Debt consolidation and home improvements drive consumer borrowing

Research from users of the Freedom Finance platform, one of the UK’s leading digital lending marketplaces, reveals that the growing demand for consumer credit is being underpinned by a move for consumers to consolidate debt.

The analysis shows that more than four in 10 (41%) people who searched for a loan through Freedom Finance’s platform in April 2023 were looking to consolidate debt. As interest rates on overdrafts and credit cards have increased rapidly since the middle of last year, so have the number of people looking to consolidate more expensive, ongoing debt into lower-cost, fixed-term personal loans – Freedom Finance’s latest Credit Monitor revealed that credit card rates are now at their highest level since December 1997.

The research also found:

  • The second most common reason among people looking for loans was home improvements (25%)
  • There is growing demand for personal loans with the Freedom Finance platform seeing 50% more people looking for loan products on its platform
  • More wealthy borrowers are using the platform as the average salary of applicants has increased steadily over the past 12 months.

Andrew Fisher, Chief Growth Officer at Freedom Finance commented: “We have seen a clear shift in the market of the past few months where all types of borrowers are moving toward using personal loans to pay off other more expensive forms of debt, such as credit cards and overdrafts.

“The changing conditions as rates have risen have also seen people look to borrow in new ways. We are seeing more people and different demographics coming onto our platform to look for the most appropriate credit products available to them.”

Falling Aftersales Absorption Should be a Major Concern

These worrying statistics published by REALtime Communications, whose highly respected data analytics relies upon real-time data from many of the UK’s franchised retailers, should concern business leaders across the franchised retailer community.

Reflecting upon the data, Richard Robinson, Chief Operating Officer from REALTime Communications notes, “The declining trend is something we have been forecasting for many months. The loss of circa 2.1M new car sales in the 2000-2022 period is now impacting the critical N-3 car parc for franchised aftersales activities. At the same time, the sales of low maintenance BEVs are also playing an increasing role in reducing servicing activities.”

The decline in absorption levels is joined by falling conversions of red and amber work, down 3.9% and 6.06%, respectively, even though work identified in Electronic Vehicle Health Checks (EVHC) increased. Tyres, an area many retailers have been targeting for growth, saw red work conversion fall by 6.01%.

As well as the decline in new car sales and the emergence of BEVs, an ageing car parc and the cost of living crisis are seen as critical contributors to the downturn, it is clear it is a challenge that retailers must seek to address, Richards concludes; “To an extent, strong used car profitability has masked the challenges facing aftersales, but we can see that gross profit from used car sales has also declined. The perfect storm needs to be addressed, and arguably, any moves to any agency model by an OEM may further crystalise the need to develop strategies to reverse the trends we have identified.”

Age Partnership & Pure Retirement write total loans of £1.7bn in 2022 and announce record profits of £22.02m

The UK’s largest equity release broker, Leeds-based Age Partnership Group, and its sister company, Pure Retirement, which provides home loan mortgage contracts within the equity release market, have written new loans of over £1.7bn between them and posted combined profits of £22.02m EBITDA for the year ending 31 December 2022.

During the financial year Age Partnership produced a £5.02m profit, up from £2.6m, while Pure Retirement built on its £13.0m profit for the previous year by posting a £17m profit in 2021.

The equity release sector has witnessed significant growth over the past few years with new loans reaching £6.2bn in 2022.

The rise in popularity is not only due to a better understanding of the product but several other factors including having interest rates fixed for life, no risk of home repossession if optional repayments are not made, receiving money tax free, a unique no negative equity guarantee provided as standard plus the opportunity to gift money early to family members for help & support and inheritance tax planning.

To meet this increasing demand, Pure has continued to invest in its loan servicing and technical capability to support third party relationships for its services and products, with its headcount increasing by 65 during the year to 277 employees.

This has helped to establish Pure as the ‘provider of choice’ for funders looking to outsource equity release origination and the servicing of loan books. It had £4.3bn of loans under administration at the year end, which is anticipated to grow to more than £5bn this year.

The chairman of both Age Partnership and Pure Retirement, Andrew Thirkill said, “Increasing UK market demand allowed the company to assist more people than ever to realise tax free cash part of the equity in their homes. Improving their lifestyle and in many cases that of their families.”

“To support demand, we are supported by outstanding teams across the two companies led by highly experienced CEOs in Steve Auckland at Age Partnership and Paul Carter at Pure Retirement.

