The UK's Financial Services Authority (FSA) is calling for a clampdown on commissions paid for selling insurance, loans and bank accounts. Banks have been found to be rewarding sales staff in ways that encourage mis-selling of financial products and new rules may be needed to protect consumers, the FSA has warned. The review of incentives at 22 financial groups found the failings of one were so serious that it has been referred to the FSA’s enforcement division. Dysfunctional incentive schemes were the cause of most, if not all, of the recent mis-selling scandals such as payment protection insurance. (The Times*, BBC)
Natural Resources
Putin protects Gazprom from formal EC inquiry
Russian President Vladimir Putin signed a decree forbidding state-controlled firms from giving information to foreign authorities without permission from Moscow. The move came just days after the European Commission opened a formal investigation into suspected market abuses by Gazprom, which supplies roughly a quarter of the gas that EU countries consume. The EC investigators have already collected a great deal of material and have access to all Gazprom’s partners and competitors in Europe. The Commission’s antitrust authorities are focussing specifically on whether Gazprom used its dominant position in the EU gas market to thwart competitors and push up prices in central and eastern Europe. The investigation could potentially result in heavy fines or demands for Gazprom to overhaul its business practices across a wide area of the EU. This comes at the same time as Gazprom Neft’s delay to the start of oil operations at its Prirazlomnoye oil field in the offshore Arctic due to safety concerns. (Financial Times*, BBC,BBC, Financial Times*,The Moscow Times)
Royal Dutch Shell to delay Alaska drilling plans
Royal Dutch Shell has been forced to abandon its plans to drill oil wells in the Arctic this year, after a vital piece of safety equipment was damaged during testing. Shell still awaits a full drilling permit for its exploration programme in the area and the paperwork is dependent on successful testing of its Arctic containment system, which includes the now damaged spill containment dome. Shell was criticised earlier in the month by Greenpeace and US group Public Employees for Environmental Responsibility (PEER) after apparently undertaking only the most limited testing of safety equipment, with no independent verification of the tests. (Reuters, Financial Times*, Business Green, The Guardian)
British MPs call for halt to Arctic drilling
British MPs are now calling on Shell,ExxonMobil, Gazprom and others to halt "reckless" oil and gas drilling in the Arctic until stronger safety measures are put in place. Politicians also want to impose the creation of a "no-drill zone" in a new environmental sanctuary. Such uncompromising demands have angered the energy industry but come just days after alarming new evidence has emerged about Arctic sea ice melting at record levels. (The Guardian, The Independent)
Textiles & Apparel
H&M urges Bangladesh to raise wages
The chief executive of fashion retailer Hennes & Mauritz (H&M) has urged Bangladesh to increase the country's minimum wage and install annual wage reviews in its booming textile industry to add stability and better address workers' basic needs. The Swedish company sources about 25% of its products from Bangladesh's textile industry, although does not own any factories in the country. About 200 factories were shut down in May 2012 as a result of strikes and rioting by Bangladeshi textile workers protesting about pay levels that fall below the rising cost of living. H&M said this month that it is urging the Bangladeshi government to consider an annual review of the minimum wage that takes consumer inflation into consideration. (Wall Street Journal)
Food & Beverage
US and EU must change biofuel targets to avert food crisis, says Nestlé chief
Key industry figures, including the CEOs of Unilever and Nestlé, two of the world's largest consumer companies, have added their voices to claims by the United Nations that diverting food crops to fuel for American and European cars could trigger a food crisis. A study released by Oxfam estimated that the land needed to power EU cars with biofuels for a year could be used to feed 127 million people. The European Commission is to overhaul rules encouraging the use of biofuels amid such widespread concern. The new changes, to be proposed as early as October 2012, will cap the amount of transport fuels made from food crops that member states can use to achieve binding EU targets to 5% down from 10%. (Financial Times*, Guardian, Business Green, Business Green)
Pharmaceuticals
Drug giants fined $11bn for criminal wrongdoing
According to two papers published in the New England Journal of Medicine in September, the global pharmaceutical industry has racked up fines of more than $11 billion in the past three years for criminal wrongdoing, including withholding safety data and promoting drugs for use beyond their licensed conditions. In all, 26 companies, including eight of the 10 top players in the global industry (including GlaxoSmith-Kline, Novartis, Abbott and Pfizer), have been found to be acting dishonestly. The scale of wrongdoing, revealed for the first time, has undermined public and professional trust in the industry and is holding back clinical progress. Leading lawyers have warned that the multibillion-dollar fines are not enough to change the industry's behaviour. (The Independent)
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