Debt charity welcomes May launch for Breathing Space scheme

The Money Advice Trust, the charity that runs National Debtline and Business Debtline, has welcomed the government’s confirmation that the new statutory Breathing Space scheme will go live on 4th May 2021.

The news, confirmed in regulations laid in Parliament today, will mean that people in problem debt will be able to access 60 days of protection from interest, charges and creditor action while they seek debt advice. Debt charities have long campaigned for the scheme, which will cover almost all creditors and will be followed by the establishment of statutory debt repayment plans at a later date.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Breathing Space will provide the time and protections that people in financial difficulty need to begin to deal with their debts, and gives us a powerful tool to incentivise people to seek free debt advice. We welcome the government’s commitment to launch the scheme on 4th May 2021, and look forward to continuing to work with the Insolvency Service on its implementation.

“As households deal with the economic and financial impact of the Covid-19 crisis, the benefits that Breathing Space will bring cannot come soon enough. We now need similar clarity on the timetable for the introduction of statutory debt repayment plans – as well as urgent action to reform government debt collection practices – to keep up the welcome progress on this agenda.”

Breathing Space regulations herald welcome relief ahead to help people resolve debt problems, says StepChange

StepChange Debt Charity warmly welcomes the publication of the draft regulations to implement a Breathing Space scheme that will give people in debt a better chance to stabilise their finances, with the benefit of debt advice, through a 60-day moratorium on interest, charges and enforcement action while they do. The Government has confirmed that the new scheme will go live on 4 May 2021.

StepChange was at the forefront of calling for the Breathing Space, having been campaigning for this measure for the last five years. The charity is delighted to see the Government following through on its commitment to introduce the scheme, and on the primary legislation to enable it, both of which demonstrate an increasingly enlightened approach to the treatment of people experiencing debt problems, better focused on helping them resolve their difficulties. This will, in due course, receive further impetus through the introduction of statutory debt repayment plans.

StepChange Head of Policy Peter Tutton says: “We look forward to working on the detail of implementation constructively with the Government, to ensure that it fully meets the policy objectives of getting more people to the debt advice that they need, and then giving them a period of calm in which to begin the process of reaching a suitable solution to their problems without fear, harassment, intimidation or escalating cost.

“There is still more that Government can do to help support the increasingly enlightened approach to debt that the Breathing Space scheme augurs – in particular, by ensuring that Government’s own debt management practices are improved so that they don’t lag behind those in the regulated consumer sector. We are hugely encouraged that this is the direction of travel in which public policy is heading, especially as the pandemic has laid bare the extreme fragility of the nation’s household finances.”

Comment: FCA support for consumer credit and our concerns

Following the news that the FCA has confirmed additional support for motor finance and high-cost credit customers who continue to face payment difficulties as a result of coronavirus, John Perez, Partner at DWF, said: “Lenders will need to give careful consideration on how they treat accrued interest on missed payments during the deferral period. The FCA have made it clear they expect lenders to waive interest on missed payments should customers be in need of extended support during this period. There will be challenges for lenders in how to implement any waiver of interest.

“Also, any customer requiring support through an extended deferral period will mean that lenders will have to wait 6 months before reverting back to standard enfacement options, including taking steps to terminate the finance agreement. This could lead to poor outcomes, not only for lenders balance sheets, but also for customers who could be faced with a much higher crystallised shortfall down the line once steps are taken to recover and sell the vehicle at a much reduced value due to depreciation throughout the 6 month period, and the threat of reduced values generally for used vehicles once we start to come out of this difficult period.”

FLA comment on FCA’s confirmation of further support for motor finance customers

Commenting on the FCA’s statement today which confirms further support for motor finance customers, Adrian Dally, Head of Motor Finance at the FLA said: “We welcome the fact that the FCA has given greater prominence and emphasis to the message that those customers who can resume full or partial payments should do so.

“This is particularly important to prevent customers accruing unsustainable levels of debt, but also to allow further support to be given to those most in need.”

