FCA’s decision to retain existing definition of vulnerability is ‘the right approach’

The Financial Conduct Authority (FCA) has today announced it is retaining its existing definition of vulnerable consumers in response to its Consumer Approach consultation, with new guidance on vulnerability set to be published next year.

The consultation, which was launched in November last year, proposed a new definition for vulnerable consumers. A range of organisations including the Money Advice Trust raised concerns that the proposed new definition presented a potential step backwards for the vulnerability agenda, with a shift in focus towards the consumer and away from the actions of financial services firms.

The regulator will also now publish new guidance for firms on identifying and supporting customers in vulnerable circumstances next year.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “The FCA’s decision to retain its existing definition of vulnerable consumers is the right approach and shows that vulnerability remains an important priority for the regulator. I am pleased that the FCA has listened to the concerns we raised as a sector about the proposed change.

“From our work training creditors in this area we know there is a growing appetite from many organisations to further improve their processes and training of frontline staff to better support vulnerable customers.

“With this continued commitment to vulnerability, the industry is in a strong position to build on the progress already made by many firms in their support for customers in vulnerable circumstances.

“We look forward to continuing to work with the FCA, creditors and partners across the sector to ensure customers receive the right support they need.”

The Money Advice Trust has trained more than 16,000 staff in over 190 creditor organisations on identifying and supporting customers in vulnerable circumstances.

StepChange Debt Charity reaction to FCA consumer approach

Responding to the publication today of the Financial Conduct Authority’s consumer approach, StepChange Debt Charity is pleased to see that the regulator has listened to respondents’ reservations, and will not be changing its definition of vulnerability. The regulator had previously proposed a new definition of ‘vulnerable consumers’, leading to concerns that this could have narrowed the focus of firms’ efforts to support vulnerable customers.

The charity, which helped over 29,000 people with an additional vulnerability on top of their debt last year, welcomes the FCA’s renewed focus on the importance of firms proactively identifying and supporting vulnerable consumers, and the announcement that the regulator intends to develop and consult on new guidance to help firms do this, as well as on the concept of a duty of care for firms to their customers.

Peter Tutton, head of policy at StepChange Debt Charity, said: “Through our work we see the crucial importance of financial service firms putting the needs of their customers at the heart of everything they do; whether this is giving people in financial difficulty the right help at the right time, or making sure people who need more support get the products and a service that match their circumstances. So clear guidance and direction from the Financial Conduct Authority is both welcome and necessary.

“We know that people with additional vulnerabilities are more likely to be on lower incomes, to be behind on their household bills, and to not have enough money to make ends meet. There is a pressing need for Government to look for ways to improve the financial health and resilience of households and people with additional vulnerabilities.”

Consumers left clueless about banking options

Online research from Equifax, the consumer and business insights expert, reveals a lack of awareness of banking options among Brits. When presented with a list of digital banks 60% hadn’t heard of any of the brands* and only 20% would opt for a challenger bank if opening a new account today.

The survey, conducted with Gorkana, showed 44% of Brits would choose a traditional bank, and when choosing which brand to bank with, they prioritise good customer service (41%), ease of managing money via a good app or online service (34%), and availability of a physical branch (32%). Media influence was least important; only 3% of people factor news stories about a bank into their decision.

Good customer service also topped the list of priorities for people who would choose a challenger bank (31%), followed by incentives such as a joining fee (28%) and a good app or online service (27%). Friends or family using the bank was the least important factor – just 5% of respondents would take this into consideration.

People who would opt for a challenger bank appear to be more value conscious; one fifth (20%) said better rates when using their card or withdrawing cash abroad would appeal to them, compared to 12% of people who would use a traditional bank. Over a quarter (27%) rate more competitive rates, for example on overdraft fees or loans services a contributory factor when choosing a challenger bank, versus 19% for traditional banks.

Jake Ranson, Banking and Financial Institution expert and CMO at Equifax Ltd, says: “Challenger and digital banks have been making their mark in the banking sector bringing attractive, consumer friendly services to market, yet many consumers are still unaware of these brands. The government has taken action to increase competition in the sector but there’s still a lot of work to do to encourage consumers to fully explore the options available to them and make informed decisions on selecting or retaining accounts.

“Open Banking is underway and is a huge advance for consumers. Services are coming to market that will help people get better value from banks, for example identifying sign-up incentives or better rates tailored to their needs. The next step is for the industry to work together to increase consumer awareness of the value Open Banking unlocks.”

