Overdraft shake-up welcome but price cap ‘should remain on the table’

The Financial Conduct Authority (FCA) has today set out proposals to change the way banks charge for overdrafts, along with other measures in its latest update on high cost credit.

The proposals include banning banks from charging more for unarranged overdrafts than arranged overdrafts, ending fixed daily or monthly charges, and requiring more action to identify customers in financial difficulty.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “This is a significant and welcome shake-up of the way overdrafts work, and we are pleased that the FCA is taking strong action to protect consumers.

“Putting an end to fixed charges and higher pricing for unarranged overdrafts should significantly reduce costs for people who use this form of borrowing. At National Debtline we see that repeated overdraft use is often a sign of wider financial problems – and the regulator is right to also require banks to do more to identify and help these customers.

“However, the option of introducing a price cap should remain firmly on the table. The FCA should set a clear end date at which it will review the impact of these new measures in bringing costs down, and must be prepared to introduce a price cap if required.”

ASOS profit warning: Expert comment

Dr Gordon Fletcher, retail expert from the University of Salford Business School comments on falling profits at online retailer ASOS.

Dr Fletcher said: “Today’s profit warning and resulting plunge in ASOS’s share price shows that e-commerce retailers cannot afford to rest on past success. The sole innovation in the original business model of e-commerce was to take the traditional retail form online.

“The subsequent development of technology and newer business models means that further innovation is now needed. While online retail is a challenger to traditional high street brands this also does not make e-commerce immune from the rising power of the consumer or changeable weather conditions. Similarly e-commerce must deliver a strong customer experience that includes rapid, cheap and convenient delivery as well as a free returns policy.

“More importantly, for ASOS, or any e-commerce brand, they should not expect to compete solely on price. There are too many online competitors in every sector to enjoy reasonable long-term success as a discounter. The fashion industry is not only a fickle and fast-moving sector it is also one not solely driven by price.

“Perhaps it is time for ASOS to reflect on its origins. In 2000, AsSeenOnScreen offered consumers a particular focus and was a distinctive offering in what was an already crowded fashion market – how long ago that initial challenge to fashion and retail now appears.”

Shieldpay agrees partnership with Visa to enable secure use of payment cards on peer-to-peer marketplaces

London based fintech Shieldpay has today agreed a partnership with Visa (NYSE: V) to deliver secure card payments across peer to peer marketplaces and classified ad sites. The partnership will open up the use of debit and credit cards to the £120bn classified industry.

Shieldpay’s instant digital escrow solution mitigates the risk of fraud by verifying the identity of all parties, holding funds securely and only releasing funds when all sides agree they are happy. As part of the partnership, Shieldpay will work with Visa’s CyberSource platform to enable access to new verticals where secure peer to peer payments have been tough in the past – such as classified ad platforms and peer to peer marketplaces.

The partnership will also allow Shieldpay’s partners to make use of the Visa Direct push payments service, enabling funds to be disbursed directly to a Visa card in real time in many European markets.

Peter Janes, CEO and Founder of Shieldpay, said: “The Visa and Shieldpay partnership is game changing for the digital peer to peer marketplace and classified ad world. Fraud is a huge concern for users of these platforms, and the security Visa and Shieldpay can now offer will revolutionise the space.”

“The team at Shieldpay continually strives to offer the most secure payment solutions to give consumers complete piece of mind when buying and selling online. Partnering with Visa will give us a strong platform for expansion and enhance our product offering by leveraging our combined assets. We are excited about the future and what we can build alongside Visa.”

Mike Lemberger, SVP Product Solutions for Visa, said: “Our partnership with Shieldpay is a great opportunity to bring Visa’s digital payments capabilities to marketplaces and ad sites. CyberSource enables Shieldpay to offer enhanced security and fraud management for card payments and Visa Direct enables real-time payouts to sellers across markets. We are excited to work with Shieldpay to launch in multiple markets utilizing our enhanced offerings to help them to expand with speed and safely”

AToM to change brand from January 2019

AToM, the specialist mortgage broker and distributor has announced that, from January 2019, it will change its operating brand to ‘impact specialist finance’. This comes after the family run business, which is moving into its 28th year in 2019, has entered into an agreement with Atom bank.

Founder and chairman, Vic Jannels, said, “We have enjoyed many successful years operating in the specialist mortgage distribution sector. During the last few years we have, traded without confusion alongside the bank as we mostly operate in differing areas of the mortgage marketplace. Our change of brand has been embraced by the whole AToM team and we are ready to make an impact, through impact specialist finance, in the New Year. Our offering to the broker market will remain exactly as it is today plus we expect to have many new and different lender products available too.”

The Jannels family structure remains as is in the business with sons Dale and Neal at the helm. Vic continues, “Dale is the MD and the front face of AToM and Neal is looking after most of the administration and IT processing, so it is a good time for Sheila and I to take a little more of a back seat. The boys are ready to drive the business forward in its new style and at pace. We will still retain a positive interest and keep a watchful eye on the more mundane aspects of the business.”

