Saudi Arabia’s push to liberalise

0:02Good morning from the Financial Times. Today is Friday, October 3rd. And this is your FT News Briefing. Ukraine is about to receive a boost from the U.S. And American credit bureaus got some not-so-great news yesterday. Plus, Saudi Arabia has been accused of exporting radicalism, but it's making an effort to change all that. It's definitely helping to soften the country's image and make it look more tolerant, despite the fact that there are Romanians issues. I'm Mark Filippino, and here's the news you need to start your day.

0:41The U.S. is escalating its role in the war in Ukraine. Washington is going to give Kiev new intelligence. It'll help guide long-range missiles and drone strikes on Russia's energy infrastructure. Now, the U.S. already gives intelligence support to Ukraine, but these new measures could make Ukraine's existing long-range drones and missiles more effective. In addition, people familiar with the decision described a, quote, seismic shift in attitude about the war inside President Donald Trump's inner circle. But they caution that the president still does not want U.S. taxpayer funds going to help Ukraine.

1:16Instead, they said Trump wants NATO allies to buy American weapons and then send them to Kiev.

1:28The American company behind FICO credit scores is shaking up a bedrock of mortgage lending. Fair Isaac Corp announced yesterday it's going to sell its ratings directly to industry data companies rather than go through credit bureaus. Here to tell us how this could impact the mortgage and credit industry is the FT's Josh Franklin. Hi, Josh. Hi, Mark. So, Josh, just break this down for me because this whole system is incredibly complex. How does FICO operate currently? So FICO is basically the industry standard for calculating the likelihood that a mortgage applicant is going to make good on their loan.

2:06And how it works right now is FICO will sell its software and its algorithm to the main credit bureaus that will use their data to calculate a FICO score. And what FICO is now proposing to do is actually to sell this FICO score directly to the companies that use the credit bureaus. They're called tri-merger resellers. So they basically compile the scores and the information across the three main credit bureaus and then sell that information to lenders. And what FICO is now proposing to do is to bypass these credit bureaus and sell directly to these resellers with the supposed goal of lowering the cost that these sellers have to pay for the data.

2:48We should mention that these scores are incredibly important because this impacts whether or not people can buy a house, right, Josh? It's one of the most important financial numbers in American commerce today is your FICO score. So why is FICO doing this? So a couple of reasons. They say that this will help lower the cost for access to FICO scores by about 50 % from the current market rates. So this potentially lowers the cost for the industry. And then potentially there is also some political pressure here. So FICO has been accused of having kind of monopoly power in the industry just because they are such a big force in it.

3:28And monopolies often lead to higher prices and worse outcomes for consumers. And so you've had the new head of the FHFA, which is the Federal Housing Finance Agency that oversees massive mortgage lenders, Fannie Mae and Freddie Mac, has been pretty critical about their monopoly power. And there's an expectation that by coming out with a move that's going to lower industry costs, that's something to appease government agencies. So this all seems to be going well for FICO. The shares surged 23 % on Wall Street trading on Thursday morning. What about these credit bureaus? They can't be happy about the change, right?

4:05No, and certainly investors aren't happy either. I mean, you had Equifax, TransUnion, and Experian, which are the three main credit bureaus. All their shares were down on Thursday. So this is potentially a big hit to their business, which in a way, it makes you wonder why FICO wouldn't have done something like this before. What impact could all this ultimately have on homebuyers, the people we were talking about who are applying for the mortgages? We'll see where the rubber meets the road in all of this and who actually manages to pocket any savings in all of this, whether or not the savings accrue to the profits of other middlemen that are able to pay less for FICO scores, or if actually some of the savings ends up being passed on to the end consumer in terms of the price of their mortgage.

4:48Josh Franklin is the FT's U.S. banking editor. Thanks, Josh. Thanks very much.

