Virgin Money appoints Susan Poot as Group Chief Risk Officer

Virgin Money today announces the appointment of Susan Poot as Group Chief Risk Officer, with effect from 24 January 2022.

Susan joins Virgin Money from ING Bank, where she spent over 20 years in a number of commercial and risk roles, the most recent of which was Chief Risk Officer, Retail Banking. In this role she was responsible for setting the standards for credit risk, compliance and operational risk management across all of ING’s retail markets, managing a team of over 1,000 people and overseeing a lending book of €400 billion. Susan was also Chief Risk Officer, Challenger and Growth Countries (C&G) during this period with responsibility for Chief Risk Officers in all of ING’s global C&G markets.

Susan brings with her a wealth of experience across a range of risk disciplines, with broad banking experience in the first and second line, across both retail and wholesale banking. She also has a track record of working in different geographies, including three years in India as Chief Risk Officer & Chief Compliance officer at ING Vysya Bank, which at the time was the seventh largest private sector bank in India.

Susan holds an MBA in Business Economics from The University of Amsterdam and completed the Executive Banking Programme: Management at INSEAD Business School, Fontainebleau.

Susan Poot said: “It’s an incredibly exciting time to be joining Virgin Money as it takes the next steps in its digital transformation. I’m looking forward to bringing my experience as the organisation accelerates its digital first strategy and develops exciting new customer propositions.”

David Duffy, Virgin Money CEO said: “Susan’s knowledge and experience will be instrumental in fulfilling our ambitious growth-led digital agenda. Building on the strong foundations we already have in place I look forward to working closely with her as she brings her strategic vision and commercial mindset to the role.”

Susan will replace the current Group Chief Risk Officer, Mark Thundercliffe, who is retiring after a suitable handover and advisory period.

Still deals to be had – Comment on the HMRC property transactions

Following the property transaction figures this morning, Richard Pike, Phoebus Software sales and marketing director, says “Although December is one of those months when many push to get their house purchases over the line before Christmas, it is nonetheless encouraging to see that activity increased compared to October and November.

“With the potential for another interest rate rise from the Bank of England in a couple of weeks there will be plenty of people looking to quickly secure themselves a decent longer term fixed rate.  As we saw at the beginning of January, when NatWest reduced it’s rates, there are still deals to be had and now that inflation has passed the 5% mark, the question of affordability will be top of mind for anyone thinking of moving house.  For lenders the same question will be as important as ever as house prices, according to the ONS this week, continue to rise unabated.”

Five Lending Predictions for 2022

“In an environment where everything is changing — the way we work, travel, meet and shop — the world of credit is adapting quickly. The pandemic isn’t the sole cause of this, as fintechs have been upending traditional banking models for years. Here’s what we at FICO see for next year.

The Focus Will Change from Digital Transformation to Digital Engagement

“Prior to COIVD, digital transformation was gathering momentum in financial services and was then turbo-charged by the emergence of the pandemic. Many journeys (both acquisition and servicing) are now well-established in the digital channel and customers have adopted them at an accelerated rate out of necessity during lockdowns. This speed of change, coupled with their experience of increased personalisation from firms such as Amazon and Netflix, has raised their expectation of how they expect their bank or building society to engage with them.

“To retain customers and attract new ones, organisations will need to increase their focus on digital engagement, rather than just transformation.

“In 2022 consumers will increasingly expect to be able to service all of their requirements, however complex, online. They will expect their bank to know when they last called a contact centre, logged into online banking, made a payment or queried a transaction. Increasingly, they will also expect their bank to use this data to anticipate their next interaction and also help them make the best of their relationship with the bank.

“Consequently, we can expect to see more banks adopt a “platform” approach to their existing customer engagement. By that I mean a platform that incorporates a real-time, 360-degree view of the customer, augmented by external data, such as Open Banking data and utility data. This data can be used by all areas of the bank that interact with customers, from marketing and customer service to risk management and collections. It can also be used to develop predictive and prescriptive analytics and next best action models to drive increased personalisation. This insight combined with an omni-channel communication capability will increasingly be the infrastructure that institutions move towards.

Lenders Will Take a New Approach to Measuring Affordability

“As economic activity rebounds, people are facing elevated levels of inflation with potential increases in interest rates forecast in early 2022, as well as higher energy prices. These factors are putting pressure on consumers’ financial positions, which in turn is putting pressure on lenders to demonstrate that both new and existing credit facilities are sustainable for their customers.

“This may prove problematic. Borrowing remains at high levels despite some households choosing to use excess income to deleverage during lockdown. In addition, a significant proportion of the adult population have never experienced rising interest rates or rising inflation, and have based their borrowing decisions on more benign economic environments.

