Comment on Monzo exploring high-cost lending – “desperate attempt at profit drive” by CEO of Squirrel

Mutaz Qubbaj, CEO of money-saving app Squirrel, commented: “The dust hasn’t even settled on the demise of Wonga and it appears another company is sidling up to fill the void of high cost, short-term credit. If true, neo banks like Monzo are clearly on a profit drive but this is a desperate attempt.

“It would be a sad day for the sector. Monzo should be one of the good guys. It looks more like ‘let’s make spending easier’ than ‘let’s solve the problem’ of debilitating debt.”

On the 12th day of Christmas, Knowledge Bank gave to me…

Criteria search system Knowledge Bank will next week launch the 12 Days of Christmas, a campaign which offers fantastic prizes both to new brokers signing up to the system for the first time and existing subscribers. To make it more affordable than ever to sign up to Knowledge Bank it has also reduced the cost of both monthly and annual subscription for the period of the campaign.

Each of the 12 Days of Christmas has been sponsored, either by one of Knowledge Bank’s lenders, service partners or our wonderful trade press publications, who have each offered a prize for the daily giveaway. Prizes include a Sonos speaker, Club Wembley tickets and ski lessons (for full list see below).

The campaign will start on Monday, December 3rd and the ’12 days’ will be all the working days throughout December, finishing on Tuesday 18th of December.

There will be prizes to be won every weekday throughout the campaign with the winner being drawn at 5pm each evening. The winner of each day will be announced on social media and then receive a follow up email that they have won. Anybody signing up to Knowledge Bank after 5pm will be entered into the next day’s draw.

All current Knowledge Bank subscribers will be entered into the daily prize draw and anybody who subscribes during the period of the campaign will also be entered.

As an added Christmas give-away, Knowledge Bank will reduce the cost of a single broker monthly subscription to just £14.99+VAT, a huge saving of 40%, while an annual subscription will be made available for £149.99+VAT.

Nicola Firth, CEO of Knowledge Bank said: “Our ‘12 Days of Christmas’ campaign is not only a bit of fun, it is also about giving a little back to our brokers, by giving them the chance to win a fantastic prize every day for 12 days. This has been made possible by the huge amount of support we have received from lenders and partners.

“We have also made it easier and more affordable than ever to use Knowledge Bank during the period of the campaign by reducing the price of sign up. Brokers can still take advantage of our one-month free trial but will need to be a licenced user of the system to be entered into the prize draw. However, with searches taking just seconds and saving brokers hours of time, we’re confident that using Knowledge Bank will pay for itself in both time saved and additional cases placed.

“Knowledge Bank contains almost 80,000 individual criteria being kept up to date by more than 150 lenders across residential, buy to let, equity release, self-build, second charges, commercial, bridging and overseas mortgages, giving brokers all the answers they need in seconds. Knowledge Bank also provides a clear audit trail, to ensure a robust file for compliance with the evidence of every search able to be saved into a client’s file.”

12 Days of Christmas sponsors and prizes:

  • Monday 3rd December – Case of wine, Norton Home Loans
  • Tuesday 4th December – £250 donation to registered charity of brokers choice, Together
  • Wednesday 5th December – Red Letter Track Day, Landbay
  • Thursday 6th December – £100 Amazon voucher, Connect Mortgages
  • Friday 7th December – Lunch with Mortgage Introducer publishing editor, Robyn Hall and commercial director, Matt Bond, Mortgage Introducer
  • Monday 10th December – Sonos Speaker, Foundation
  • Tuesday 11th December – M&S Hamper, Vida Homeloans
  • Wednesday 12th December – 2x Merlin passes; Thorpe Park, Alton Towers, Chessington, London Eye + 29 other attractions free for a year Masthaven
  • Thursday 13th December – Case of wine, Magellan Homeloans
  • Friday 14th December – Magnum of Laurent & Perrier Champagne, Mortgage Solutions
  • Monday 17th December – 4 x Club Wembley tickets for an England game, Financial Reporter
  • Tuesday 18th December – 3 x Ski lessons for 2 people @ Birmingham indoor ski centre, United Trust Bank

