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The gas and electricity watchdog has announced a series of new rules for energy companies, including requiring firms to hold more capital, similar to the regulations placed on the banks in the wake of the financial crisis.

Ofgem has proposed the regulations to protect customers and make firms more resilient after a number of electricity suppliers went bust and cost taxpayers billions.

The collapse of electricity provider Bulb came after wholesale gas prices skyrocketed last year and left the company losing money on the energy they were contracted to sell to households and businesses at lower prices.

Its bailout is expected to be the biggest since the Royal Bank of Scotland was nationalised in the financial crisis and cost £6.5bn, according to forecasts from the Office of Budget Responsibility (OBR).

The Bulb insolvency is just one of dozens of smaller collapses which lead to criticism for the industry regulator Ofgem over how it allowed new energy companies in to the market.

Under the new rules announced on Friday, firms would be required to hold on to more cash or assets to reduce the risk of them going bust and reducing the cost and disruption if they do so.

Firms would also have to ringfence the money they needed to buy renewable energy in an effort to stamp out the misuse of customers’ credit balances, which will be closely monitored, Ofgem said.

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The proposals have already come under fire from electricity suppliers, particularly the absence of a requirement for suppliers to ringfence all customer credit balances.

Customer money used to ‘fund day to day business activities’

British Gas owner Centrica issued stinging criticism for this omission and warned lessons have not been learned from the Bulb liquidation.

“When customers pay up front for their energy, they are trusting their supplier to look after their hard-earned money. They would be appalled to learn their money was being used to fund day to day business activities, but that’s exactly what’s happening in some companies, and it undermines confidence in the market,” Centrica chief executive Chris O’Shea said.

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“We identified this as a major risk to consumers in 2016 – years before the energy crisis – and Ofgem promised to fix this.

“Energy companies must be adequately capitalised by their shareholders so that if they fail, the shareholders feel the pain, not UK consumers. It really is as simple as that, but it appears lessons have still not been learnt. This feels like an abdication of responsibility by a regulator not focusing on the right things. If and when a large supplier fails, the recklessness of the decision not to address this issue will be clear for all to see.”

Ofgem’s chief executive said there was a difficult balancing act to be done to ensure costumer protection while not placing undue restrictions on firms and hinder investment.

“These proposals will provide protections, checks and balances for consumers, suppliers and the entire sector to create a more stable market. We want suppliers to be able to be innovative and dynamic, while also making sure they are financially stable, and that customers’ money is protected,” Jonathan Brearley, Ofgem’s chief executive, said.

“This is a delicate balance and while Ofgem want well capitalised businesses that can weather price fluctuations, we also don’t want to block the market for new suppliers or force suppliers to sit on lots of capital they could be investing in innovative ideas.”

Feedback is being sought on the proposals and Ofgem expects reforms will be published by next spring.

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Consumers warned after thousands targeted by scammers impersonating financial regulator

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Consumers warned after thousands targeted by scammers impersonating financial regulator

Thousands of consumers been targeted by fraudsters impersonating the Financial Conduct Authority (FCA).

The FCA has said it received 4,465 reports of scammers pretending to be the regulator in the first half of the year.

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It said the fraudsters try to steal money by getting people to hand over funds or sensitive information, such as bank account PINs and passwords, and that around 480 victims had been scammed into sending money.

One of the most common scam methods involves fraudsters claiming the regulator has recovered funds from a crypto wallet that was opened illegally in the individual’s name.

The FCA said another common method is the targeting of people vulnerable to loan scams, with criminals telling them they can help them recover money they have lost.

Victims are then persuaded to hand over further funds to who they believe is the regulator.

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The regulator said almost two-thirds of reports came from people aged 56 or over.

A separate scammer trend has involved fraudsters emailing consumers telling them their creditors have taken out a county court judgment against them and that they need to pay the FCA the funds owed.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Fraudsters are ruthless. They attempt to steal money from innocent victims by impersonating the FCA.

“We will never ask you to transfer money to us or for sensitive banking information such as account PINs and passwords. If in doubt, always check.”

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Health and beauty chain Bodycare in race to avert collapse

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Health and beauty chain Bodycare in race to avert collapse

A health and beauty retailer founded on a Lancashire market stall more than half a century ago is facing collapse amid a race to find a rescue deal.

Sky News has learnt that Bodycare, which employs about 1,500 people, could fall into administration as soon as next week unless a buyer is found.