“As well as achieving impressive financial results, both organisations have been recognised for numerous industry awards, with Age Partnership winning ‘Best Financial Adviser’ at the Equity Release Awards in 2022, and Pure winning multiple awards including ‘Later Life Lender of the Year’, ‘The Later Life Lending Innovation Award’, ‘Best Equity Release Provider’, ‘Best Later Life Lender’ , ‘The Best Provider for Service’ and  the 2023 Equity Release Broker of the Year at The Mortgage Awards.

“Additionally Pure has once again retained the prestigious ‘Gold Investors in People’ accreditation with Age Partnership securing the accolade for a record 10th consecutive year.”

FSB launches ‘Sunshine List’ of ideas to empower hospitality firms as tourism season kicks off

Policymakers have a golden opportunity to help small firms make the most of tourism season this summer as the holiday season kicks off, according to the Federation of Small Businesses (FSB).

The UK’s unparalleled attractions, coupled with favourable exchange rates, will likely attract a wave of international visitors over the next few months – while budget-conscious Brits will be looking to make their money go further with local staycations.

Recent data from the latest Small Business Index (SBI) shows there has been a big rebound in confidence in accommodation and food services, up 53.7 points to -17.8 points.

The fact that it remains in the negative zone highlights the challenges faced by the sector in the aftermath of Covid-19 – with 77% of small tourism and hospitality firms saying they carry some sort of debt, compared to 59% pre-pandemic.

This means the Government and other policymakers must consider urgent ways to alleviate the burden on our tourism industry.

To help, FSB has created a Sunshine List to help lift tourism firms this summer:

  • Transport needs to run smoothly – and the Government must ensure its Pothole Fund is fairly allocated.
  • Parking must be accessible on high streets, with tourist hotspots increasing park and ride.
  • Raising the VAT threshold from £85,000 to £100,000 could spark growth in the hospitality industry, as currently, many tourism firms halt trading near the end of the tax year to avoid hitting the current limit and incurring additional costs.
  • The Small Business Rates Relief threshold should be increased to £25,000 to remove 200,000 small firms out of the rates system.
  • Cheaper energy costs – energy firms should adopt FSB’s proposal to allow small firms who negotiated their contract at the height of the energy crisis last year to be able to ‘blend and extend’* their contracts to take advantage of lower, wholesale prices.
  • Local Visitor Economy Partnerships should come up with plans that are fully reflective of small business interests.

FSB National Chair Martin McTague said: “This summer presents a kaleidoscope of opportunities for small firms in the hospitality and tourism sectors across the UK. There’s a wealth of things to do here – from historical sites to traditional fish and chips by the sea – so it’s no wonder people flock here every summer.

“Long term weather forecasts are notoriously unreliable, but we hope the Met Office’s predictions of a warm summer come true, giving a fillip to small firms that rely on tourists.

“Small firms have already endured the profound impact of the pandemic and overcome numerous obstacles, and now they must navigate high inflation. The improvement in hospitality confidence indicates the first green shoots of recovery, but they need continuous care and support.

“Stimulating our tourism and hospitality sectors with our Sunshine List this summer could make the world of difference, allowing hospitality firms to be the best they can possibly be. In turn, this will mean tourists can properly support our small business ecosystem, helping confidence leap into positive territory.”

April retail sales rise slightly more than expected

Retail sales volumes rose an estimated 0.5% in April, following a 1.2% decline in March. Sales volumes rose  by 0.8% in the three months to April 2023 when compared with the previous three months, the highest rate since August 2021. The month saw increases in both Food (up 0.7%) and non-food (up 1.0%) store sales. Retail sales had been expected to rise by 0.3% (Trading Economics).

Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: “Retail sales volumes in April came in slightly better than expected, with slightly better weather helping.

“No one is going to look at these figures and claim consumers are feeling flush. But at the same time the cataclysmic predictions for the UK economy in 2023 are proving very wide of the mark.

“Results from retailers themselves back this up. Earlier this week M&S reported a relatively upbeat trading update, while results from the likes of Next and Primark also show little evidence of a significant slowdown in consumer spending.

“The worry is that higher interest rates have yet to really bite. Many people are still sitting pretty on fixed rate mortgages. When they refinance they are going to find their disposable incomes drop significantly. At that point retailers may really start to feel the pinch, especially if inflationary pressures remain elevated.”

Praetura unveils first-of-its-kind tech platform to support brokers and SMEs

Praetura Group (Praetura), the North West-based debt and equity capital provider to small and medium sized businesses, has launched a custom-built tech platform to enhance its SME lending process. The platform will help more SMEs access funding from Praetura faster through their broker partners.

