Morrisons Suffers Staff Payroll Data Theft

Data from supermarket chain Morrisons' staff payroll system, including bank account details, has been stolen and published on the internet, the company has confirmed.

In an email sent to staff and seen by Sky News, the company called it an "illegal theft" of data.

The information has since been taken off the website that published the details.

A data disk was also sent to a regional newspaper with the stolen data.

The theft included names, addresses and bank account details of an unspecified number of staff. It employs around 100,000 people.

The email warned that "this affects colleagues from all levels of the organisation".

Morrisons, which became aware of the theft on Thursday, said: "Initial investigations suggest that this theft was not the result of an external penetration of our systems.

"We can confirm there has been no loss of customer data and no colleague will be left financially disadvantaged."

The email warning was sent to senior staff who were asked to inform workers

So-called insider threats have become a serious concern for companies in recent years, due to the volume of data stored and its accessibility.

Sky News has confirmed that the data watchdog, the Information Commissioner's Office (ICO), has been alerted to the theft and may launch a probe.

An ICO spokesman said: 'We have been made aware of reports that Morrisons have suffered a potential data breach, and we will be making enquiries."

Morrisons, which is Britain's fourth biggest supermarket group, said it had called in police and cyber crime experts.

The criminal inquiry into the data theft from Bradford-based Morrisons is being led by West Yorkshire Police.

Detective Chief Inspector Nick Wallen said: "We are aware of the situation and are supporting Morrisons and their investigation into these matters."

It has also started communications with banks handling staff accounts and a credit rating agency, and has set up a helpline for employees.

The group has come under pressure recently over its performance in the ultra-competitive sector.

On Thursday, it launched a counter-attack in the supermarket price war after losing more than just ground to its rivals in its last financial year.

The chain, which has struggled amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after a profit of £879m in the previous 12 months.

Like-for-like sales fell 2.8% in the period, and its share price suffered a 10% drop on Thursday.

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Co-op Warned Of Collapse Without Overhaul

The Co-operative Group has been warned it will collapse unless drastic steps are taken to overhaul a "massive failure" of governance.

Former City minister Lord Myners made the warning in a damning interim review of the group's operations.

Lord Myners rounded on the Co-op's board because of oversight failings and inadequate experience for such a large organisation.

He was "deeply troubled by the disdain and lack of respect for the executive team" held by some board members.

Euan Sutherland has left the Co-op

Lord Myners added that some members, elevated from within the Co-op, had "simply not been up to their task".

He said: "The Co-operative Group suffers from acute systemic weaknesses in its governance framework that over many years have gravely damaged the organisation."

"Unless the group takes urgent steps to reform its governance so that it generates sustainable economic value, it will run out of capital to support its business."

Lord Myners was commissioned by the Co-op to conduct the governance review.

He decided to publish his findings earlier than expected after the shock resignation of chief executive Euan Sutherland.

Mr Sutherland quit on March 10 and said the Co-op was "ungovernable" with some board members thwarting reform attempts.

Lord Myners, who is also a new board member at the Co-op, said it was only due to Mr Sutherland and his executive team that the group remained viable.

His report revealed a board that was lethargic to change and potentially hostile to operational management.

He said: "There is a phrase frequently used in Co-operative Group circles that the executive should be 'on tap but not on top'"

Following Mr Sutherland's resignation on Monday the Co-op board agreed to the main recommendation by Lord Myners' review that it should be abolished in favour of a new "plc" style board, responsible for taking commercial decisions.

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Investors Line Up To Back £4bn AA Listing

By Mark Kleinman, City Editor

A powerful group of City investors is lining up to back a £4bn-plus deal that would entail a change of ownership for the AA, Britain's biggest roadside recovery group.

Sky News can reveal that Cenkos Securities, a London-based investment bank, has tabled a proposal to the AA's parent company for it to list on the London Stock Exchange.

The offer, which has been made in recent days, would resurrect a technique known as an accelerated initial public offering (IPO), which gained traction more than a decade ago but which has only been used infrequently in recent years.

