Insurance premiums ‘rise due to tax change’

Cars

Insurers have warned customers that premiums will go up thanks to a tax rise that has now come into force.

The Insurance Premium Tax (IPT) rate has increased from 10% to 12%, with motor, home, pet and health insurance all affected.

Companies warn that the average family will be paying £47 more a year as a result.

Successive chancellors have found IPT to be an irresistible way to raise money for their spending plans.

This latest rise of two percentage points to 12% means that the rate has doubled in only a few years.

Calculations suggest that the tax rise will add £8 to the average motor policy.

It may add £20 to the bill for a 19-year-old whose motor insurance premium was already much higher than the average, owing to the greater risk posed by younger drivers.

A percentage tax bears heaviest on those who have the most expensive policies, such as young drivers or people living in less well-off areas or flood zones.

A spokesman for the Treasury said: “Insurance Premium Tax is a tax on insurers, not consumers – insurance firms decide whether to pass it on to their customers or not.

“IPT is higher in several European countries, including France and Germany, than it is in the UK.”

However, the Association of British Insurers said it punished responsible people who had done the right thing by buying cover for their cars and homes.

Insurance premiums ‘rising due to tax change’

Cars

Insurers have warned customers that premiums will go up thanks to a tax rise that has now come into force.

The Insurance Premium Tax (IPT) rate has increased from 10% to 12%, with motor, home, pet and health insurance all affected.

Companies warn that the average family will be paying £47 more a year as a result.

Successive chancellors have found IPT to be an irresistible way to raise money for their spending plans.

This latest rise of two percentage points to 12% means that the rate has doubled in only a few years.

Calculations suggest that the tax rise will add £8 to the average motor policy.

It may add £20 to the bill for a 19-year-old whose motor insurance premium was already much higher than the average, owing to the greater risk posed by younger drivers.

A percentage tax bears heaviest on those who have the most expensive policies, such as young drivers or people living in less well-off areas or flood zones.

A spokesman for the Treasury said: “Insurance Premium Tax is a tax on insurers, not consumers – insurance firms decide whether to pass it on to their customers or not.

“IPT is higher in several European countries, including France and Germany, than it is in the UK.”

However, the Association of British Insurers said it punished responsible people who had done the right thing by buying cover for their cars and homes.

Banks ‘rebuilding reputation’ after crash

Piggy bank

UK banks are starting to rebuild their reputation following the financial crisis with a marked improvement in the last two years, a survey suggests.

The sector has been rated as “average”, according to an online survey of 35,000 people by the Reputation Institute.

Its score places it higher than the utilities sector, but below that of technology companies.

The Nationwide Building Society tops the list, with taxpayer-owned RBS at the bottom.

Nationwide’s mutual status and the quality of its products rated highly among respondents.

In general, banks have started to rebuild their reputations in the last two years, with perceptions of products and services improving most significantly recently.

This is despite widespread concern among debt charities over lending policies and overdraft charges among High Street banks.


Virgin Money is second on the Reputation Institute’s ranking, followed by Halifax, Lloyds Banking Group and Metro Bank.

Lloyds is one of the big risers, with Santander – which cut some interest rates on popular accounts – having fallen in the ranking compared with a year earlier.

Despite the position of some challenger banks high on the list, innovation is seen as one area where ratings have dropped in the last year.

A from consultancy Accenture suggested that artificial intelligence would be the main way that banks interacted with their customers within the next three years.

The report examined the views of 600 bankers and other experts, with many saying that AI would help banks create a more human-like customer experience.

BA’s owner launches new trans-Atlantic budget airline

Level airline aircraft

BA’s owner IAG launches its new trans-Atlantic budget airline, Level, with its first flight from Barcelona to Los Angeles on Thursday.

Over the next three weeks Level will roll out flights to San Francisco, Buenos Aires and Punta Cana in the Dominican Republic.

Fares start from £99 one-way and have been on sale since March.

Parent company IAG, which owns Iberia, BA, Aer Ingus and Vueling, said it sold 100,000 tickets in the first month.

BA has been at the centre of controversy following a disastrous computer crash that stranded 75,000 passengers over the weekend.

Critics have said that BA has been relentlessly cutting costs to take on competition from budget airlines. BA denies that this caused the IT problems which it blames on an electrical power surge.

But its owner IAG Group is now pinning its hopes on the new airline to help it compete in an increasingly aggressive trans-Atlantic market.

Level’s pricing structure is divided into six types of fare. The most basic includes hand luggage only.

The most expensive is Flexible Premium Economy which offers a hot meal, two checked bags, and seat selection. Wifi is available – at prices starting at 8.99 euros.

It will start out with flight and cabin crew from its sister airline Iberia and will create up to 250 jobs based in Barcelona.