City sources said that Interpath, the advisory firm which has been working with Bodycare and its owners for several months, was continuing to explore options for the business.

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The company is owned by Baaj Capital, a family office run by Jas Singh.

Its other investments have included In The Style, which underwent a pre-pack administration earlier this year, and party products supplier Amscan International.

Baaj also attempted to take over The Original Factory Shop earlier this year before its offer was trumped by Modella Capital, another specialist retail investor.

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News of Bodycare’s travails comes just weeks after the retailer secured a £7m debt facility to buy it short-term breathing space.

The facility was secured against Bodycare’s retail inventory, according to a statement last month.

Bodycare was established by Graham and Margaret Blackledge in Skelmersdale in 1970, and sells branded products made by the likes of L’Oreal, Nivea and Elizabeth Arden.

The chain was profitable before the pandemic, but like many retailers lost millions of pounds in the financial years immediately after it hit.

Bodycare received financial support from the taxpayer in the form of a multimillion pound loan issued under one of the Treasury’s pandemic funding schemes.

The chain is run by retail veteran Tony Brown, who held senior roles at BHS and Beales, the now-defunct department store groups.

If Bodycare does fall into insolvency proceedings, it would be the latest high street chain to face collapse this year, amid intensifying complaints from the industry about tax increases announced in last autumn’s budget.

In recent weeks, River Island narrowly avoided administration after winning creditor approval for a restructuring involving store closures and job losses.

Later this week, the struggling discount giant Poundland will seek similar approval from the courts for a radical overhaul that will entail dozens of shop closures.

Bodycare could not be reached for comment on Tuesday, while Baaj has been contacted for comment and Interpath declined to comment.

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Trump seeks to fire Fed governor, triggering fresh independence crisis

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Trump seeks to fire Fed governor, triggering fresh independence crisis

President Trump says he is firing a governor of the US central bank, a move seen as intensifying his bid for control over the setting of interest rates.

He posted a letter on his Truth Social platform on Monday night declaring that Lisa Cook – the first black woman to be appointed a Federal Reserve governor – was to be removed from her post on alleged mortgage fraud grounds.

She has responded, insisting he has no authority over her job and vowed to continue in the role, threatening a legal battle that could potentially go all the way to the Supreme Court.

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The president‘s threat is significant as he has consistently demanded that the central bank cut interest rates to help boost the US economy. Growth has sagged since he returned to office on the back of US trade war gloom and hiring has slowed sharply in more recent months.

Mr Trump has previously directed his ire over rates at Jay Powell, the chair of the Federal Reserve, blaming him for the economic jitters and has repeatedly called for him to be fired.

The Fed, as it is known, has long been considered an institution independent from politics and question marks over that independence has previously shaken financial markets.

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The dollar was hit overnight while US futures indicate a negative opening for stock markets.

Mr Powell’s term is due to end next spring and the president is expected to soon nominate his replacement.

Fed chair Jay Powell is seen in discussion with board member Lisa Cook. Pic: AP
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Fed chair Jay Powell is seen in discussion with board member Lisa Cook. Pic: AP

The Fed has 12 people with a right to vote on monetary policy, which includes the setting of interest rates and some regulatory powers.

Those 12 include the seven members of the Board of Governors, of which Ms Cook is one.

Replacing her would give Trump appointees a 4-3 majority on the board.

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He has previously said he would only appoint Fed officials who support lower borrowing costs.

Ms Cook was appointed to the Fed’s board by then-president Joe Biden in 2022 and is the first black woman to serve as a governor.

Her nomination was opposed by most Senate Republicans at the time and was only approved, on a 50-50 vote, with the tie broken by then-vice president Kamala Harris.

It was alleged last week by a Trump appointed regulator that Ms Cook had claimed two primary residences in 2021 to get better mortgage terms.

Mortgage rates are often higher on second homes or those purchased to rent.

She responded to the president’s letter: “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in an emailed statement.

“I will not resign.”

Legal experts said it was for the White House to argue its case.

But Lev Menand, a law professor at Columbia law school, said of the situation: “This is a procedurally invalid removal under the statute.

“This is not someone convicted of a crime. This is not someone who is not carrying out their duties.”

The Fed was yet to comment.

It has held off from interest rate cuts this year, largely over fears that the president’s trade war will result in a surge of inflation due to higher import duties being passed on in the world’s largest economy.

However, Mr Powell hinted last week that a cut could now be justified due to risks of rising unemployment.

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