Sources close to the situation said that Cenkos had approached major institutional investors including Aviva, BlackRock, F&C Investments, JP Morgan Asset Management and Threadneedle about a transaction that would involve them acquiring stakes in the AA through a new stock market-listed company.

It is not clear which of the firms has formally committed funds to the bid yet.

The AA is part of Acromas Holdings, a private equity-backed group which also owns Saga, the financial services and travel specialist for the over-50s which is pursuing its own £3bn flotation.

The Cenkos-led proposal for the AA was not solicited by Acromas and it is unclear whether it is likely to be formally considered by the company's current owner given its focus on Saga's listing.

Acromas has been expected to retain ownership of the AA for some time, given the scale of its borrowings relative to its earnings.

The AA has net debt of about £3.2bn, putting its borrowings on a multiple of 7.6 times the level of its earnings before interest, tax, depreciation and amortisation.

In the third quarter of last year, the AA reported sales of £244m, with earnings up 8.2% to £104m.

The AA, which has styled itself as "the fourth emergency service", has 4m personal members and 9m business customers, giving it a 40% share of the roadside insurance market.

Some City observers believe that a separate listing of the breakdown recovery group may be difficult because of its debts and a financial mechanism known as a whole business securitisation that was undertaken last year.

The accelerated IPO was first used in the City more than a decade ago by Collins Stewart, the investment bank which a group of Cenkos executives left to set up.

The technique involves a more rapid listing process during which the sponsoring investment bank agrees to buy the shares before selling them on to other investors.

Like Saga, the AA has turned to new leadership, appointing Chris Jansen, a former British Gas executive, as its new boss.

The AA has taken advantage of strong financing markets by launching a £350m bond, the proceeds of which are being used to repay a chunk of Acromas's vast debt-pile.

Acromas is owned by Charterhouse, CVC Capital and Permira, three of the UK's biggest private equity groups, which acquired the AA from Centrica, the owner of British Gas.

The AA's principal rival, the RAC, is also expected to be the subject of a change of ownership in the next couple of years, with Carlyle, its private equity owner, likely to seek a stock market listing for the company.

Sky News disclosed on Thursday that Acromas is close to hiring Goldman Sachs and at least three other banks to work on a flotation that will put Saga on course for inclusion in the FTSE-100 index.

As many as half of the shares on offer, equating to hundreds of millions of pounds, could be sold to ordinary retail investors, meaning Saga is likely to vie with Royal Mail's privatisation for the status of the City's biggest retail offering for years.

A sale of part of the Government's remaining stake in Lloyds Banking Group, expected this year, will include a retail offering that will dwarf those of Saga and Royal Mail.

Cenkos and Acromas declined to comment.

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Morrisons Plots Price Cuts After Annual Loss

Morrisons has launched a counter-attack in the supermarket price war after losing more than just ground to its rivals in its last financial year.

The chain, which has struggled amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after profits of £879m in the previous 12 months.

Like-for-like sales fell 2.8% in the period.

The £176m annual loss was largely explained by a £903m writedown relating to the value of its stores and its purchase of online children's wear retailer Kiddicare, which it now plans to sell following a poor financial performance.

Its share price fell 10% on opening on the FTSE 100 in response to the figures, with its plans to turn its fortunes around seemingly failing to impress.

Morrisons wants to focus more on value in a challenge to discounters

Sainsbury's and Tesco also saw steep falls in their values because of the implications of the price war, with Tesco having fired a new salvo the previous day with a fuel offer.

Morrisons said a £1bn programme of property disposals over three years would fund a major investment in its customer offer.

There would be £300m spent on its proposition during the current financial year and it would also introduce a loyalty card.

Chief executive Dalton Philips said Morrisons was investing the money to improve value and "defend and strengthen our competitive position," suggesting the grocery sector was facing its biggest structural shift since the 1950s.

The Yorkshire-based chain has been losing sales to hard discounters Aldi and Lidl faster than the rest of its so-called "big four" rivals.

In its annual results, it said of the discount market challenge: "It is currently worth £9.5bn (up 20%) over the prior year.

"This reflects a fundamental shift in the market and one that is likely to be structural rather than cyclical.