New report reveals employee mindset on financial, physical, mental wellbeing – and how it impacts employers

Employers are not grasping the depth of concern staff feel about their financial, physical and mental health, according to new research from Neyber into the mindset of UK employees. Two of the three biggest issues for employees were money-related. Thirty percent cite financial worries as the biggest concern, retirement provision came third at 24% and health is the second biggest worry, slightly more, at 25%.

Employers, however, think employees worry about entirely different issues. They believe that work/life balance is their employees’ most pressing concern (44%), followed by workload (33%).

Staff concerns are understandable. Since last year, there has been a significant increase of those affected by financial worries – up from 58% to 63%, as well as those with less than one month’s savings – up from 24% to 32%. Fourteen percent say they have zero savings.

The DNA of Financial Wellbeing, Book One, highlights the views of 10,000 UK employees and 580 employers and shows the impact of individual wellbeing and the toll it takes in the workplace. This is the third annual report commissioned by financial wellbeing company, Neyber.

Stress and strain – the impact at work

Thousands of employees reported how financial worries are impacting them. Thirty-five percent have felt stressed, 33% felt anxious, 26% lost sleep and 20% felt depressed.

Both employers and employees are largely aware that these issues impact work behaviour. Forty-five percent of employees and 69% of employers feel that employee financial pressure impacts their job performance. Sixty percent of employees said that money worries change their behaviour. This rises to 72% under the age of 34.

For the first time, the survey asked respondents about mental illness. Sixty-two percent of employees have either had a mental health issue (18%) or know someone that has (45%).

Heidi Allan, Head of Employee Wellbeing at Neyber, said:

“Our physical, mental and financial health are all interlinked. If employees feel less confident in their finances, this has a knock on effect on other areas of their lives.

“This year’s findings show areas of positivity and deep concern for employers. For instance, we asked employees whether they feel that their employers care about certain aspects of their wellbeing. Career and personal development (73%), later life/retirement provision (66%) and overall wellbeing (65%) all scored highly by employees.

“Yet, when it comes to financial health, only 50% said their company cares. This is less than those who think their employer cares about their mental health (62%), physical health (60%) or later life and retirement provision (66%).”

Jonathan Hollow, Financial Capabilty, Strategy and Innovation at Money Advice Service, said:

“Currently about 28.7 million working age adults in the UK are not satisfied with their finances1. No wonder – we live lives of ever-increasing financial complexity. We must deal with busy lives and the complexities of major financial decisions, as well as key life events such as bereavement, buying a home or nearing retirement.

“Every employer should care about the findings in this report. A growing body of evidence shows that anxiety about finances leads to poorer mental, physical and social wellbeing, and that this affects attendance and performance at work. When your workforce suffers, your business can suffer too.”

The survey also showed:

Financial worries are top of mind for all age groups – until the age of 55 when they worry about later life.
It takes until the age of 65 to be more likely to be worried about physical health – although ‘not worried’ is in the top three for the first time at this age for 24% of respondents.
A salary of at least £40k is when financial worries are not the biggest worry.
The top four things people feel happy about are their living arrangements (81%), social lives (81%) and overall wellbeing and mental health (joint 78%).

Equifax, first CRA to sign Women in Finance Charter

Equifax, the consumer and business insights expert, has become the first credit reference agency (CRA) to sign the Women in Finance Charter.

HM Treasury has today announced that the total number of charter signatories is now 272. The charter asks financial services companies to commit to actions to prepare their female talent for leadership positions, in order to build a more balanced, diverse and fair industry.
Signing the charter, Equifax pledges to promote gender diversity by:

· Having senior executive sponsorship and leadership, with responsibility and accountability for gender diversity and inclusion
· Setting internal targets for gender diversity in senior management positions
· Publishing progress annually against these targets
· Working to ensure the pay of senior executives is linked to delivery against these internal targets

John Garside, HR Director – Europe at Equifax Ltd, says: “A diverse, balanced workforce is good for our team, our customers, and our long term business development. We want Equifax to be a company that attracts talented people and provides the right environment for them to thrive, develop and reach senior roles in our business. We’re committed to being open, transparent and importantly accountable in our equality and diversity approach. Signing the charter is an important part of our people strategy and reinforces our drive to make Equifax an employer of choice.”

