Recently, Deliveroo announced its new advertising service, Deliveroo Media and Ecommerce. Starting last month (July 2022), this new advertising service will allow fast-moving consumer goods companies to promote their products on Deliveroo’s order tracking page. While making their orders, consumers of Deliveroo may also gain samples advertising the services of fast-moving consumer goods companies who have partnered with Deliveroo in this new initiative.
Prior to the Deliveroo Media and Ecommerce advertising service, Deliveroo provided advertising services for their restaurant and grocery partners, such as sponsored positioning. The new Deliveroo Media and Ecommerce advertising service would allow fast-moving consumer goods companies to advertise their services to the 8 million monthly subscribers. For these fast-moving consumer goods companies, this seems to be a very profitable partnership to embark on. To bring this innovation to life, Deliveroo is working with a commerce media company called Criteo, which will supply Deliveroo with advertising and media sales services.
Initially known for its takeout services, the new Deliveroo Media and Ecommerce platform will serve as an alternative source of revenue for Deliveroo. This strategy is welcome and would most likely be successful in capturing the attention of consumers who often go onto the tracking page to check the progress of their orders. As such, there is a high chance that while reviewing the progress of their order, they would notice advertisements of fast-moving consumer goods companies who have partnered with Deliveroo in this initiative.
Regarding receiving samples, consumers are more likely to read through samples while having their meal, as most people like to be engaged while eating. If successful in the UK, which seems plausible, the Deliveroo Media and Ecommerce initiative will be introduced into the global market.
During the pandemic in 2021, Deliveroo is said to have seen orders double to 148.8 million in the first half of the year. This is because many people resorted to home deliveries as restaurants closed due to lockdown. As lockdown habits using delivery services have come to stay, it is no surprise that Deliveroo is expanding in terms of its partnerships and new income revenues.
For law firms, especially a firm with Deliveroo as a client, Deliveroo’s expansion after the pandemic, such as this new media and e-commerce advertising service, would lead to more Deliveroo partnerships. This would, in turn, increase clientele and create more revenue for law firms as the need for their legal advice arises among delivery companies such as Deliveroo.
Initiatives such as the new Deliveroo Media and Ecommerce advertising service are likely to spark further initiatives in competitors such as Just Eats and Uber Eats. As such, law firms with these delivery companies as clients would also receive more revenue as delivery companies expand in the new competitive delivering market.
In April 2022, the UK Government announced its intention to make the UK a ‘global hub for crypto-assets technology’ with a ‘world-leading regime’ for crypto-asset businesses. This is being undertaken through amendments to the 2017 UK anti-money laundering regime. The draft Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 are intended to take effect on September 1, 2022, subject to Parliamentary approval.
The UK does not currently have a bespoke financial services regulatory regime which applies specifically to crypto-assets. However, some crypto-asset related activities will hold characteristics which bring them within the existing regulatory perimeter. This is the case for initial coin offerings and for the provision of crypto-asset exchange services inter alia, which fall within the scope of the UK’s anti-money laundering regime and are subject to registration requirements with the Financial Conduct Authority (FCA) – the authority which assumes oversight of the cryptocurrency’s anti-money laundering and counter-terrorism financing activities. A few key changes to the current regulations are examined below.
The proposed changes will bring stablecoins, when used as a means of payment, within the scope of the UK’s payment services regime. Stablecoins are a form of crypto-assets that are typically pegged to a fiat currency such as the dollar and are intended to maintain a stable value.
After a 12-month grace period, crypto-asset exchange providers and custodial wallet providers will need to adhere to the Financial Action Task Force (FATF) ‘travel rule’ which requires any virtual-asset transfer of above GBP 1,000 to be accompanied by detailed personal information of both the originator and beneficiary.
At the current time, the FCA does not need to approve the acquisition of a crypto-asset service provider which is registered under the Money Laundering and Terrorist Financing Regulations. The 2022 regulations change this approach and will require proposed acquirers of crypto-asset service providers to notify the FCA ahead of such acquisitions, allowing the FCA to undertake a ‘fit and proper’ assessment of the acquirer, and granting it the power to object the proposed acquisition.