IAG chief executive, Willie Walsh, said: “This is just the start. In summer 2018 we will have more aircraft and will operate more destinations from Barcelona. We’re also planning to expand Level operations to other European cities.”

The competition has ratcheted up since the arrival of the Boeing 787 Dreamliner in late 2011. The plane, made from composite materials was lighter, more fuel efficient and cheaper to fly than any of its predecessors. Aerospace analysts considered it a game changer for the airline industry.


The Oslo-based budget airline Norwegian jumped at the opportunities the new aircraft offered. It now has 13 Dreamliners in service with 30 more on order to fly passengers from cities including London and Paris across the Atlantic.

This year Norwegian started offering $65 fares for a one-way ticket between smaller airports in the UK and Ireland to similar destinations in New York state, Providence, Rhode Island, and Hartford, Connecticut.

Level has taken a different tack, opting for the latest Airbus A330 aircraft, designed specifically to compete with the Dreamliner, and fitted with 293 economy and 21 premium economy seats.

But the trans-Atlantic budget air space is about to get very crowded. From July Iceland’s budget airline WOW will be offering flights from London Gatwick, Bristol and Edinburgh to Chicago from £139, and Lufthansa’s Eurowings subsidiary will be increasing its low cost offerings to Orlando, Florida and Seattle.

Firms warned to prepare for tougher EU data protection rules

TalkTalk

Companies must prepare for new tougher EU rules on data protection, or face big fines, PwC has warned.

The financial services firm said new rules, coming into effect next May, could see fines soar to 20m euros (£17.4m) or more.

Fines for data breaches had already risen, from 18 in 2015, to 35 in 2016, amounting to £3.2m in total, said PwC.

There were also 23 enforcement notices, where organisations were required to improve compliance – a 155% increase.

According to PwC’s research, the UK is one of the most active places in Europe for regulatory enforcement in this area, along with Italy.

Penalties issued by the UK Information Commissioner’s Office in 2016 included a record £400,000 fine for telecoms firm TalkTalk over security failings that allowed a cyber attacker to access customer data “with ease”.

In 2015 the online pharmacy Pharmacy 2U was also told to pay £130,000 after it sold details of more than 20,000 customers to marketing companies without their consent.

However, PwC said that when the new General Data Protection Regulation (GDPR) becomes law across the EU next May, firms would face much tougher obligations and penalties.

In particular, the Information Commissioner’s Office will be able to issue fines of up to 4% of global turnover, or 20m euros – whichever is highest. The regulator can only issues fines of up to £500,000 at present.

“UK organisations must use the remaining time to prepare for GDPR compliance before May next year,” said Stewart Room, an expert in global cybersecurity and data protection at PwC.

The UK is due to adopt the new rules before it leaves the EU, but PwC said it was unlikely to water down the protections after it left the union.

AutoNation names Iserman COO, executive vice president of sales

AutoNation Inc. named Lance Iserman COO and executive vice president of sales, effective June 1, the nation’s largest dealership group said late Wednesday, two weeks after former COO Bill Berman abruptly resigned.

Iserman, who has worked at AutoNation for more than 15 years, is currently president of the western region, overseeing the Fort Lauderdale, Fla., retailer’s 81 stores and 110 franchises in the region, a statement said.

Steve Kwak, 44, will replace Iserman, 52, as western region market president after serving on the western region management team for 12 years.

CEO Mike Jackson said AutoNation had “quite a number” of internal and external candidates for the COO and sales boss positions, but Iserman was “clearly the best choice and therefore the decision.”

Berman resigned May 15.

Split duties

Iserman will split Berman’s previous responsibilities with Scott Arnold, who was named executive vice president of customer care and brand extension.

“We had come to the conclusion,” Jackson said, “that with all the aspirations we have to grow the business through brand extension, to split the position” between two executive vice presidents: customer care and sales.

Executing AutoNation’s brand extension plans for parts, accessories and collision will be Arnold’s responsibility, Jackson said. Iserman will oversee the brand extension strategy for AutoNation USA, the company’s used-vehicle stores.

COO is typically seen as the No. 2 post. When asked about the succession plan for CEO, Jackson said: “We’re in an excellent position if you look at this list of executive vice presidents that we have. There are many on there to be considered in succession planning when the time comes.”

Long-timers

He identified 11 executives with a combined average of 15 years of service, including executives such as Arnold, Iserman, Chief Marketing Officer Marc Cannon and CFO Cheryl Miller.

“If I put it all together, 90 percent came from internal succession planning,” Jackson said. He added that the company would also consider candidates from outside the company.

Texas store’s CEO sets plans in aftermath of fatal shooting

Dealer Rick Ford was about 15 minutes from his Nissan store in Greenville, Texas, on Tuesday evening when he got a shocking call from his general manager.