1 in 5 British adults has had an outstanding credit card balance for at least six months

One-in-five (22%) British adults have had an outstanding credit card balance for at least six months, including the 4% of British adults who have had an outstanding balance for over five years, according to a survey of over 2,000 British adults by insolvency trade body R3.
The research, part of a long-running survey of Britain’s personal finances by R3 and ComRes, also found that, of the 34% of British adults currently worried about their level of debt, 49% are worried about their credit card debt – by far the most common cause of concern of the types of debt tested.

Mark Sands, chair of insolvency trade body R3’s Personal Insolvency Committee, says: “With low interest rates, lengthy interest-free periods, and a poor period of real wage growth, credit cards have become a necessary crutch for some households.

“The problem is that credit card debt can be so easy to accumulate. Contactless payments and automatic minimum repayments can make it easy to lose track of spending and the total amount owed.

“When taking on any new debt, including a credit card, it’s very important to have a plan for how to repay it. Taking on more debt or continually putting off repayments is not the answer and will only make existing financial situations worse. Credit cards aren’t a long-term solution for serious financial difficulties, but they can be treated like that.

“For many, credit card debt is affordable. Interest-free periods and transferable balances can help make things manageable. But, it is very easy to be caught out or for small balances to snowball. Where people have outstanding balances which are several years old, you worry about whether that debt can actually ever be repaid.”

Notably, the 25-44 year old age group is the most likely to have a credit card with an outstanding balance. 44% of those in this age group have an outstanding balance, compared to 26% of over-55 year olds (the least likely group to have a credit card with an outstanding balance).

Mark Sands adds: “With a chance of Bank of England base rate rises over the next year or so, which underpin the rates at which commercial lenders price their lending, credit card borrowers may find themselves in for a shock. A significant chunk of the adult population has never experienced base rates higher than 0.5%.”

The research also shows that, of the 34% of British adults who say they often or sometimes struggle to payday, 27% say they struggle because of making credit card repayments.

Mark Sands says: “While credit cards can be a quick fix for financial problems, they can store up problems for later. It’s really important that anyone worried about their debt, or struggling with their finances, speaks to a qualified and regulated expert about their options.”

The proportion of people with debt worries who are worried about credit card debt dwarves the proportion of people with worries about other types of debt. While almost half (49%) of the 34% of British adults worried about their current debt are worried about credit card debt, overdrafts worry just 20%, followed by mortgage repayments and bank loans (each 15%), and student loans(11%).

Intuit’s Direct Bank Feed with Lloyds Bank Now Live

Intuit Ltd, a fully owned subsidiary of Intuit Inc (Nasdaq: INTU), and Lloyds Bank (LSE: LLOY), announced today that its direct bank feed is now live. Now, QuickBooks customers in the UK can automatically and securely import transactions from their Lloyds Bank account directly, and at no extra charge, to QuickBooks.

Through a global initiative to save businesses time and give them complete confidence in their financial management, Intuit now has direct bank feeds with three out of the top four retail banks in the UK, covering more than 60 percent of the UK market.

Direct bank feeds are a fundamental component of financial management software and cloud accounting because they automate much of the time-consuming data entry once associated with bookkeeping. By automatically transferring data between their bank and their financial management platform, QuickBooks customers save valuable time and avoid potential data-entry errors.

“Our direct bank feed with Lloyds Bank is now live, giving small businesses and accountants better access to financial data that is key to making smarter financial decisions. We’re delighted to be working with Lloyds to give our mutual customers complete confidence in their financial lives, and achieve a more open and innovative financial data-sharing ecosystem,” says Dominic Allon, Vice President and Managing Director of Intuit Europe.

The direct feed is now fully available to all customers of Lloyds Bank.

Open Banking after first 6 months: “it promises to be biggest improvement for customers since the introduction of the cashpoint“

Thursday 13 July marks six-months since Open Banking was introduced, with the government aiming to dramatically increase competition and ensure a much better experience for the UK‘s current account holders.

“While the results so far for customers are yet to be dramatic, that is hardly surprising as it is such a major and complex change, with many banks initially struggling to comply let alone use the changes to their advantage. However, internally there has been a lot happening,“ says Gianluca Corradi, the head of the UK banking practice at pricing specialists Simon-Kucher.

He added: “Overall Open Bank has been a very good regulatory-driven initiative and the best is yet to come. I am sure over the coming years its impact on customers will be profound and positive, the biggest improvement for bank customers since the introduction of the first cashpoint in 1967… and maybe it will prove even more profound.“

An example of the new services enabled by Open Banking is HSBC’s Connected Money which allows customers to see their accounts at up to 21 different banks in one place.