Comment on FCA’s confirmed support measures for motor finance and credit customers

Following confirmation from the FCA today on additional support measures for motor finance and high cost credit customers, Nick Hill, money expert at the Money and Pensions Service said: “The extension of support measures confirmed today, including for motor finance and high cost credit customers, could be helpful for people who are experiencing temporary payment difficulties, as we know that Covid-19 is continuing to affect people’s finances. It’s really important that people speak to firms to find out what options are available and appropriate for them, and consider what this will mean for their repayments in the long term.

“Anyone who might be struggling to find a way forward with their finances at this time can use the new Money Navigator Tool on the Money Advice Service website. After answering a few questions people can get personalised guidance on how best to deal with money difficulties, so they can take action to avoid bigger money problems later on.”

Financial services staff most likely to play by the rules – unlike government workers

Staff in the banking and financial services (FS) industry are three times more likely to follow processes “rigorously” than government workers, according to new research surveying senior decision-makers by Digital Intelligence company ABBYY. In fact, almost half (46%) of banking and FS workers rigorously follow the rules, compared to just 15% in government.

However, banking and FS staff aren’t having an easy time and claim processes are too complex or there are too many to follow. Encouragingly, leaders are open to a helping hand – an enormous 98% of banking and FS bosses think process mining technologies would be helpful to their business, as did 89% in insurance.

“In a rapidly shifting industry like financial services – where legacy institutions have fallen behind new, innovative challenger brands – figuring out which processes work best and which don’t, and which are too complex or hard to understand, is a game-changer,” said Neil Murphy, Global VP at ABBYY. “Only then can the best processes be automated, freeing up staff to take on more challenging, human-centric work.”

Fortunately, FS bosses believe their staff are well-motivated to follow processes and rules. Only 12% of staff don’t have the motivation in banking and FS, and as few as 8% in insurance. Overall, a majority 9 in 10 bosses (89%) in both banking, FS and insurance said processes are “rigorously” or “mostly” followed.

Conversely, a quarter (25%) of government leaders say their employees aren’t motivated to follow the rules – and an even greater proportion (31%) think they don’t have the time. In times of crisis, processes and procedures are even more critical to getting work done. This casts a worrying light on the actions of government workers during the current pandemic.

When financial services employees do break the rules, it’s often to provide good customer service – 62% of insurance bosses have confidence that their employees do so to meet the needs of customers, and 50% of banking and FS bosses agree. This suggests financial services staff are extremely customer-driven, and willing to bend the rules when it’s better for customers.

Neil Murphy continued, “It’s vitally important for financial services firms to gain visibility into business processes as they actually behave, identify variances, and then identify how they can better meet current customer needs. This is an essential first step in achieving digital transformation. It’s especially critical for companies under unprecedented pressure, amidst a perfect storm of maintaining business continuity during a pandemic, technological disruption, and evolving customer expectations that impact call centre operations. This digital transformation can be achieved using innovative process intelligence solutions.”

Nivo launches innovative Broker <> Lender Messenger service to meet the first challenge from its new Second Charge Lenders Technology Steering Committee

Nivo has launched a new B2B digital messenger service as a direct result of feedback from its recently formed Second Charge Lenders Technology Steering Committee. Several members of the lender committee contributed to the development of the service with Optimum Credit, United Trust Bank and Freedom Finance already running cases. Conveyancer brands on Nivo, along with lenders Central Trust, Norton and Shawbrook Bank are also planning to implement the service within the next few weeks.

The new beta service was developed and implemented within 5 weeks of the inaugural meeting. It is designed to eliminate the need for unsecure email and post in response to a push to slash the painful back and forth between brokers and lenders.

The new service enables subscribing lenders and their invited broker introducers to securely message each other through the course of a loan case. It allows for instant sharing of key customer evidence such as biometric ID results, E-signed agreements, payslips and bank statements, and makes all relevant information much easier to find in one easy to follow conversation trail. It overcomes the shortcomings of many lenders’ existing processes such as lower levels of security in email communications, patchy audit trails, and fragmented bits of information in different places – which together were causing confusion, delays and mistakes.