Dale Jannels, MD AToM added “It’s sad to lose the very well known AToM name as it’s served us incredibly well over the last 27 years. But change is good. We sat down and looked at all the things we do, which include Insurances, Mortgages, Protection And Creative Technology, so the new name is right on the money.   This is an exciting new era and having a fresh, dynamic, eye catching new brand in impact, will be a great start to 2019.

impact specialist finance will launch publicly to the marketplace in January but it remains ‘business as usual’ in the meantime.

Giles Andrews OBE, co-founder of Zopa, to join Dynamic Credit as Chairman of the Supervisory Board

Giles Andrews OBE, co-founder of Zopa, the world’s first marketplace lender, will join Dynamic Credit as Chairman of their Supervisory Board, subject to regulatory approval. The Board will have three members and serves to strengthen the corporate governance of Dynamic Credit Group (DCG), which comprises of the asset manager and direct lender Dynamic Credit and the investor servicing platform LoanClear.

Giles Andrews is co-founder of Zopa, the world’s first marketplace lending platform. With a focus on delivering on customer experience, Zopa has now originated over GBP 3.8 bn in personal loans in the UK (since it was established in 2005). Throughout the credit cycle, Zopa has provided positive returns to investors. In addition to his role at Zopa, Giles acts as non-executive chairman of Bethnal Green Ventures, the accelerator for start-ups using technology to make social or environmental impact. He is also chairman at MarketInvoice, a fintech where business sell invoices to investors to raise working capital, and chairman at Kreditech, the fintech lender serving consumers in multiple geographies.

Dynamic Credit is growing into a full-service direct lender, with a broad loan offering ranging from regular mortgage loans to prime SME loans and buy-to-let loans, both in the Netherlands and abroad. The funding of the loans is via the ‘I-to-I’ principle: ‘institutional to individual’. Providing top-notch client service is key in the distribution of these loans. The experience of Giles, who has always championed the importance of the client angle, will be a key contributing factor in shaping this strategy.

Giles Andrews said: “I am delighted to be joining Tonko and his team and am really looking forward to working with them on the exciting opportunities they have in front of them. I have been incredibly impressed by what they have achieved to date, both the scale of assets managed and the culture they have built over 15 years, which positions them so strongly for the next phase of their growth.”

Tonko Gast (Founder and CEO of Dynamic Credit Group) commented: “We are proud that Giles Andrews has agreed to join Dynamic Credit Group as Chairman of the Supervisory Board. His experience in the field of direct lending, both from a product perspective and in how to grow a direct lending business in a robust way, is very extensive. On top of that we share core beliefs, like always acting ethically, the importance of being curious and of being honest and transparent.”

Having just celebrated its 15th anniversary, Dynamic Credit now has over EUR 10.5 billion in mandates from pension funds, insurance companies, banks and the capital market. The strategies of asset manager and direct lender Dynamic Credit include Dutch mortgage loans, Dutch prime SME loans and global asset-backed securities (ABS). LoanClear facilitates loan investments for institutional investors and offers a loan marketplace. The management board of DCG is formed by founder and CEO Tonko Gast, COO Daan Potjer and General Counsel Joost van Hunnik.

Content Guru Secures FSQS Accreditation

The FSQS accreditation mark is valued by some of the largest purchasers in the financial sector and indicates that an organisation has gone through the process demonstrating its commitment and credentials to the industry. FSQS is supported by major players in the financial sector such as LV, Santander, Nationwide and the Bank of England.

Content Guru’s accreditation highlights its commitment to providing secure and reliable communications and integration capabilities to the financial sector. Being an FSQS registered organisation, buyers can recognise Content Guru as a creditable third party supplier and reduce the time and cost associated with pre-qualification, assurance and on-going compliance.

Chris Barbour, Financial Services Specialist at Content Guru, stated: “It is fantastic that Content Guru has been recognised with the FSQS certificate for its services to the financial sector. It is essential that banks, building societies and insurance companies select secure, high-quality and compliant suppliers, and to be registered as an organisation that provides solutions that measure up to FSQS standards is invaluable.”

The trend for remortgaging, rather than moving up the ladder, is likely to continue

Richard Pike, Phoebus Software sales and marketing director, says “The number of remortgages in October is indicative of the upward trend we have seen over the last few months. As we know many deals were coming to an end and the cautiousness around Brexit is making people look closely at their finances to see where they can find longer-term stability. The number of long-term fixes has increased throughout the year, and there are plenty of great deals across the market. Until we have some sort of a resolution regarding our exit from the EU this trend for remortgaging, rather than moving up the ladder, is likely to continue.

“However, once we know what is happening after the first quarter next year I am sure the market will start moving as people come to the realisation that we just have to get on with it, no matter what. There will be no more reason for the caution we have seen this year.”

iwoca adds Barclays and HSBC to Open Banking connections

iwoca, the UK’s fastest growing small business lender, today announces it has connected to Barclays and HSBC banks under Open Banking. This expands the number of Open Banking connections offered by iwoca to three, including Lloyds Bank, and will enable more than 60 percent of the lender’s customers to take advantage of the Open Banking service.