Just minutes earlier, about 15 to 20 customers and employees ran and dove for cover amid multiple gunshots during a two-minute shootout that left three people dead on the showroom floor.

No employees or customers were killed.

“In my 36 years in the business, this is the first time I’ve ever been involved in a situation like this,” Ford told Automotive News. “It was an absolute miracle that no innocent bystanders were hurt.”

But Ford, the CEO of RFJ Auto Partners Holdings Inc., the dealership group that owns the store, worries it will hurt business in the long term, especially in light of the massive local media coverage, he said.

EDITOR’S NOTE: The video below, provided by Greenville police, contains graphic footage.

Nissan assistance

“It’s purely coincidence that this happened here. This could have happened at Starbucks or any other retail location,” said Ford. “We’re formulating how we’re going to communicate to our customers and the public at large to let them know that that’s the case.”

Ford wants customers to know that no dealership employees were involved in the shooting.

In the meantime, Nissan North America is helping Ford finish his month-end sales count and other business, even offering to help him find counselors for traumatized employees, he said.

RFJ, of Plano, Texas, owns 20 dealerships in the Southern U.S. as well as some locations in the Northwest. It ranks No. 36 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 24,047 new vehicles in 2016.

For additional coverage of the tragedy at the Nissan store in Greenville, click here.

Bounty hunters

Tuesday afternoon, Ford said, two men entered Nissan of Greenville, about 50 miles northeast of Dallas. The two said they were federal law enforcement officers and were looking for a woman who had been in earlier to buy a car. They explained they expected her to return with a person who was a fugitive and they wanted to make an arrest there, Ford said.

“Obviously, we were under the impression that these are federal law enforcement officers. They showed some identification. Our guys are not trained to the point of being able to identify what’s real and what’s not,” Ford said.

The staff told the men they did not know when she would be back, but the men chose to wait a couple of hours. When she returned, she had a man with her. The men, who were bounty hunters, approached him and tried to handcuff him.

“It’s unclear, but a struggle broke out, and multiple gunshots were fired, and all three [men] died here on the showroom,” Ford said. A video was released showing the beginning of the incident.

Full showroom

To Ford’s horror, the showroom was full of customers and employees.

“It was a busy night,” he said. “The employees and customers, most of them all dropped to the floor, and some hid under their desk and took cover. I am looking at bullet holes in walls and glass. I don’t know how many shots were fired, but multiple shots in multiple directions.”

When the dust cleared, employees called 911, then called Ford. One employee went to the hospital for a minor neck injury and was released. Police investigated the scene until 2 a.m., with Ford there the whole time.

The next day, he stood in the closed store assessing the damage as a crime-scene cleanup company worked to sanitize the store.

There are crews there to repair 10 glass panels and showroom windows shattered from gunfire, he said. He will replace damaged furniture and destroyed computers, and fix bullet-riddled walls and two damaged vehicles. He had no estimate on the cost and plans to remain closed Thursday, possibly longer.

What next

“We need to clean up. We want to make sure we provide our employees with available counseling if they desire to have that and give them time to process this situation and to make sure the dealership is safe and sanitized to be ready for it to open up,” said Ford.

He will pay all employees while the store is closed and is bracing for a hit to his bottom line.

“Not only did we lose sales yesterday, because there were customers in the showroom in the process of completing their sales,” said Ford. “Then, all the sales we had scheduled for today, which is typically one of our busiest days of the month, the last day of the month, we lost.”

The store typically sells 10 to 12 cars on the last day of the month, Ford said.

Ford will use email and social media to communicate with customers when the store reopens and is safe. Still, he laments:

“There’s no doubt it will have a negative impact. It was the lead story on all four of the local news channels.”

Lessons

In the meantime, Ford said executives from Nissan have called him offering assistance.

“Obviously, this is the last day of the month, and it’s the last day to report sales and there are incentives, etc.,” Ford said. “They have offered to try to assist us in those things. They’ve offered to find counselors to talk to our employees.”

He already hired counselors. He also plans to bring in security experts to suggest how to guard against such an event in the future. The dealership’s only security cameras are in the finance & insurance office, which activate only when customers are closing a deal. He is considering expanding camera coverage.

Also, he said, the local police department told him fake law enforcement badges are now so realistic that police often can’t tell the difference. The police advised him, “If we have someone who represents themselves as law enforcement, we should call our local police department and they’ll come out to verify it for us,” Ford said. “Which is what we plan to do.”

Although Texas allows people to carry firearms, his store has signs prohibiting them in the dealership, he said. That won’t change. But Ford said he is aware the signs have little effect for those with criminal intent. “What can you do?”

GM plans to cut shift at Mich. transmission plant

DETROIT — General Motors on Wednesday said it will end one of two production shifts at a Michigan transmission plant next month, following cutbacks at several vehicle assembly vehicle plants amid a decline in U.S. industry sales.