Key features of the new Nivo B2B service include:

  • Seamless and secure transfer of selected pieces of customer data from a broker to a lender with instant messaging between them to move deals forward faster
  • Sharing key evidence at the touch of a button – including biometric ID checks, E-signed agreements, payslips and bank statements gathered from customers through Nivo’s secure mobile app
  • All information associated with a loan case is brought into one thread, organised, easily referenceable, and available to all agents in a single contextual channel

Craig Collins, Wholesale Director at Optimum Credit said: “As we move away from our reliance on email, we are focused on making things easier for Brokers. This solution meets the needs raised by the Lender Steer Co, we’re pleased to have launched its beta version quickly, and we’re excited by combining our market expertise with Nivo’s technology to keep improving it at a rapid pace. We’re already developing the next phase, including dynamic needs lists, which will provide a real time view of items which are still outstanding on the route to a loan completion. Ultimately, we plan to integrate the Nivo technology into our existing systems ensuring all Brokers benefit from these developments to create value for Lenders, Brokers and customers alike.”

Mat Elliott, Chief Development Officer at Nivo, commented: “We created the Second Charge Lenders Technology Steering Committee with the intention of driving innovation and digital change in the Second Charge sector. The key takeaway from the first session was the importance of speed in the application process and a real need to improve broker <> lender engagement, especially around reducing the effort involved during the back and forth communication around what lenders need from brokers. Now, little more than a month after our first meeting, we have implemented a solution that it’s out there, delivering results, and gathering feedback. We listened to the Lenders, analysed the issue, and developed a solution. It is exactly what the Steering Committee was set up to achieve.

“Technology will play a significant role in driving the recovery and growth of the Second Charge market. Most of the biggest lenders in the sector have agreed to work together to discuss and participate in helping to develop digital solutions to benefit the industry. I see this as the start of something transformational, shaped by the key players, brought to life through our platform and driven to market with our partners.”

Over two thirds of consumers would swap bank or insurance provider over incorrect information online

With many bank branches closed or facing restricted operating hours due to the coronavirus pandemic, Yext, Inc. (NYSE: YEXT), the Search Experience Cloud company, reveals a surge in searches online for financial service products during the coronavirus pandemic: consumers currently search on the web for banking information eight times a month.

Consequently, no company is safe as consumer expectations are sky-high, with 7-in-10 (69%) saying they are willing to change their bank or insurance company due to bad experiences of information online, pointing to a desire for better customer experiences and presentation of information.

Trusting online information

With over three in five (63%) consumers concerned about misinformation online, which indicates that there is still much to be done to build trust and reliability in online information, financial services have a challenge ahead of them.

And while two thirds (67%) of customers trust the information given to them online by financial service brands, only 63% are satisfied with the information provided by their insurance company or bank, indicating that there is still more to be done to provide better answers to customers. For example, the majority of consumers (93%) think services could be improved with either a live chat or better way to get answers to their questions. Despite this, over half (53%) agree that they’re more likely to either buy insurance online or bank online after the pandemic than before it.

“It is a constant battle for brands to reassure and promise consumers that the information they’re receiving online is accurate. From social media conspiracies to conflicting deals and offers, consumers are constantly presented with misinformation,” said Jon Buss, MD of Yext UK. “That’s why it’s even more important for financial services to get this right – with so many customers reliant on their offerings, they can’t afford for the information online to be wrong. Worse, with limited physical locations, consumers are flooding contact centres looking for information. Providing answers first online can alleviate this strain and we’ve seen this reduce visits by almost half with other brands.”

Lockdown search habits

When it comes to the services that consumers are searching for from banks and insurance firms online during the pandemic, online banking remains the top choice by far (62%), showing the concern consumers still have around ensuring their money is managed well. The other top searches were for insurance (43%), checking account (42%), credit (36%) and investment (33%).

In particular, consumers have been searching for increasingly detailed information from financial services, with just over a quarter (27%) looking for specific services (e.g. credit, investment, accident insurance, etc.), while a similar proportion search for opening hours (24%) and the specific name of the bank or insurance company (24%) more often.