“Today, assessment of affordability within financial institutions is fragmented, and there are different systems and approaches for each product and each stage of the credit. In order to meet the increasing regulatory requirements and to ensure good customer outcomes, we expect to see a shift in 2022 towards more customer-centric affordability assessment with consistent modelling for income and outgoings across all areas of the business. This centralised approach will give lenders increased control, consistency and agility to react to regulatory changes. It also will enable the simulation of multiple outcomes, which is crucial in a rapidly changing environment.

BNPL Will Expand Amongst Mainstream Lenders

“BNPL (buy now, pay later) will continue its rapid expansion in 2022 from its current position, where transactions values are expected to exceed £6 billion in 2021 in the UK alone. This growth is driven by the attractiveness of BNPL to both merchants and consumers; it has a positive NPS of 30, which compares favourably to other banking products (credit cards, for example, typically have an NPS in the single digits). There is also continued investment in the sector, with Klarna’s recent capital raising of $639 million being an example.

“This growth is just one of several threats (others include P2P payments, Open Banking, and fintech expansion) to the traditional business models of financial organisations, both in terms of lost revenue streams and reduced customer insight from less transactional data. Despite the increased regulatory scrutiny, we anticipate that in 2022 there will be more mainstream lenders who introduce BNPL-type products in an attempt to compete and reduce customer attrition. This could take the form of product innovation or partnering with existing providers; however, the focus will need to be on ensuring compliance with any new regulations that may be introduced (which could give banks an advantage, as they have more experience with regulations than fintechs).

The ESG Agenda Will Drive the Search for Cleaner Decisions

“The ESG (environmentally sustainable growth) agenda has grown rapidly in recent years and is forcing seismic shifts in some industries such as energy and transportation, as consumers, investors, employees and regulators raise their expectations of corporations. The recent COP26 Conference statement prescribed that in order to “power us towards net zero by the middle of the century every financial decision needs to take climate into account”. The COP went on to state in one of its four associated actions that “Banks, insurers, investors and other financial firms need to commit to ensuring their investments and lending is aligned with net zero.”

“In financial institutions, much of the ESG agenda is delivered at the corporate level, but in 2022 we expect to see an increased focus on bringing ESG data into more granular lending and investment decisions. This will require increased innovation in the use of alternative data across all kinds of lending. One example would be the inclusion of property energy ratings data in mortgage valuation and decisioning, and CO2 emission data for small businesses.

“As new data sources come on stream, such as IoT device data, there will be an increased focus on developing new data assets such as individual carbon profiles. Organisations will increasingly need flexible data and decisioning platforms that enable these new data sets to be ingested, assessed rapidly for their validity and then deployed into decision-making processes.  Over the longer term, we expect that ESG and climate risk evaluations will become an integral element of credit risk and affordability assessments, and banks and financial institutions will increasingly seek to help consumers and businesses to improve their carbon footprint through provision of education, insights and incentives.

Open Banking May Hit an Inflexion Point

“The Open Banking ecosystem continued to evolve at pace during 2021, with the OBIE reporting 330 regulated providers in the UK marketplace. These providers generated 4.9 million API calls and 11 million Open Banking payments in the 6 months to August 2021 in the UK alone. It is estimated that approximately 8% of digitally enabled consumers are now using Open Banking, with 76% stating that they will continue to use the service. This suggests that those Open Banking propositions are driving sustained behaviour changes amongst consumers.

“We expect to see the above trends growth continue in 2022 and beyond. This represents both a challenge and an opportunity to the traditional incumbents in the payments and lending markets, who will need to have and execute clearly defined Open Banking strategy.

“Whilst the overall scale of Open Banking usage is still relatively small, there will be a point of inflexion where customer adoption rises exponentially, as was seen with the take-up of contactless and mobile payments. Could this point of inflexion be in 2022?”

By Doug Craddock Senior Principal Consultant in FICO Advisors Lifecycle practice

Fleet Mortgages’ Q4 2021 Rental Barometer shows steady yield returns

Fleet Mortgages, the buy-to-let specialist lender, has today (19th January 2022) released the latest iteration of its Buy-to-Let Rental Barometer covering Q4 2021 rental yields across England and Wales.

The regional snapshot covers all areas of England and Wales in which Fleet lends and highlights the rental yield changes that have occurred in each of those regions. In this iteration, the yearly comparison is between Q4 2021 and Q4 2020.

Across England & Wales the Barometer shows a slight fall in rental yields, down from 6.2% a year ago to 5.6% during the last quarter of 2021, however three regions – East Anglia, West Midlands and the South East – posted a yearly increase in this iteration, compared to just one – the South East – last time.

