Meerkats meet their match

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The meerkats are getting so much attention from the Competition and Markets Authority nowadays that it’s time to shoot a TV show about it.

The CMA doesn’t usually report drift by without inspiring the Brits who are always lazy to make a step to go to a shop. They go shopping and start using those cost comparison services advertised by meerkats.

Actually, price comparison is the first answer of the CMA to any trouble consumers report them about. A good example is the energy review that has shown £300 can be saved off the gas bills.

The CMA also never disappoints when it comes to the retail banking market inquiries. Almost 3 years have passed, and the organization releases 405 pages of text telling us it is thinking on whether big banks have to be broken up. After all, they decide not to do it and leave everything as it is. Big surprise that: imagine how George Osborne would have enjoyed being told what to do with the taxpayer-backed Royal Bank of Scotland and Lloyds.

Instead, the CMA plans to “tackle the issues hindering competition” by giving personal and small business customers more info, not least over “opaque” and swingeing charges for overdrafts. Incapable of working out “if they are getting good value”, almost 60 per cent of personal banking clients have stayed “with the same bank for over ten years”.

Price comparison is the answer, apparently. But this time the CMA is giving the meerkats some proper competition. It comes in the shape of a robot with an Open API — application programming interface — which the CMA is forcing the banks to set up between them. Alasdair Smith, who chaired the CMA inquiry, insists “it’s not a glorified price comparison website”. But it certainly looks like one. Customers will be invited to share their transaction history with the bot. In return, it’ll tell them whether to switch accounts or indeed banks — and all via an app, by 2018.

Or that is the theory. In practice, the banks first have to make the thing work and prove it’s secure and not a route, either, into being bombarded with cold-calls and junk mail. On top, people may not trust that a bank-designed system won’t cheerfully push them into dodgy products, à la PPI.

In short, there’s a ton of work to do. True, the CMA report plans welcome caps on overdraft costs, while thankfully resisting any charges for in-credit accounts. Yet if the best the CMA can come up with is some robot app, the banks look to have got off as lightly as their relaxed share prices imply. Meerkats will be the main moaners here.

Utilitarian

Are housebuilders the new utilities? Listen to Pete Redfern, the Taylor Wimpey boss, and it might sound that way. He’s just treated the analysts to a site visit to Great Western Park, Didcot, the grand finale to a day they’ll never forget: one where he jacked up the dividend policy and declared the business “utility-esque”.

It used to be only the likes of water and electric companies that commanded such epithets, businesses capable of maintaining the payout whatever the financial weather. Now Mr Redfern reckons a housebuilder can do it too, so illustrating not only how sanguine he is over toppy house prices, stamp duty changes on buy-to-let or Brexit but something else: how far the company has come since 2007 when George Wimpey had just merged with Taylor Woodrow and went into the recession with £1.4 billion debt.

Now Taylor Wimpey has £223 million net cash, thanks to no longer having to pump it into a land bank that’s good for 5.7 years. The upshot is that Mr Redfern is promising £1.3 billion of dividends over the three years to 2018, with the regular payout next year upped by £100 million to £150 million and a £300 million special on top.

He reckons an ordinary divvy of £150 million is now sustainable whatever the ups and downs of the housing market, having stress-tested the business for a “major shock”: a 20 per cent fall in prices and 30 per cent in volumes. And, in the good times, such as those he sees for two years at least, there’s scope for a special. The shares, up almost 5 per cent to 193½p, now yield 7.5 per cent in 2017 and 8.2 per cent in 2018. Few utilities can match that.

Leaky roof

DIY rarely works, as Lakehouse has just proved. Having been brought to market by Peel Hunt in March 2015 at 89p a share, the roof came off spectacularly in February this year. The shares crashed 58 per cent in a day to 35p, after the social housing doer-upper and smart meter installer ran into various problems. A shareholder coup ensued, triggering the exit of three non-execs and the chief executive and the return to the board of founder Steve Rawlings.

The new team, still minus a chief executive, has now discovered that one Lakehouse fix for its mishaps was to branch out into roofing. The predictable result? Too many loss-making roofing contracts and another profit warning, sending the shares, which had recovered a bit, down a third to 33¾p. Don’t expect this Lakehouse to be ready for the summer.

On-site inspection

Some MPs might be a bit squeamish about Mike Ashley’s helicopter, especially if the Magpie owner decides to buzz some Championship football ground. But the Sports Direct founder makes a perfectly fair point: if MPs on the business committee want to quiz him over working conditions at the retailer’s Derbyshire warehouse, the least they can do is visit the place first. Apparently, trains go there too.

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