Online search and reputation

Consumers search for more than just a bank’s own services when searching online, however. The role of search in determining whether a customer will sign up to a particular service cannot be underestimated. For instance, almost four in five (77%) consumers said reviews are important to them if they choose a bank or insurance company, so making this information easy to locate and access is crucial.

Besides reviews, the five recommendations consumers rely most on when choosing a bank or insurance company are:

  1. Results of rating and comparison portals such as Money Supermarket (39%)
  2. Family members (31%)
  3. Friends and acquaintances (25%)
  4. Consumer advice from organisations like the Citizens Advice Bureau (22%)
  5. Search engine results (Google, Yahoo, Bing, etc.) (21%)

Buss continues, “In what has become the toughest time for consumers and businesses in living memory, financial services must ensure that the customer’s first step of the banking journey – an online search – is providing the right information every time. They need to be prepared to answer the questions at every customer’s fingertips: what measures are in place in light of COVID-19, which services are available online and what the latest rates are. As well as advice from friends and family, these are all things that consumers will turn to websites and search engines to answer.”

Retention bonus scheme will help employers, but with over 9m furloughed we mustn’t forget the workers

Steve Bee, Director at WorkLife by OpenMoney, which provides free financial advice to workers at SMEs, commented: “With the number of employers who’ve furloughed workers at a new high of 1.2million, today’s Treasury statistics are yet another demonstration of the struggles facing UK businesses.

“The new job retention bonus scheme, announced last week, is a great initiative for firms already planning to bring furloughed workers back, as extra financial help is always welcome, but it won’t be a magic wand for those small businesses who have suffered through lockdown and continue to do so as they try and return to some kind of normal.

“It is also important to remember the worker throughout all of this, many of whom will have been hit financially by the pandemic and remain uncertain about their job security. And it shouldn’t just be those who work at large corporates who can get help. In addition to government support, there are a wide range of services that small businesses in particular can turn to, such as free financial advice and practical money management tools, to provide their employees with important help during difficult times.”

June mortgage activity back to normal levels as remortgages continue to dominate

New data from the MCI Club show that pre-mortgage activity in June has returned to the same levels as 2019.

The data show diary appointments leaping more than 50% to 46,120 between May and June – very similar to 2019 levels and only marginally down on pre-lockdown.

This shows that lead pipelines are buoyant after an average 31% drop-off over April and May, even before the Chancellor’s recent announcement of a temporary Stamp Duty cut.

However, protection activity, which spiked in March 2020, dropped by an average of 40% for the same period and is 30% lower for June compared to 2019.

The dataset, sourced from MCI Club and the eKeeper CRM, highlights different types of activity within the intermediary market and businesses.

Case activity relating to brokers and administrators working on mortgage and protection cases saw a significant drop of 38% at the beginning of lockdown. This has yet to return to pre-lockdown levels and remains 34% down compared to 2019 activity in the same period.

Remortgages continue to outstrip purchases, a situation that started in September 2019, as macro factors such as the general election and Brexit negotiations were played out. Leading up to the lockdown announcement, the number of purchases significantly declined but remortgages rose dramatically the week after the lockdown announcement, jumping 63% in four weeks.

Melanie Spencer, Head of the Mortgage Club, commented: “It’s certainly refreshing to see that mortgage activity is returning to pre-lockdown and 2019 levels.

“Of particular interest is the spike in remortgages directly after the lockdown announcement. This is part of an ongoing trend of remortgages outstripping purchases, indicating both that customers are seeking alternative deals and that customer retention remains a key feature for advisers at present.”

Regarding case activity, Spencer continued “The observed case activity is a potential concern from a compliance perspective, as specific actions and activity may not be recorded during the advice process. Alternatively, this could be caused by firms furloughing support staff, who typically undertake much of this function. Its gentle rise in June aligns with support staff returning to work. Nevertheless, compliance is a crucial factor in the advice process, and one where MCI Club can offer businesses a more streamlined alternative.”