GM did not reveal how many jobs would be eliminated as a result. The plant, Warren Transmission Operations, employs about 630 hourly workers and 100 salaried workers. Some of the affected UAW employees likely would have the chance to move to another plant.

“Recent actions to reduce passenger car production have caused us to adjust transmission production starting in late June,” a GM spokesman said. “Warren Transmission Operations will operate on one shift, building fewer transmissions each day. This action will help maintain more stable production and provide the smallest impact to plant employment going forward. We are not providing more detail about our plans for competitive reasons.”

The plant makes six-speed transmissions for the Chevrolet Traverse, Equinox and Impala, the GMC Acadia and Terrain, the Buick Enclave and Regal, and the Cadillac XTS. It also builds electric drive units for the Chevy Volt and Malibu Hybrid.

GM cut a shift at the Michigan plant that makes the Traverse and Enclave earlier this month, when it also moved Acadia production to Spring Hill, Tenn. In March, it removed a shift at the Detroit plant that assembles the Impala and Volt. Two GM plants that build other vehicles lost shifts in January.

GM’s inventory was at its highest level in nearly a decade at the beginning of May, climbing 37 percent over the past year, while other automakers have kept their inventories essentially flat.

GM executives have said the buildup was intentional in preparation for production that will be lost to several important changeovers to redesigned models this year. But it leaves GM more vulnerable to declining demand than many of its competitors, at a time when industry sales have declined for four consecutive months.

Brazil meat-packing giant JBS to pay record $3.2bn corruption fine

Joesley Batista, a former executive at meat packing giant JBS, pictured in October 2015

The controlling shareholder of the world’s largest meat-packing company, JBS, has agreed to pay a record 10.3bn real ($3.2bn; £2.4bn) fine for its role in Brazil’s corruption scandals.

J&F Investimentos will pay under a leniency deal in two corruption investigations.

The payments will start in December and J&F will have 25 years to make them, prosecutors say.

The fine beats the .

Brazil’s President Michel Temer is in danger of being toppled thanks to testimony given by J&F’s owners, Joesley and Wesley Batista, under a plea bargain.

The pair, who resigned from their board positions at the company last week, say they spent 600m real to bribe nearly 1,900 politicians in recent years.

Joesley Batista also gave prosecutors an audio tape – leaked to the press – where Mr Temer appears to condone bribing a witness.

The audio came from a conversation between the president and Joesley, and was recorded using a hidden device.

In it, Mr Temer appears to discuss making hush-money payments to silence politician Eduardo Cunha, who is currently in prison.

Mr Temer has said the recording is genuine and was taken from a meeting in March but denies any wrongdoing.

“I never authorised any payments for someone to be silent,” he said in a televised address. “I did not buy anyone’s silence. I fear no accusations.”

Brazil’s biggest-ever corruption investigation, Operation Car Wash, has been running for more than three years. The number of people embroiled in it continues to rise.

The country’s Supreme Court has approved an investigation into the allegations against the president.


Fields tried to fire Hinrichs before being ousted himself

DETROIT — Former Ford CEO Mark Fields intended to fire top lieutenant Joe Hinrichs in an effort to relieve pressure Fields was facing from the board in the days before his ouster on May 19, Automotive News has learned.

Fields intended to get approval from the board for his decision to fire Hinrichs during the week of May 14, sources said.

Fields’ plan backfired, however, when the board decided instead to part ways with him and communications chief Ray Day, following a Friday, May 19, meeting. Instead of a pink slip, Hinrichs was given a promotion to the newly created position of president of global operations, in charge of Ford’s global product development; manufacturing and labor affairs, among other things.

Hinrichs was conspicuously missing in a round of retention bonuses the company paid out to top executives on Wednesday, May 17, according to Securities and Exchange Commission filings.

But Hinrichs was added to the list the following week, getting a $5 million stock bonus.

Fields faced increased scrutiny during meetings with Ford’s board of directors ahead of the company’s annual shareholders meeting on May 11. The board had grown impatient with Fields’ strategy for the future and irritated with the automaker’s sluggish stock price, which had fallen nearly 40 percent since he took over in July 2014.

Fields believed he could deflect pressure from himself and pacify the board by ousting Hinrichs, the sources said.

Fields and Ford did not immediately respond to requests for comment.

Hinrichs, 50, had been president of the Americas since December 2012. Since he took over, the company earned about $38 billion in North America, which represented 92 percent of its total pretax profits during that period.

He also oversaw the successful redesign of Ford’s best-selling vehicle, its profit-generating F-series pickup.

However, U.S. sales are down 5.1 percent through April, more than double the industry decline as the industry plateaus. The automaker has lost four-tenths of a percentage point of market share during that same stretch.

In April, Ford reported first-quarter net income of $1.6 billion, down $900 million from a year earlier.