Those regions which have seen a slight drop in rental yields over the last year, are on the whole only posting a figure slightly down on Q4 2020 – with the exception of the North West and East Midlands, in which yields are down by over 1%.

For the sixth consecutive quarter running, the North East of England has the top rental yield regional figure, dipping slightly to 7.9% but still holding onto the number one spot. However, there has been some movement in the places below, with Wales continuing to show strength with its 7%-plus rental yield, to move it into second place, just ahead of Yorkshire & Humberside.

The most significant jump over the year is in East Anglia, which has increased by 1.4% to 6.8%. Most properties financed by Fleet in the region are concentrated around the larger towns such as Norwich, Peterborough and around the outskirts of Greater London. Yields in the South East are also improving steadily – for two quarters running it has seen a positive year-on-year change.

Fleet suggests this could be as a result of changing behaviours from tenants, more working from home, and a widening of searches to incorporate larger properties and garden space outside city centres.

Fleet said it anticipates tenant demand to remain strong throughout 2022, and while existing landlords are focused on adding to portfolios, overall supply within the private rental sector (PRS) is unlikely to meet that demand.

It said prospective owner-occupiers would also continue to face supply-side issues and the PRS would continue to be required to fill the ‘housing gap’ resulting in rental yields maintaining good levels. Fleet said this view was echoed by the latest residential survey from the Royal Institute of Chartered Surveyors confirming historic low levels of supply (for sale or rent).

Steve Cox, Chief Commercial Officer at Fleet Mortgages, commented: “Our new Rental Barometer, covering the last three months of 2021, shows that rental yields are keeping pace with property prices which have risen by approximately 10% over the last 12 months. This is good news for the private rental sector and landlord borrowers.

“Three regions continue to offer 7%-plus yield and the North East retains its top spot, although Wales has shown a significant increase over the year as tenant demand continues to improve there, possibly as a result of the growing working from home trend.

“East Anglia has posted the biggest year-on-year increase, while conversely both the North West and East Midlands fell by the most. However, these drops are from points above a 7% yield and again we anticipate they will stabilise as the year continues.

“In terms of how this might impact landlord activity, it looks increasingly positive for 2022 particularly as professional investors review the recent capital increases in their properties and make the most of them via refinancing in order to secure the deposits required for new purchases.

“2022 has been described as a big year for remortgaging in the buy-to-let space, and that looks highly likely, but it will be remortgaging with a reason for existing landlords, who tend to capital raise in order to secure the funds they need for portfolio growth.

“With these yield figures showing a strong yearly return possible across most regions of the UK, and with house prices likely to continue on an upward trajectory due to a continued lack of supply, property investment and buy-to-let is likely to retain its allure.

“This is good news for advisers active in this space, and their clients, who are going to benefit from a highly competitive finance market and access to lenders like Fleet who have a strong appetite to lend right across the piece.”

New developments at LendingMetrics

Intelligent decisioning technology provider LendingMetrics has announced a number of new appointments and several promotions within its fast-growing workforce.

Donna Airey has been appointed as the company’s Head of Finance, bringing a wealth of experience in finance management to the department. Chelsea Clark is the company’s new Talent Acquisition Specialist and will be leading the LendingMetrics recruitment efforts as the company continues to expand in the coming months. On the technical side, an addition to the R&D team is Stuart Dewing who has joined the company as a Junior Developer after completing a master’s degree last year. He will aid in further advancing LendingMetrics’ multi-award-winning software solutions. Filling the newly created role of HR Manager, Karina Marvin will be joining the team in the New Year.

In addition to the new appointments, and to reflect the company’s continued growth, several internal promotions have been made in order to prepare the management structure for scale. These include the promotion of Maxine Raleigh to Head of Legal and Compliance, and Ella Barnes to Executive Assistant. To further enhance the company’s project management services, Katey Cooper has been elevated to the role of Service Delivery Manager, and will continue to manage projects and implementations, as well as the prompt delivery of platforms and exemplary customer service.

David Wylie, CEO of LendingMetrics, commented: ‘As a successful 2021 draws to a close, we look forward, despite the speedbumps of the pandemic, to 2022 with huge optimism and ready for the challenge of achieving further growth, which is why we’re delighted to make these important new changes to our team. LendingMetrics aims to continue to expand in the New Year to ensure the maintenance of high delivery standards to our expanding customer base.’