Praeview (pronounced ‘preview’) will double Praetura’s total capacity for the number of businesses it can support in the next 12 months. Designed to deliver quicker and more accurate lending decisions at scale, Praeview is the first tech platform of its kind in the UK alternative finance industry, with no other lender developing a bespoke platform with this level of technical capability combined with significant first party data.

The platform aggregates individual and SME financial data from over 15 sources, correlating it to sectors, asset classes and economic conditions.

Using this data, Praeview provides underwriters and decision makers with an accurate risk profile for each individual or SME that applies for finance and a bespoke score to inform the terms of each deal.

Every deal is always viewed and assessed on an individual basis and this service will not change. Instead, through the introduction of the Praeview platform, more time is now available for the credit and risk teams to assess and restructure options to better suit an SME’s particular circumstances.

Praeview is also capable of plugging into software used by banks, institutions, and brokers via the tool’s application programming interface (API), providing seamless data entry and end-to-end risk monitoring with real-time alerts.

In the initial months of testing, the platform has enabled SME clients to access funding more than four times faster, and by integrating with its broker partners, the Praetura team can offer greater oversight and certainty of funding throughout the application process.

The tech was built in-house at Praetura by the company’s head of technology Ruta Makunaite, who utilised over 25 years of SME lending data and expertise from the five Praetura lending businesses.

Peadar O’Reilly, CEO of the Praetura Lending Division and co-founder of Praetura Group, said: “At Praetura we have always taken an entrepreneurial approach to lending by putting SMEs first and making funding available quicker than other lenders. The challenge, however, is balancing this with risk assessments and the checks and balances we need to carry out.

“We’re now able to lend and make lending decisions faster than ever before thanks to Praeview. We’re aiming to create a new standard within the finance sector that will complement the essential work that banks, underwriters and brokers do. This is part of our ongoing commitment to help UK SMEs get access to the finance they need to succeed.”

Ruta Makunaite, Praetura Group’s head of technology, said: “With Praeview, our mission is to empower the people tasked with lending decisions and monitoring risk rather than replacing them, which is what the narrative around tech solutions is focused on in a lot of instances right now. Drawing on 20 years of data and our own expertise, we have created a powerful solution that will inevitably lead more SMEs to get the funding they need.”

The launch of Praeview follows considerable growth for the Praetura Group. The group now employs more than 150 people across the North West, and grew its lending division with the acquisition of Zodeq in 2022. Last year, Praetura Commercial Finance was also named as the third most active UK M&A lender on in Experian’s 2022 market report.

Specialist lender’s latest quarter results show strong performance

Together, one of the UK’s leading specialist lenders has announced its loan book has grown to £6.2 billion in its results for the quarter ending 31st March 2023.

The group, based in Cheadle, Greater Manchester, has seen an increase of 29.1% on the same period for the previous year, and up 4.6% on the previous quarter. In addition, its average monthly lending sits at £211.7m, in line with the same quarter last year.

Together’s underlying profit before tax was £41.3 million, again in line with the 2022 figures for the same period (£41.3m) and up 60.1% on the previous quarter (£25.8m), due to the impact of increased impairment provisions and one-off expenses in the prior quarter.

In March, the company also maintained leading positions in its key markets, announcing that it had completed bridging lending of £115m in March, highlighting the demand from businesses for specialist short-term finance to meet their ambitions.

Gerald Grimes, CEO Designate of Together, said: “The business delivered another strong performance in the quarter to 31 March, as we successfully grew our loan book to £6.2bn while maintaining a prudent approach to originations, conservative LTVs and consistently low headline arrears levels which are well below pre-pandemic levels.

“As the pace of interest rate rises slowed, our net interest margin recovered to 5% and the Group has remained highly profitable and cash generative.

“While the UK’s economic outlook is showing signs of improvement with inflation forecast to reduce over the next six months and interest rates to stabilise, the environment remains challenging for many households and businesses.”

This quarter, the lender published its Together Market Report 2023, exploring commercial and residential property market trends backed by its own research and industry partner contributors. It was also awarded Best Bridging Finance Provider at Moneyfacts Awards 2023.

Mr Grimes also added that Together had made good progress in “shaping its business for the future”; strengthening and diversifying its group and operational management teams, maintaining leading positions in key markets, developing talent across the organisation and delivering on its sustainability strategy.

He said “We have continued to enhance and diversify our Group Executive management team with the promotions of several Together employees to c-suite positions. In addition, we received planning permission for a sustainable scheme to connect our two offices in Cheadle, increasing space, improving facilities and utilising thermal modelling to minimise embodied carbon impact.

Mr Grimes added: “With a clear purpose, a successful track record and a proven and well-funded model, Together is well placed to help increasing numbers of customers realise their ambitions and to play our part in supporting the UK’s economic recovery.”