4:59Global deliveries of Tesla vehicles jumped 7 % to a new record in the third quarter. That was thanks in part to a rush by U.S. consumers taking advantage of an electric vehicle tax credit that expired at the end of September. That same rush also boosted Ford's EV sales by 30 % and helped GM hit its own quarterly record. Tesla CEO Elon Musk has been ringing the alarm. He said there will be difficult quarters ahead because President Donald Trump is rolling back two things, the U.S. tax credit and curbs on vehicle emissions. Last week, Musk also said the reversal would take away consumer choice and economic benefits.

5:45Saudi Arabia is the birthplace of Islam. It's also a place where religion and government have gone hand in hand since the founding of the state. More recently, the country has been associated with radicalism, in part because most of the hijackers in the 9-11 attacks were Saudi citizens. But since 2016, Saudi Crown Prince Mohammed bin Salman has led a series of modernization reforms. Ahmed al-Omran is our Saudi correspondent. He's here to tell me what all that has to do with the kingdom's economy. Hi, Ahmed. Hi there. So, Ahmed, just walk us through how this liberalization effort has really affected daily life in Saudi Arabia?

6:23So when Crown Prince Mohammed bin Salman launched his Vision 2030 back in 2016, most of the focus was on the economic aspect of it, which is how the kingdom can decrease its dependence on oil revenues and diversify its economy into other sectors and sources. But another element of the vision was also social change. And we have seen a series of steps that the conference has pushed. Part of it is removing restrictions on women, including lifting the ban on driving, as well as allowing forms of entertainment, music, concerts, and other aspects of changes that really have transformed the daily lives of many Saudis from a life that many have seen before as suffocating and restrictive into So something more open, more relaxed, and more resembling the rest of the world.

7:17Now, it may not be entirely clear. So explain it for me. What's the connection between the economy and religion here? Because the two are interlinked. So if you want to open new industries and you want to change the economy from one that is driven by government spending to one that is driven by private sector growth, you needed more women participation. You needed to attract foreign investment. You needed to attract foreign tourists from abroad. And you would not have been able to do any of that if you lived under the same religious and social restrictions that have long ruled the kingdom. Now, I have to imagine that not everyone is on board with these reforms.

7:59Ahmed, what has the response been from those who believe in the conservative model? Yes, the changes and reforms, the social liberalization has not been universally welcome. And what we have seen is that the authorities have tried to preempt that potentially strong rejection or opposition to this by launching a crackdown in September 2017 when a large number of clerics and conservative figures have been detained. And the result of that has had a chilling effect on the margin of freedom of expression in the country because even those conservatives who have not been targeted have gotten a very clear message that the country is moving in a different direction and there will not be any tolerance for defiance to that new direction.

8:50So these are all the things that are going on inside the country. What's it doing for the kingdom's image abroad? It definitely helps because Saudi Arabia faced huge scrutiny and a lot of accusations of exporting radicalism and extreme interpretations of Islam after 9-11. And they have really struggled to overcome that, even though they launched different initiatives and programming to try to explain to the rest of the world that those hijackers and attackers of 9-11 were not really part of society. So having that image changed has been a very long and difficult process. But now with all these reforms being introduced inside the country and opening the country to foreign tourists and foreign business people to come and see for themselves, it's definitely helping to soften the country's image and make it look more tolerant and more open, despite the fact that there remains issues around restrictions on free speech, human rights issues that the country will continue to have to tackle as they face more scrutiny in the years to come as they prepare to host major events like the World Cup in 2034.

10:05Ahmed Al-Omran is the FT's Saudi correspondent. Thanks so much for your time, Ahmed. Thanks for having me.

10:14You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing was produced this week by Sonia Hudson, Katya Kumkova, Victoria Craig, Fiona Simon, Ethan Plotkin, and me, Mark Filipino. Our show is mixed by Alex Higgins, Blake Maples, and Kelly Gary. We had help this week from Peter Barber, Michael Lello, and David DaSilva. Our acting co-head of audio is Topher Forges, and our theme song is by Metaphor Music.