New call for evidence provides ‘welcome opportunity’ for much-needed bailiff reform

The Ministry of Justice published its call for evidence following concerns raised by the advice sector over continued problems with bailiffs and bailiff firms, despite reforms introduced in 2014. The call for evidence follows the sector’s joint Taking Control report published last year.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “We continue to see significant problems with the behaviour of some bailiffs and bailiff firms. The sector’s Taking Control report, published jointly by organisations from across the debt advice and charitable sector, highlighted the limited impact that the 2014 reforms have had and made a strong case for fundamental change.

“This new call for evidence, with its broad scope, is a welcome opportunity to secure the fundamental reform that is needed to deal with the systemic issues that many of the people we help are experiencing with bailiff action.

“We look forward to working with government and advice sector partners as we press for key changes including independent regulation, a single complaints mechanism and a revised fee structure that incentivises good practice.”

A survey of advisers conducted for the Taking Control report highlighted continuing concerns about bailiffs, including: not accepting offers of payment, using threatening behaviour, not applying fees appropriately or proportionately, seizing goods inappropriately and failure to treat vulnerable clients appropriately.

Paradigm announce ‘Reverse Advent’ charity drive for The Trussell Trust

Paradigm Mortgage Services, the mortgage services proposition, has today (26th November 2018) announced the launch of a ‘Reverse Advent’ charity drive in aid of The Trussell Trust, which operates a network of over 420 foodbanks across the UK.

Throughout next month Paradigm will be collecting food supplies via a ‘Reverse Advent’ approach; each day in December Paradigm employees in their respective offices will add food items to a collection which will then be given to their local foodbanks to help those who might be struggling at Christmas.

Paradigm is encouraging both its 1,290 member firms, the wider intermediary market and its lender and provider partners to get involved, take up the same idea and implement it across their offices all over the country. It wants everyone who is able to, to get involved and implement their own ‘Reverse Advent’ and donate non-perishable food items to their local foodbank. All food supplied to The Trussell Trust foodbanks is provided to local people.

Alternatively, Paradigm is accepting donations at its office in Solihull, and will ensure they are all taken to The Trussell Trust foodbank on the 20th December.

It also wants to hear from anybody who gets involved in the ‘Reverse Advent’ initiative via social media, encouraging them to share details and photos using the hashtag: #ParadigmHelpFightHunger.

The Trussell Trust is the only nationwide network of foodbanks in the UK, providing emergency food and support to those in crisis. Over 13 million people live below the poverty line in this country resulting in many people going hungry every day.

For more information on The Trussell Trust and to find your local foodbank, please visit:

Bob Hunt, Chief Executive of Paradigm Mortgage Services, commented: “Christmas is normally a time of enjoyment and, for many of us, over-indulgence. Many people throughout the UK though simply don’t have this luxury, and with millions of people living below the poverty line, it is a sad fact that the importance of foodbanks has grown and grown. At Paradigm we want to do our bit to support those less fortunate in the UK which is why we have selected The Trussell Trust’s network of foodbanks in the hope that we can give them a much-needed boost of stock at what is always a very busy time for them. We’ll be running our ‘Reverse Advent’ charity drive and encouraging both our members and the wider intermediary market, including lenders and providers, to do the same. We now have over 1,290 member firms and we believe we can make a real difference if they all get involved and help those who are struggling at Christmas. For many people, this isn’t necessarily the most wonderful time of the year and we want to help make it a little better for those most in need.”

The UK alternative finance market grew 35 per cent in 2017 – a new report says

The UK alternative finance market grew 35 per cent to £6.2 billion in 2017, as peer-to-peer business lending became an increasingly important part of small business financing, says report by Cambridge Centre for Alternative Finance.