UK economic growth to outpace global average in 2022

Global trade will expand above the long-term average this year but will be disrupted by labour and supply chain bottlenecks, amplified by omicron in the first half of the year. The UK’s economic growth will outstrip the global, the US’ and the EU’s average growth in 2022, despite its cocktail of Brexit-amplified headwinds, according to Euler Hermes.

In its annual economic outlook ‘Don’t Look Up’, the world’s leading trade credit insurer forecasts UK GDP will grow by 4.4% in 2022 and by a further 2.6% in 2023. This is despite a unique combination of higher energy prices, corporate and personal tax increases, supply chain strains exacerbated by Brexit and a heavier initial blow from Covid-19 in 2020. It expects the EU’s economy to grow by 4.1% and 2.3% in 2022 and 2023, while it forecasts the US will record 3.9% and 2.8% in the same period.

Euler Hermes expects UK GDP to have rebounded by +7.1% in 2021, as businesses built up a cash buffer of £138bn and kick-started delayed decisions on investment, which it expects to improve by +5.8%.

Ana Boata, head of macroeconomic research at Euler Hermes, said: “UK firms will have high hopes for trade in 2022, spurred by the lifting of current Covid restrictions. However, a cocktail of headwinds including Brexit are likely to encumber the recovery, given the UK’s high dependency on imported intermediary goods for its exports.”

Brexit will continue to pose a challenge, with the UK the only member of the G7 to see exports fall last year (-2.8%). Imports from the EU in 2021 remained 19% below the 2018-19 average (against +5% above for non-EU imports) while exports to the EU stood -12% below (against -10% for non-EU). A quarter of current supply-chain disruptions were driven by Brexit.

Inflation in the UK is expected to continue to outstrip the EU in the next 12 months (+3.8% on average) with only the US economy running hotter despite an easing from 2021.

Euler Hermes forecasts that advanced economies will continue to drive more than half of global GDP growth (2.2pp in 2022 and 1.6pp in 2023) while emerging markets lag for the first time since the global financial crisis.

The insurer’s 2022 global GDP forecast remains broadly unchanged. GDP growth in China may slow to +5.2% due to ongoing disruptions in the real estate sector and the government’s focus on financial stability. China’s lowest contribution to global GDP growth since 2015 is likely to have negative spill over effects on emerging markets whose recovery will be shallower compared to past crises.

Ana Boata added: “The economic impact of the pandemic is generally weakening but there are still risks to recovery. Potential disruptions to labour markets due to sanitary restrictions could put 2-3% of the value added at risk in advanced economies.

“Tighter financial conditions or a premature withdrawal of policy support could undermine the recovery and greater divergence of fiscal and monetary policy normalisation could disrupt the recovery of international trade. Rising uncertainty about the implications of slowing external demand from China could also weigh on the outlook for emerging markets.”

Pervasive supply-demand imbalances will keep inflation high until the end of the first half of 2022 in both advanced and emerging markets, but is likely to decelerate later this year as the recovery becomes entrenched.

Zephyr Homeloans reduces rates

Zephyr Homeloans, the specialist buy-to-let (BTL) lender owned by Computershare, has reduced rates across its mortgage product range.

The lender said it is offering 2.84% on its most popular product – a five-year, fixed rate, standard buy-to-let mortgage at 75% LTV – for properties with a D or E rated energy performance certificate (EPC).

It is also offering lower rates for fixed rate mortgage products at 65% LTV for standard new-build properties and flats above commercial dwellings with an EPC rating between A and C: 2.69% for a five-year term and 2.50% for a two-year term.

Paul Fryers, managing director at Zephyr Homeloans, said: “2022 is shaping up to be a year of opportunity for brokers to engage with their customers on the drive to increase the energy efficiency of rental properties as well as the significant re-mortgaging opportunity arising from maturing five-year, fixed-rate products.

“We’re able to reduce our rates and enhance the products available to brokers and their landlord clients to take advantage of these important market changes.”

The company said it has lowered rates by between four and 20 basis points across its product range.

Last month the company announced new products and a range redesign to support energy efficiency savings in the BTL sector.

Zephyr Homeloans is a trading name of Topaz Finance Limited, a part of the Computershare Loan Services division of the Computershare group.

Sistemas Críticos Launches Solution for Transactional Fraud Prevention using FICO Falcon Fraud Manager

FICO, the world leader in predictive analytics and decision management software, and Sistemas Críticos, a global IT company with presence in Latin America, today announced the launch of BSafe Platform SaaS, which combines the fraud prevention technologies of FICO® Falcon® Fraud Manager and TenS®, a proprietary Sistemas Críticos platform, on the cloud for any type of company/institution, notwithstanding of size and industry.