"It is a challenge we will address in 2014/15."

Morrisons also said it would do more to engage in the convenience sector as shoppers adopt more of a "little and often" approach at the expense of big basket weekly shops.

Its online grocery offer, in partnership with Ocado, only began at the start of the year.

However, Mr Philips said it was already producing market-leading performance for on-time deliveries and a low rate of substitutions.

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Which?: Energy Bills To Rise £640 By 2020

By Poppy Trowbridge, Consumer Affairs Correspondent

Annual household energy bills could rise by more than £600 within seven years so power companies can keep the lights on, consumer champion Which? has warned.

Sky News has learned the watchdog has written to the Treasury ahead of next week's budget to warn of rising costs.

In a new forecast, Which? has predicted energy companies will need to spend £118bn on new infrastructure between now and 2020.

This would include building new power stations, replacing grids and building wind farms as part of a drive to sustain Britain's power supply and cut down on carbon emissions.

Which? believes this cost will inevitably be passed on to consumers, and that households and businesses will foot the bill.

This would mean that the average bill would exceed £2,000 a year even if wholesale costs of gas and electricity remain stable - an annual rise of £640 per household.

Richard Lloyd, executive director of Which?, said: "I don't think consumers know that this is heading their way and that decision has already been made by the Government.

"This is a massive chunk potentially on everyone's bills. This means one thing: that household bills are set to rise, and to rise for many people very steeply for the foreseeable future."

Which? is campaigning for a full market investigation to find out if consumers are paying a fair price for energy.

Sky News also learned that at least one of the 'big six' energy firms is not guaranteeing to make the necessary investment should it not prove profitable for the company.

Energy companies rely on investors - who require a return on their investment - to finance certain projects.

Angela Knight, of Energy UK, the body representing the industry, said: "A lot of this is all about the policy that the Government and previous Government signed up to.

"Right now there is significant concern about the price of a bill and that is before much of this investment comes through.

"At the same time, a lot of our stuff is old and you do have to refresh and replenish."

One move Chancellor George Osborne may deploy to tackle the costs being passed through to consumer energy bills could be freezing the Carbon Floor Price in next week's budget.

The tax policy means polluting industries must pay a minimum amount of money for the right to pollute.

If Mr Osborne were freeze or abolish the Carbon Floor Price, the knock-on effect would prevent around £8 being added to bills each year, according to one energy company source.

In December 2013, HM Treasury released estimates of planned national infrastructure investments relating to 2013-2020 and beyond.

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Liberty Global Aims To Bloom With £500m Daisy

By Mark Kleinman, City Editor

The US-based cable giant Liberty Global has been holding secret talks about a £500m-plus takeover of the London-listed IT supplier Daisy Group.

Sky News understands that Liberty has held discussions in recent weeks about an agreed offer for Daisy, which is run by Matt Riley, one of the UK's most prominent entrepreneurs.

The talks are understood to have been discontinued in the last few days because of a gulf in the two sides' views about the potential price that Liberty would pay for Daisy, a source said.

However, Daisy may come under pressure from the Takeover Panel to confirm that it had held discussions if its share price moves significantly during trading on Friday.

The talks about a prospective takeover were held in the wake of a deal struck by the two companies last month. That involved a five-year agreement for Daisy to provide services and engineering support to Virgin Media, which is part of Liberty Global.

It is unclear whether the talks are likely to be revived.

Shares in Daisy closed on Thursday up 1% at 188p, giving the company a market value of just under £500m.

Last year, it paid its maiden dividend, and has used bank facilities to extend the services it offers to small and medium-sized companies through a string of takeover deals.

Liberty has been on a much larger acquisition spree in recent times, snapping up cable and other assets across Europe amid an accelerating consolidation of the industry.

The company, which is chaired by the media tycoon John Malone, has a division called Liberty Global Business Services, into which Daisy would be likely to be integrated if a deal was successfully revived.

Liberty Global and Daisy both declined to comment.

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Co-Op Must 'Work To Rebuild Customer's Trust'

The chairman of the Co-operative Group has told Sky News that the mutual will need to work hard to rebuild customers' trust.

