m not certain. I may have made more during my time with Boney M, but I also had more expenses then. In some ways, I’m better off now. I have been a born-again Christian since the early ’70s, and for me, true wealth is about having security, a stable home, and a loving family.

Have you ever faced challenges in making ends meet?

During my time with the cast of Hair in Berlin, we often struggled financially due to low wages, with the London cast facing similar hardships. Some things never change; in theatre, substantial earnings typically come only to the stars of a performance.

Do you invest in shares?

No, I find that topic uninteresting.

What do you believe is better for retirement—property or pension?

I’m not entirely certain. In showbusiness, one has to organize their own pension—it’s not taken care of by anyone else. However, I still receive fan mail from across the globe requesting my performances. Although I am slowing down a bit, I have no immediate plans to retire as I truly enjoy performing.

What has been your wisest business choice?

Joining Boney M was undoubtedly my best business decision, even if I was not always treated fairly by the record company. During the band’s peak, I was too busy performing to count my earnings. At times, I was uncomfortable with the poses we were directed to take for promotional material, worrying about being exploited—though after expressing my concerns, Frank reassured us that the photos would not be “vulgar.”

It’s gratifying to have lent my voice to songs that have brought joy to countless people and continue to do so. If I wished, I could perform anywhere in the world. Unfortunately, some tribute bands named after Boney M do not openly acknowledge they are tributes, which can be quite awkward.

What would you consider your best investment?

Buying my home with Thomas has been the wisest financial move we ever made. Being a family-oriented person, I cherish the happy memories associated with our house. I’ve never needed to invest in singing lessons; I was naturally gifted with a voice and have used it since childhood. If I’m not performing live, I can often be found singing at my church.

What was your biggest regret in investments?

I’ve spent £600-£700 on dresses for personal use that I’ve only worn once after realizing they weren’t quite my style, proving to be poor investments. My mother was a talented dressmaker and crafted some of my earlier stage outfits, with several Boney M costumes inspired by my ideas.

What is your financial weakness?

I have a fondness for soft leather Italian shoes, which can range in price from £150 to £1,000. I own many pairs in various colors to match my stage outfits and don’t hesitate to treat myself.

What has been your most extravagant expense?

These days, my principal extravagance revolves around holidays, which can become costly when accommodating a large family. I enjoy taking them to destinations like Disneyworld, and visits there have led to expenses totaling several thousand pounds for flights, accommodation, and entry fees.

What are your financial goals moving forward?

My main objective is to keep singing for as long as possible. It has taken time for me to recuperate from a car accident last year that resulted in a wrist injury. Prior to that, I was performing two to three gigs each month, but my schedule has slowed down since. However, I look forward to returning to performances next year once I’m fully recovered, as the past year has been challenging mentally.

If you won the lottery, how would you spend it?

I would donate the entire amount to my Let It Be charitable foundation, which focuses on educating black British children to appreciate their African or Caribbean heritage, enriching their lives and shaping them into better individuals.

What significant lesson on finances have you learned?

It’s crucial to choose your friends wisely once you achieve financial success. As Sam Cooke sang in “Nobody Knows When You’re Down and Out,” when his “money got low,” he found it hard to locate friends.

boneym-lizmitchell.com, letitbefoundation.co.uk