Open Banking is the new regulation which allows customers to give verified third-parties access to their bank data via a secure application programming interface (API). Business owners who bank with either Barclays, HSBC or Lloyds can now provide up to five years of transaction history in seconds when applying for a revolving credit facility or long-term loan from iwoca. According to the Competition & Markets Authority (CMA), these three banks combined accounted for between 50 and 80 percent of the market share of UK business current accounts in 2015, the last year for which figures are available.

However, a survey of 1,000 small business owners, carried out in November on behalf of iwoca, found that almost three quarters (73 percent) could not correctly identify what Open Banking is. A lack of public awareness of Open Banking has been identified as an issue in the past but as the initiative approaches its first anniversary, awareness remains persistently low.

iwoca became the first business lender to connect with any of the UK’s nine largest high street banks through Open Banking when the fintech company announced a full connection to Lloyds Bank in November. A beauty salon in Kent was the first ever small business to apply for a loan in the UK using Open Banking to provide iwoca with a transaction history during the application process. iwoca made funds available to the salon in just one hour and 23 minutes.

Following this announcement, iwoca will continue to work on finalising connections with the remaining six high street banks. Connections to Santander and NatWest are close to being completed. iwoca has been working closely with all nine of the banks since the initiative’s launch in January 2018.

Mark Chidley, Independent SME representative to the Open Banking Implementation Entity (OBIE) said: “iwoca’s announcement today demonstrates that the potential of Open Banking to transform how small businesses manage their finances is being realised. This is very good news for the UK’s small businesses who, according to recent Government figures, employ over 16 million people and have a combined turnover of over £2 trillion.

“Open Banking has a powerful role to play in bringing together members of its ecosystem to provide small businesses with the ability to manage their businesses in a more productive, efficient and profitable way – helping to mitigate persistent challenges such as late payments, low productivity and inefficient access to credit. The OBIE looks forward to continuing to bring the many actors in the ecosystem together in order to fully explore and realise the benefits that open banking can bring to small business owners and UK plc.”

Christoph Rieche, CEO and co-founder of iwoca commented: “Our Open Banking team has been hard at work to add Barclays and HSBC to our first connection with Lloyds and I’m delighted that we can now offer almost two-thirds of our customers an easier way to get approved with us. Clearly there’s a need to raise awareness of Open Banking and help small business owners benefit from it, and we’d love to work with the banks and the Open Banking body to achieve that.

“We believe that what we do at iwoca is helping a vital sector of the country thrive. Business owners want to get on and do what they do best – running their own business. That’s why we want to make getting a small business loan from iwoca as simple as booking a plane ticket online. Open Banking is helping us to achieve that.”

BoE stats: Mortgage lending on the rise despite Brexit

George Robbins, director of financial services at TransUnion (formerly Callcredit) comments on the latest Mortgage Lenders and Administrators Statistics from the Bank of England: “Despite ongoing uncertainty around Brexit, the latest figures reveal that new mortgage lending in Q3 was 4.7% higher than a year ago. This increase will come as a surprise to many, as the housing market was widely expected to stall in the latter part of this year in the wake of the final deal for our departure from the EU being agreed. However, this surge will possibly continue as homebuyers aim to secure their new property and complete a move before Brexit day on 29 March next year.

“Whilst it’s positive that the political uncertainty of the protracted negotiations hasn’t impacted the housing market – and in fact overall gross mortgage lending is at its highest since 2007 – it’s important to note that there is an increase in the proportion of high loan-to-income lending, as well as lending where the loan-to-value exceeds 90%. Lenders need to be exercising caution here and ensuring that they are conducting thorough affordability assessments and that these customers, who would be less cushioned in the event of a downturn, are not overstretching themselves.”

Arrears up for first time in 2 years – Spicerhaart corporate sales warns it could get worse

Mark Pilling, Spicerhaart Corporate Sales managing director, says: “The latest mortgage lenders and administrators statistics reveal that the value of outstanding mortgage balances with some arrears increased for the first time since 2016 Q2 to £14.5 billion.

“With the recent rate rises, I had predicted we would start to see arrears rise again, and I fear this could be the start of a more permanent shift. Consumers racked up a record £17.1billion of credit card debt in October, 11.6% higher than a year earlier, and October is not usually a month associated with big spending. Since those stats, we have had a record spending day on Black Friday, most of which was online so likely to be spent on cards, and we have Christmas coming up – traditionally a time when many families overstretch themselves in terms of spending.

“There are growing concerns that many people are now relying on credit cards for everyday purchases, and while many in this situation are able to keep their heads above water now, if there is another rate rise, payment shock coming off a fixed rate deal or rise in the cost of living, many people may struggle to make their monthly mortgage payments or rent – which in turn will impact landlords and where appropriate their ability to make mortgage payments.

“Repossession should always be the last resort and lenders should always look to find another option if it is available. We can help lenders find solutions that best suit them and their customers, so it is important that lenders start looking at all their borrowers and identify those who are already having difficulties managing their mortgage or are likely to experience future difficulties.”