The UK online alternative finance market volume grew by 35 percent in 2017, to £6.2 billion (from £4.6 billion in 2016), as peer-to-peer business lending became an increasingly important part of overall financing of smaller British businesses, according to the 5th UK Alternative Finance Industry Report by the Cambridge Centre for Alternative Finance (CCAF) issued Friday 23 November.

Peer-to-Peer (P2P) Business Lending retained the top spot as the largest market segment in online alternative finance, with £2 billion in transaction volume in 2017 and 65 per cent year-on-year growth. Assuming that the vast majority of P2P business borrowers are small businesses with turnover of less than £2 million, P2P Business Lending was estimated to be equivalent of 29.2 per cent of all new bank loans to small businesses in 2017 – nearly double the 15.3 per cent figure in 2016.

“P2P Business Lending is becoming an increasingly important contributor to overall SME financing in the UK,” the report says.

Following P2P Business Lending at £2 billion, the largest UK alternative finance categories in 2017 were P2P Consumer Lending at £1.4 billion, followed by P2P Property Lending at £1.2 billion and Invoice Trading at £787 million.

The report, conducted with support of the Peer-to-Peer Finance Association and the UK Crowdfunding Association, included responses from 75 platforms with an estimated 95 per cent of the known UK online alternative finance market, plus two additional platform datasets using web scraping methods.

Other findings of the report:

–Equity-based Crowdfunding grew by 22 per cent year-on-year to reach £333 million, but Debt-based Securities stagnated at £79 million.

–Real Estate Crowdfunding increased by more than 200 per cent to £211 million, but donation-based crowdfunding only grew by 2.5 per cent to £41 million.

–Reward-based Crowdfunding decreased by £4 million year-on-year to £44 million in 2017.

The year 2017 also saw further increases in the institutionalisation of funding across alternative finance models: on the debt side, 40 per cent (up from 28 per cent in 2016) of funding for P2P Business Lending was provided by institutional lenders including mutual funds, pension funds, asset managers, banks, family offices and other financial institutions. This trend of institutionalisation was also seen in equity-based crowdfunding, where 49 per cent of the funding was provided by venture capital funds and professional investors “co-investing” with retail investors.

The CCAF for the first time asked UK online alternative finance platforms to provide an indicative breakdown of their operating costs and budget allocation, finding that on average and across models, they spend about 15 per cent on IT, 14 per cent on research and development, 14 per cent on sales and marketing, and 8 per cent on reporting and compliance.

Bryan Zhang, the Executive Director of the Cambridge Centre for Alternative Finance said: “This report reflects an industry that is playing an increasingly important role in helping consumers and businesses access finance, whilst growing to become more diversified, sophisticated and institutionalised.”

FCA double whammy crackdown on rent-to-own price caps is welcome, says StepChange

Commenting on today’s announcement from the Financial Conduct Authority on its proposals to introduce a bespoke price cap in the rent-to-own credit market, StepChange Debt Charity is pleased to see the regulator addressing both the cost of credit and the cost of goods.

StepChange Head of Policy Peter Tutton said: “We are pleased that the FCA is addressing rent to own, where the high cost of goods and add-on warranties can make agreements expensive even compared to other types of high cost credit. The most financially vulnerable households cannot be left with no choice but the highest price on the high street. Fundamentally, we also need better alternatives for households who struggle to afford household needs, such as the cost of mending or replacing necessary household appliances.”

Finance professional role to become analyst instead of relationship manager

It is not relationship management or service orientation, but the analytical ability of a finance professional that is the most important skill to develop. The FinTech Barometer from fintech company Onguard shows that these new skills must be developed in order to add value in the future.

Almost a third (30%) of CFOs and finance professionals put analytical skills at the top of the list with adaptability (27%) also considered an important skill. Relationship management came in third place (16%), while only 6% cited leadership qualities. In the study, the CFOs surveyed indicated that they consider learning to programme (12%) even more important than the development of service orientation (5%).