In addition, the UK’s existing securities regime would apply to persons offering services in relation to certain tokens, where such tokens behave like existing categories of regulated investments such as shares, debt securities, and units in collective investment schemes (catching many initial coin offerings).
The regulations create a ‘financial market infrastructure sandbox’ to help firms innovate.
Recent crypto crashes have increased the need for a robust digital asset regulatory regime which 1) increases investor protection, 2) ensures cryptocurrencies are not used to finance terrorism or money laundering, and 3) offers greater clarity on how to treat digital assets. The UK is also keen to ‘ensure its financial services industry is always at the forefront of technology and innovation’.
The regulation of stablecoins became a pressing priority following the market crash in May 2022, where 50 billion USD in total capital was lost. Since then, various exchanges and crypto companies have gone into liquidation, with some of the largest, global exchanges pausing trading and having to make large numbers of their staff redundant. The market is therefore likely to welcome some regulation of the riskier parts of the digital asset landscape to offer investors protection, providing that it does not stifle innovation or seek to control the way in which blockchain and distributed ledgers work.
Unlike banks, cryptocurrency exchanges do not currently have a legal or technological framework to obtain, hold and transmit identifying information of both parties of the transaction. The ability to obscure transactions is the primary reason the FATF and regulators demand insight and oversight for virtual assets. Cryptocurrencies have been used to launder money, transmit funds for illegal activities and otherwise circumvent financial controls. This is the loophole the government is trying to close.
While many in the industry welcome regulatory oversight, as it provides clarity and certainty for both investors and operators, others believe regulations extending the UK’s existing securities regime to certain categories of tokens and enshrining the ‘travel rule’ to be an anathema to distributed ledger technologies, where the original concept is to exchange tokens without any need for third-party oversight. Many enthusiasts point to the fact that cryptocurrencies do not need banks, governments or other organizations as their defining feature, making them a bastion of privacy and sovereignty.
Finally, measures such as the ‘financial market infrastructure sandbox’ aim to ensure the UK financial services sector remains at the cutting edge of technology, attracting investment and jobs and widening consumer choice.
When the lockdown hit in March 2020, many people living in cities moved in search of greener pastures, sparking a considerable hike in house prices to record highs. This increase was further helped by the stamp duty holiday that ended in October 2021.
According to Rightmove, the average asking price of a house fell by almost 5% to £365,173, and the average house price in London is now £692,828, a drop of 1.3%; however, many experts have commented that this slight drop has been consistent over the past ten years, with Rightmove reporting this drop is expected in August as many families are enjoying their summer holidays. In previous years the housing market has returned to normal after the summer, with autumn generally being a busier time for the housing market. Many commentators have reported that house prices continue to rise even as demand drops.
In July, for the third month in a row, most estate agents surveyed by the Royal Institute of Chartered Surveyors (RICS) reported a drop in interest from house hunters. Transaction levels were at their peak in 2021 and, according to RICS, have begun falling this summer. Interestingly, RICS report that there has been continued transaction growth at the top end of the market despite rising interest rates and the cost of living crisis. RICS reported that the fall in sales over the last three months has not hindered house prices due to the lack of supply. The lack of supply can be attributed to a lack of social housing developments, leaving the rent expectations metric to grow stronger. However, RICS’s Chief Economist, Simon Rubinsohn, commented that house prices remain resilient.
In early August, regulators provided Perenna, a specialist mortgage lender, a license to offer fixed-rate mortgages of up to 50 years. This will be a massive lifeline for many first-time buyers, allowing them to climb the property ladder. Perenna has joined another specialist lender, Kensington, who accounted in November 2021 that they will be offering a fixed rate mortgage of 40 years, with the primary benefit of long-term mortgages being lower payments.
Despite the positivity a 50-year mortgage provides, many commentators, such as the Telegraph and The New Statesman, have reported that the housing market is about to crash. The New Statesman argue that introducing a 50-year mortgage is clear evidence of a crash, as it demonstrates the housing market has reached a ‘point of desperation’.