Ursula Lidbetter said the Co-op must also implement governance reform in the wake of chief executive Euan Sutherland's resignation.

"The situation we are in is very sad, but the basis of the organisation is still there," Ms Lidbetter told Sky's Poppy Trowbridge.

"Our members, our customers, our staff, the members who get involved in our democracy - they are such good people.

"The organisation, fundamentally, is really good and sound but we need to get the public's support back with us.

Richard Pennycook is now running the Co-op Group

"It's all about customer confidence. It's about doing the right thing."

The Group confirmed a Sky News report this morning that Mr Sutherland had left his job, despite efforts by the board to change his mind.

Mr Sutherland resigned on a point of principle, citing the Group's structure as "ungovernable".

He was also known to be furious over a number of leaks to the media - leaks that he believed had come from the top of the organisation and included details of his pay.

Mr Sutherland said in a statement: "It is with great sadness that I have resigned as chief executive.

"I have given my all to the business and had hoped to be able to lead its revival. However, I now feel that until the Group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the Group and give it a relevant and sustainable future.

"Saving The Co-operative Bank and with it The Co-operative Group from administration was a huge task, but the changes required do not stop there, with fundamental modernisation needed to safeguard the 11 future for our 90,000 colleagues and millions of members.

"The Group must reduce its significant debt and drive major efficiencies and growth in all of its businesses, but to do so also urgently needs fundamental governance reform and a revitalised membership.

The appointment of now ex-bank chair Paul Flowers is being investigated

"I will not accept the retention payments and long term incentive payments previously agreed for the delivery and protection of value in the Group and the Bank, even though this was successfully delivered."

Ms Lidbetter confirmed Richard Pennycook - who was chief financial officer - had been appointed interim chief executive pending the appointment of a permanent successor to Mr Sutherland.

She said she had accepted his resignation with "deep regret."

An emergency board meeting on Monday night - held to discuss Mr Sutherland's resignation - also proposed a restructuring that would result in the current 21-member board being disbanded and replaced by two different structures.

One would be a PLC-type board while the other would represent members.

Ms Lidbetter has described the planned reforms as urgent.

The decisions were taken following a crisis for the Co-op which has seen its banking operation subjected to regulatory scrutiny after control was lost to US hedge funds.

A £1.5bn black hole in the bank's balance sheet sparked the Co-op's problems but the restructuring of the lender left the Group with just a 30% stake.

Mr Sutherland's own role was in focus at the weekend over plans to raise his own pay to £3.6m despite the mutual's problems and an expected worst-ever loss for 2013 of £2bn, due to be announced at the end of the month.

The Co-op could sell 15 farms and its pharmacy business

The debate over rising awards at the Co-op began just weeks after Mr Sutherland admitted the Group had "lost touch" with customers.

At that time he launched an online poll so the public could make suggestions about its future direction.

A plan to sell parts of its business also left question marks over more than six thousand jobs.

Mr Sutherland has only been in the job since last April.

He expressed fury about media leaks on Sunday in a Facebook posting to an employees' group after the news on pay awards appeared in a national newspaper.

He said: "I'm very sorry to have to report that we have had yet another leak to the media.

"This time it is to the Observer newspaper and concerns levels of annual Executive remuneration, including my salary, and also proposed changes to the Group Executive team.

"It appears that, once again, the leak has come from our Group Boardroom.

"We seem to have an individual, or individuals, determined to undermine me personally, my team and the rest of the Group Board regardless of the uncertainty and disruption this causes to our 90,000 colleagues and our supportive members.

"Despite this, I am determined that we will see through the vital transformation of our business."

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Payday Lenders Face Debt Sympathy Inquiry

A wealth of complaints about how payday lenders and other such firms treat their customers has prompted an inquiry by the City regulator.

The Financial Conduct Authority (FCA), which assumes oversight responsibility for the consumer credit market on April 1, said it was making a priority of the issue because three-fifths of complaints to the Office of Fair Trading (OFT) are about how debts are collected.