The importance of data
Developments in the field of new technologies and the acquisition and storage of data are rapidly advancing, so much so that almost half of finance professionals (43%) expect financial service providers to be transformed into IT companies in ten years’ time. The availability and use of data is important for companies with data playing a role in 93% of organisations. It is not surprising, therefore, that 45% of finance professionals think that big data will have the most influence within the industry. These aspects could explain why CFOs and other finance professionals expect the need for skills development in the future, particularly in the field of analysis.

Marieke Saeij, CTO at Onguard, highlights the importance of these skills: “We are seeing that more and more companies are looking to collaborate with partners to continuously deliver increased value to customers. Through these partnerships, platforms are being created that in turn provide a wealth of extra data, which companies can use to make sound decisions. In addition, it is important for finance professionals who are in contact with clients on a daily basis to be able to analyse this data and, in so doing, provide an extra service. For example, through data, finance professionals can find out the customer’s preferred communication channel and payment method for their invoices. Data analysis by a finance professional therefore creates a lot of added value within organisations.”

Rent-to-own price cap welcomed by debt charity

The Financial Conduct Authority (FCA) has today set out a proposed price cap on the rent-to-own market and an update on its work on alternatives to high-cost credit. The proposals are designed to protect people who use rent-to-own credit and outlines ongoing work on availability and awareness of alternatives to high-cost credit.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “This price cap for rent-to-own-firms is very welcome news, and I am pleased the FCA has listened to the advice sector’s concerns on this form of borrowing. Following its successful intervention in the payday loan market, this is another sign the regulator is taking problems with high-cost-credit seriously.

“While a 100 percent price cap will offer greater protection to people who use this market – who are often vulnerable and usually on low incomes – the FCA should consider going further by also capping late payment fees, which can escalate quickly.

“We also hope to see further action from the FCA in other areas of high-cost credit, including on logbook loans following the government’s disappointing decision to shelve the Goods Mortgages Bill.

“Tackling problems with high-cost-credit is of course only one part of the solution – so it is good to see that the FCA are also looking at affordable credit. Together with the Government’s decision to explore a possible No Interest Loan Scheme, we are beginning to see momentum build on this crucial issue.”

Experian unveils new innovative Open Banking services

Experian has launched a new set of advanced Open Banking services. Affordability Check and Tennant Vetting Service are both innovations which will empower consumers to better understand and take control of their finances, while offering businesses the insight to deliver improved products and services.

Experian is the only one of the UK’s main credit reference agencies to be an FCA accredited Account Information Services Provider (AISP). The services go live over the next month and are already being used by major UK banks, as well as providers of digital mortgage services, gambling organisations, leading automotive financiers and UK credit card providers.

Tom Blacksell, Managing Director of B2B Experian, said: “We’ve spent 18 months developing and testing our Open Banking services to produce class leading applications. The time is right for us to launch our services to market.

“Open Banking APIs are becoming fully operational and many organisations are looking to Experian to help them enhance their products and services, especially where they can be used to increase financial inclusion and help people access more affordable services.

“The insight can be used to increase financial inclusion and help people access more affordable services, while helping organisations to make better informed decisions.”

The Affordability Check allows organisations to confirm an individual’s income and expenditure using the advanced data science of Experian’s categorisation engine, Trusso.
Whereas the Tennant Vetting Service provides an online automated check which validates the consumer’s income as well as their previous rental history from their bank transaction data. It can reduce the time it takes to get a reference from days to hours.

Both services are underpinned by Experian’s leading cloud-based data aggregation platform, Verdus. It was developed by Fintech innovators Runpath, a business which Experian acquired last year.

Verdus sources and aggregates product information for UK financial services on behalf of price comparison sites. Open Banking allows Verdus to provide API connectivity so banks can access transaction data in real-time.