Simon-Kucher is working with numerous banks and fintechs in the UK to help them devise and successfully deploy new services enabled by the Open Banking initiative. It expects many new innovations to be going live in the autumn.

Gianluca Corradi added: “Previously everyone involved at the big banks were panicking as the regulation forced a big rush to comply. Now bank management is able to think “Is there more we can do? How can we benefit from this strategically?”. There are now a lot of strategic initiatives underway and we can expect to see new developments from the major banks from the autumn onwards.”

He added: “Open Banking is already leading to more competition overall and a faster pace of innovation at the established banks through them now facing a much greater Fintech threat, which is becoming ever stronger. As an example of how it has speeded up innovation in the large banks, for instance HSBC recently launched Connected Money app, which allows you to see your accounts at up to 21 banks big banks in one place“.

“The established banks are well positioned to keep their overall leadership of the market because they have been investing. They may be moving at a slower pace than the fintechs, but there is an inherent inertia in the market, which prevents sudden changes in market share.

“The difference in a few years won’t be between big banks winning or fintechs winning and vice versa, it will between which banks and fintechs invested successfully in becoming the most customer-centric and those that that didn’t and lost.

“For those brining initiatives to market in the autumn and 2019, it’s crucial they start thinking right now about how they can monetise their new solutions. One thing is to get “reach” with the new solutions, the other is to plan how to get “rich” with the value provided to the customer. Monetisation is a key building block for the success of this whole venture and often businesses leave it too late and fail to generate profitable revenue from market-leading innovations.”

Equifax partners with consents.online to develop Open Banking solutions

Equifax, the consumer and business insights expert, has formed a strategic alliance with consents.online, a digital consent management and AISP accredited Open Banking platform which for the first time allows UK consumers and small businesses to manage the sharing of their financial information.

The alliance has been established to develop solutions for the UK’s Open Banking initiative which gives online banking customers the ability to share their financial data, traditionally held by banks and building societies, with authorised third parties. The partnership will allow consumers and small businesses to provide consent to organisations they would like to be able to access their financial data and has already powered the UK’s first live consumer Open Banking journey for HSBC.

Through the consents.online app and website customers have full sight of all permissions granted, for what purpose and can allow access to be revoked, paused or extended at any time. Equifax is also working with consents.online’s data analytics platform, AccountScore, which specialises in transaction data analytics for consumer and business lending, developing products that deliver enhanced data to financial service providers in real-time, supporting lending decisions making the application process smoother for customers. This includes solutions which:

· Remove the need for manual payslips when completing financial applications;
· Categorise transaction data to provide more detailed insight on customers;
· Notify financial service providers of events in a customer’s life which could alter their requirements.

Jake Ranson, Banking and Financial Institution expert and CMO at Equifax Ltd, said: “The vision for Open Banking is to enable people to unlock the power of their data to make the most of their money, giving them more transparency, control, security and access to help. This can be achieved when the extensive data Equifax already holds is harmonised with bank transaction data. Our detailed evaluation identified consents.online as the stand-out candidate to make this a reality, thanks to its long history and deep expertise in working with transaction data globally.

“The Open Banking challenge is educating people on the latent value of data sitting in their current accounts. This will encourage ‘value exchanges’, moments when a customer explicitly consents that an institution can temporarily access their current account data because it will deliver a better or quicker outcome than previously possible. This can benefit consumers and business alike, whether applying for a loan, mortgage or credit card, the process can be improved via this exchange.”

Emma Steeley, Commercial Director at Consents Online Ltd, said: “We’re delighted to enter into a partnership with Equifax which creates significant benefits for mutual clients through the combined product offering. We have found the Equifax team has a relentless focus on driving value for clients using a combination of intellectual rigour and a best in class product set. Together with them we can provide the infrastructure, tools and control to deliver the full service, real-time solutions financial service providers require.”

Consumer finance new business up by 11% in May

New figures released today by the Finance & Leasing Association (FLA) show that consumer finance new business in May grew by 11%, compared with the same month last year.

Credit card and personal loan new business together grew by 11% in May, while retail store and online credit new business increased by 8%. Second charge mortgage new business fell 1% by value, but was up 2% by volume over the same period.

Geraldine Kilkelly, Head of Research and Chief Economist, said: “Growth in consumer finance new business in May was in line with wider trends in the economy. Retail sales were boosted by events such as the Royal Wedding and hot weather, while the continued strength of the labour market and low interest rate environment meant consumer confidence remained relatively stable in the first half of 2018.”