The watchdog, which has previously announced a range of measures to strengthen protections for consumers, wants to investigate how sympathetic lenders are when customers struggle to pay back their debts.

It will examine the culture at each payday firm.

More than a third of payday loans - equal to 3.5 million - are repaid late or not at all annually.

The new rules are expected to see a quarter of payday firms exit the market

The FCA said its new rules should help reduce the numbers.

They include limiting the number of times a payday loan can be rolled-over to two, the banning of misleading adverts and compulsory affordability checks for all loan applicants.

But the regulator said it also wants to see struggling borrowers helped by discussions on the different options open to them.

It expects that around one quarter of payday firms will decide they cannot meet its higher consumer protection standards and leave the market.

The consumer credit market is huge.

Around 50,000 consumer credit firms are expected to come under the FCA's remit from next month when it assumes responsibility from the OFT.

Around 200 of those firms will be payday lenders - a number already reduced through failures to adhere to market rules or simply leaving the market because of the looming regulations.

Analysis by the Competition Commission, which is carrying out a separate inquiry into the payday loan sector, found that such firms currently issue approximately 10.2 million loans a year, worth £2.8bn.

More than a third of payday loans are repaid late or not at all each year

The average size of a payday loan is £260.

By comparison, the entire consumer credit market is worth over £200bn.

Martin Wheatley, the FCA's chief executive, said: "There will be no place in an FCA-regulated consumer credit market for payday lenders that only care about making a fast buck."

The regulator is additionally considering a cap on the overall cost of short-term credit, which would be put in place early next year.

The Consumer Finance Association, which represents the biggest payday operators, welcomed the developments.

Its chief executive Russell Hamblin-Boone said: "We urge the FCA to use its proposed price cap on credit to tackle excessive default fees and charges which are used by the least reputable lenders to profit from customers who are already in dire straits.

"CFA members offer a range of help for customers in financial difficulty including freezing interest and charges to prevent a short-term loan becoming a long-term debt," he said.

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Facebook HQ Placed In Lockdown After 'Threat'

An apparent threat against Facebook's California headquarters has been dismissed by police after the campus was placed on a precautionary lockdown.

Staff were prevented from going home until 8:30pm local time (0330 GMT) while officers investigated.

The site - at Menlo Park in the San Francisco area - was searched before the authorities decided the threat was "totally not credible."

Menlo Park Police Department spokesman Dave Bertini said Facebook personnel held employees inside.

"It was a totally not credible, unsubstantiated threat," he told reporters.

The spokesman declined to say what the nature of the incident was.

"I'm not even sure that it was specifically to the Menlo Park campus of Facebook," he added.

Facebook declined to comment.

The incident happened just a week after Facebook said it would pay to fund a full-time police officer to bolster security in the area around its HQ - a move seen as the first such partnership between a private company and police.

The company's offer to pay $200,000 (£120,000) annually for a minimum of three years was backed by the city council.

Ray Mueller, the Menlo Park mayor, shrugged off suggestions that Facebook could get special treatment, saying: "The only way you'd have a conflict of interest is if someone tried to exert influence over our police force.

"That's not going to happen."

More follows ...

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Insurers 'See Customers As Pound Signs'

The City regulator has accused insurance firms of seeing customers as pound signs in the so-called 'add-on' market, worth £1bn annually.

The Financial Conduct Authority confirmed proposals to reform the industry on Tuesday, nine months after it began a market investigation into the products.

A general insurance add-on is an insurance product that is sold alongside goods or services, a car or holiday for example, or other principal insurance products such as home insurance.

Christopher Woolard, director of policy, risk and research at the FCA, said: "There's a clear case for us to intervene. Competition in this market is not working well and many consumers are simply not getting value for money.

"Firms must start putting consumers first and stop seeing them as pound signs.

"We believe our proposals will address these issues and prevent consumers paying for poor-value insurance products that they may not need or use."

It is recommending the banning of pre-ticked boxes, forcing firms to publish claims ratios and breaking the point of sale advantage for guaranteed asset protection (GAP) insurance, usually offered alongside car sales.

More follows...

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