FICO® Falcon® Fraud Manager is a real-time solution that combines predictive analytics and artificial intelligence to offer comprehensive fraud prevention, security, and compliance management, with a focus on the customer lifecycle. This best in-class solution is already used by hundreds of organizations globally and helps them reduce the risk of fraud.

Sistemas Críticos will offer BSafe Platform SaaS, which streamlines the integration, connectivity, and use of this intelligent solution in a simple, flexible, and modular way, in addition to being available on the cloud. This makes it an attractive and affordable alternative to the market, using a plug-and-play platform in the era of digital transformation.

“We are very excited to be able to make our leading fraud prevention and management solution available to all companies globally through BSafe. Large and small companies in any sector will have access to the analysis of millions of accounts from various countries and financial institutions to protect them against new types of fraud that spread around the world,” said Fabricio Ikeda, Global Head of Fraud and Compliance at FICO for Partners and Alliances. “This democratization of the solution will help in the medium term to strengthen the economies of the countries and prepare them for the challenges of the coming years.”

“Our goal with BSafe is to offer a competitive solution in the market in terms of price, accessibility, support, and service. The industries to benefit include financial, retail, processing, security, and telco, among others,” said Álvaro Quintero, president of Sistemas Críticos. “With TenS®, we seek to streamline integration, connectivity, and the use of an intelligent solution in a simpler way, adapting to the different needs of companies, which results in a dramatic reduction in implementation time.”

TDX Group awarded Collections Managed Service provider and supplier of Advisory Services on CCS’s Debt Resolution Services framework

TDX Group, the UK’s leading provider of data-powered debt collection and recovery services, is today announcing that it has, along with its parent company Equifax, secured a place on Crown Commercial Service’s new Debt Resolution Services framework. The provider status will see the company build on its existing relationship delivering the original Debt Market Integrator (DMI) framework and continuing to deliver collections and advisory services – cementing it’s standing as a trusted data and managed services provider to the UK Government.

The Debt Resolution Services framework is designed to bring together a range of debt collection and data services into a single commercial agreement. It is aligned with the cross-government debt management strategy, which aims to provide a more consistent and integrated approach to public sector debt collection, improving capability and ensuring taxpayers money is spent in the most efficient and effective way.

TDX Group is part of Equifax which allows the organisation to offer an unrivalled level of cohesion across both debt services and credit bureau data and analysis, which together with the company’s significant experience in the public sector makes it ideally placed to provide streamlined services to government.

Since 2015, TDX Group, through its subsidiary Indesser, has recovered over £2.5 billion in public sector debt, enough to build more than 200 primary schools. Over £150 million of that taxpayer money would not have been collected without the company’s data and analytical capabilities. Over the past seven years the group has worked in partnership with 56 different central and local governments to responsibly, efficiently, and fairly recover money owed to the public sector.

Equifax UK has been placed as one of the data providers on three individual Lots in the DRS framework; including Fraud Error & Debt Data Solution Services, Affordability Assessment and Monitoring, Fraud, Error and Debt Advisory services.

Patricio Remon, President of Europe at Equifax, commented: “At Equifax we’re on a mission to be the most connected data provider, because it’s through connecting the dots that we can deliver true value to society.​ ​Helping people become more financially resilient is something that we take very seriously at Equifax – as part of this tender we have made further commitments to provide unique data insights to support policy makers, improve access to debt advice and to offer financial education to ​support debt prevention.​”

Phil McGilvray, Managing Director of Debt Services at Equifax, said: “Through our TDX Group company, Indesser, we have supported the UK Government for almost seven years now, and that service continues to go from strength-to-strength as our combined capabilities evolve together. Our inclusion in the DRS framework will build upon the work we’ve already delivered to help find the right outcome for over 6 million consumers through our existing collections services for public sector clients. Whilst furthering the data and analytical services provided to more than 13,000 users across UK government agencies, enabling them to make informed decisions and operate more effectively.”

Crown Commercial Service (CCS) supports the public sector to achieve maximum commercial value when procuring common goods and services. In 2020/21 CCS helped the public sector to achieve commercial benefits equal to £2.04 billion – supporting world-class public services that offer best value for taxpayers.

Second charge mortgage new business volumes grew by 36% in November 2021

Commenting on the latest new business figures for the second charge mortgage market, Fiona Hoyle, Director of Consumer & Mortgage Finance and Inclusion at the Finance & Leasing Association (FLA), said: “The second charge mortgage market reported its eighth consecutive month of new business volumes growth in November as the market continued its recover from the impacts of the pandemic. New business volumes in 2021 as a whole are expected to be 16% below the pre-pandemic peak.”