The sixth consecutive interest rate rise will likely impact the housing market. Many economists and commentators have spent numerous months predicting that inflation and rising interest rates will end the increase in house prices. During a cost of living crisis, it is hard to imagine that the housing market will continue to grow. Researchers at Capital Economics argue that increased interest rates are always a precursor of a decline in house prices, with Capital Economics forecasting price falls of between 5-10% by the end of 2024.
The ECTEA 2022 received Royal Assent on 15 March 2022 after a five-year deliberation to create a public register detailing the beneficial ownership of UK properties (mainly registrable land) by overseas entities.
Contextually, the entities in discussion are legal entities, such as companies, sole partnerships, public authorities, and governments subject to national laws other than the UK’s. Such entities are recognised ‘persons’ in law who may hold legal and beneficial interests in any property.
Before ECTEA 2022, legal entities could remain anonymous, with such anonymisation increasing the opportunities for the concealment of assets when faced with, for instance, financial sanctions such as those recently imposed on Russia, its citizens and any legal entities associated with the country because of the Russian invasion of Ukraine.
Additionally, an overseas entity was not subject to the duty of disclosing their beneficial interests in UK-owned properties nor who controls the entity which, according to the commonslibrary.parliament.uk, ‘means companies can be used to disguise ownership’, with ‘both legitimate reasons (like privacy) and illegitimate reasons (like hiding criminal activity).’
Therefore, the Act provides greater transparency, thus countering such concealments, and in turn, aids the facilitation of the effective enforcement of sanctions by introducing the ‘live’ Register of Overseas Entities (ROE) on 1 August 2022.
The ROE is inapplicable to UK companies already subject to disclosure under the Companies Act 2006 (since 2016) via the People with Significant Control (PSC) Register. Additionally, beneficial owners holding an interest exclusively through a legal entity subject to its disclosure requirements, for example, through a UK company, are exempt.
However, the ROE imposes that overseas entities must now register their UK-owned properties at Companies House to retain the capacity to purchase or dispose of property. When registering the properties, a UK-regulated agent, which could likely include accountancy and law firms, must first verify any entity information. Furthermore, the ROE applies to any overseas entity with a property disposal transaction on or after 28 February 2022; therefore, the ambit of the ROE is widely encompassing and will likely increase further as inevitable amendments are made to the regime.
Those entities as owners of registrable freehold properties before ECTEA 2022 are given a prescribed period of six months to register at Companies House. Those entities who seek to register their beneficial interests during the six-month transitional period must provide additional information on a lease exceeding seven years, on transfers or grants of legal charges over registrable land made since 28 February 2022, and those entities who may want to acquire property after the introduction of the ROE must first register at Companies House before any such proprietorship is otherwise registered, that is at the Land Registry.
Notwithstanding the practical implications of the ROE, such as the complexity of the registration process for larger entities with more complex corporate structures and the impact on lenders and real estate transactions, corporate transactions such as mergers and acquisitions (M&A) and joint ventures will undeniably be affected by the ROE’s regime.
The regime imposes on law firms with clients to whom the regime applies to ensure their clients are registered within prescribed deadlines, with the real possibility of having to restructure current deals to comply with the ROE’s requirements which may lead to completion delays and, subsequently, substantial financial loss for parties privy to such transactions.
In ensuring their clients comply with the registration requirements, law firms may have to secure undertakings from their clients, or they may have to give those undertakings based on relationships fostered with their clients. The latter is almost always a precarious venture for law firms.
Mirroring to a vast extent the penalties applicable to corporate entities and their officers under the Companies Act 2006 for failure to comply with legislative requirements, under the ECTEA 2022, failure to register beneficial interests within the prescribed timeframe means the commission of a criminal offence and the officers of the entity responsible for the commission of such acts are prosecutable. Failing to update the Register as and when required is also a criminal offence punishable by a daily fine of £2,500, whilst providing false information is punishable by up to two years imprisonment.
Given the implications of the ECTEA 2022 and the considerable ramifications for non-compliance, law firms must ensure they are continually diligent in advising and ensuring their clients are as well versed with the provisions of the Act and the Register as possible.