The Money Statistics November 2018

Striking Numbers
-5.6%: Change in the average real wage since pre-crash peak in February 2008
98%: First-time buyer deposit as percentage of average salary, in September 2018
41.5%: Increase in first-time-buyer house prices since 2012
34%: Proportion of income including benefits spent on rent by private renters
0.84%: Average interest rate on a cash ISA in September 2018
18.63%: Average credit card interest rate in September 2018
£59,008: Average total debt per UK household in September 2018
£32,220: Average student debt for 2016 cohort in England
-£38 billion: Change in Public Sector Net Debt (excluding RBS and debt to Bank of England) in the year to September 2018

Every Day in the UK
The population of the UK grew by an estimated 1,074 people a day between 2016 and 2017.
On average, a UK household spends £4.00 a day on water, electricity and gas.
The number of people unemployed fell by 118 per day in the year to September 2018.
Borrowers paid £141 million a day in interest in September 2018.
Citizens Advice Bureaux in England and Wales dealt with 2,683 new debt problems every day during October 2018.

Personal Debt in the UK
People in the UK owed £1.605 trillion at the end of September 2018. This is up from £1.560 trillion at the end of September 2017, an extra £870.78 per UK adult and £76.54 higher than the previous month.
The average total debt per household, including mortgages, was £59,008 in September. The revised figure for August was £58,861.
Per adult in the UK that’s an average debt of £30,819 in September, around 113% of average earnings. This is up from a revised £30,742 a month earlier.

Mortgages, Rent and Housing
Outstanding mortgage lending stood at £1.39 trillion at the end of September. This is up from £1.36 trillion a year earlier.
That means that the estimated average outstanding mortgage for the 11.1 million households with mortgage debt was £125,208 in September.
The average mortgage interest rate was 2.53% at the end of September. Based on this, households with mortgages would pay an average of £3,168 in mortgage interest over the year.
For new loans, the average mortgage interest rate was 2.11%. Using the latest figures from UK Finance, this means new mortgages would attract an average of £3,060 in interest over the year.
According to UK Finance, gross mortgage lending in September totalled an estimated £20.6 billion. This is down 3.3% on September 2017.

Savings and Pensions
In Q2 2018, households saved an average of 4.4% of their post-tax income, including benefits. This is down from 5.2% in Q2 2017. From 2000 to 2015, the savings rate fluctuated mostly in the 6-10% range, with a post-crash peak of 12% in Q3 2009.
The average interest rate for an instant access savings account, not including bonus interest payments, was 0.25% in September 2018. For a cash ISA, this was 0.84%.
If someone on the average salary saved 4.4% of their income in an average instant access savings account for a year, they would receive £2.40 in interest after tax. If they saved it in an average cash ISA, they would receive £10.10.

Spending and Loans
In the year to August 2018, consumer credit increased by 8.1% according to UK Finance, while outstanding levels of credit card borrowing grew by 8.9%, a rate that has been fairly constant over the last year.
In Q2 2018, households in the UK spent £108.7 million a day on water, electricity and gas, or £4.00 per household per day. On a seasonally adjusted basis, this was slightly down on Q1 2018.
The average interest rate on credit card lending bearing interest was 18.63% in September 2018. This is 17.88% above the Bank of England Base Rate of 0.75%.

The Bigger Picture
The UK economy grew by 0.6% in the three months to September 2018, an increase from the 0.4% growth in the second quarter of 2018, according to the latest estimates from the Office of National Statistics.
The CPI (Consumer Prices Index) 12 month rate stood at 2.4% in the year to September, down 0.3% on the year to August. The inflation rate has been above the Bank of England’s 2% target since February 2017.
The highest rates of inflation over the 12 months to September were in transport (5.6%), alcohol and tobacco (4.1%), and recreation and culture (3.0%).

About The Money Charity:
The Money Charity is the UK’s financial capability charity. Our vision is that everyone has the ability to be on top of their money as a part of everyday life. We empower people across the UK to build the skills, knowledge, attitudes and behaviours to make the most of their money throughout their lives.