United Trust Bank provides funding for £24m Build to Rent scheme by Oblix Living

United Trust Bank (UTB) is providing £15.3m of funding to growing Build to Rent developer Oblix Living to complete their conversion of Saxon House in central Leicester.

Founded in 2020 by Rishi Passi and Anthony James, Oblix Living is a specialist developer, investor and operator of residential rental assets in strategically selected locations across the UK. It develops mid-sized schemes in urban areas where there is demand for well serviced rental accommodation. Its developments are service led, technology enabled and focus on young professionals seeking flexibility, security and amenities fit for modern day living.

Saxon House was built in 1993 and occupied by HMRC until 2021. It was acquired by Oblix Living in 2022 with plans to convert the 89,000 square foot, six storey former office building into ‘The Saxons’, comprising 100, 1 and 2 bedroom apartments with a gym, workspace, residents lounge and 28 resident car parking spaces.

Specialist lender, United Trust Bank, is providing the £15.3m of funding required to complete the scheme which has an estimated GDV of £24m. This is the second Oblix Living development supported by UTB which also provided £11m towards the developer’s £17.2m, 95 apartment scheme at  Iron Yard in Sheffield city centre, which is now complete and leasing up.

Rishi Passi, Chief Executive Officer of Oblix Living, commented: “We’re pleased to be working with UTB again to deliver another high quality build to rent development to meet the growing demand from young professionals for professionally managed, well designed, amentised buildings throughout the UK.

“The team at UTB have been a pleasure to work with. Their responsiveness and willingness to go above and beyond have been invaluable in ensuring that we have the financial resources needed to conitue our growth trajectory.”

Hardeep Thandi, Director – Property Development, United Trust Bank commented: “The Build to Rent sector is booming and we are delighted to be supporting another exciting scheme by Oblix Living which will bring much needed high specification rental accommodation to one of the UK’s fastest growing cities.

“Rishi, Anthony and the Oblix Living team have a huge amount of collective experience in residential and commercial development, lending and investment and at UTB we enjoy working with developers who are committed to building outstanding homes and are meticulous in their planning and delivery. Oblix Living are exactly that and I look forward to a long and fruitful partnership extending for many years to come.”

Personetics Recognised as Top Solution for Banks Serving Small Businesses

Personetics, the global leader in financial data-driven personalisation and customer engagement, is the best solution for banks to gain a competitive advantage when serving the small business (SMB) market, according to a new report from Celent, “Become a Challenger in Small Business Banking: Embedding Fintech. Celent, a leading research and advisory firm for the financial services industry, undertook this assessment because of the growing signs that financial institutions’ competitive position in SMB banking is eroding, mostly due to deposit run-offs to fintechs and shrinking shares of small business credit.

SMBs are increasingly turning to non-traditional financial institutions and banks’ competitive position is eroding, as exemplified by deposit run off to fintechs and shrinking share of small business credit.

“Banks have the power to move from being challenged to being challengers, despite competition in this space being fierce. However, most banks are missing out on the opportunity to deliver advanced solutions to SMBs that would enable them to generate new revenue streams and better serve their customers,” said David Sosna, CEO at Personetics. “SMBs are demanding much more from their banking provider – they want banks to be providers of proactive insights, more relevant guidance, and provide automation that removes friction from their finance-related tasks. Time and time again, our platform has been shown to deliver for banks exactly what they need to grow their customer base.”

Celent compared Personetics’ solutions and engagement capabilities alongside seven competitors in the space. The report says that deploying platforms such as Personetics are key to enabling banks to deliver a value proposition, making them more competitive in serving SMBs.

“Personetics has developed the most extensive customer engagement platform,” stated Alenka Grealish, Celent analyst and author of the report. “It uses real-time data in addition to batch data from different sources, and leverages AI models to create more customised and contextually relevant personalised interactions for both the SMBs customer and the banker and digital marketing teams.”

Sosna added: “Celent’s evaluation confirms our commitment to using the power of AI and predictive analytics to empower financial institutions to become leaders in SMB banking by enabling banks to provide real-time, predictive, and actionable insights and advice, personalised for each customer.”

In order to boost engagement with SMBs and create long-term relationships, it’s vital for banks to deploy new ways of adding value and support financial wellness. Personetics’ thought leadership in the world of hyper-personalised, data-driven insights enables banks to identify trends and provide SMBs with suggested actions for them to make better cash flow management decisions and ensure they are getting the best from their banking relationships.

‘What holiday?’ Small businesses working overtime during month of bank holidays

New analysis from business insurer Simply Business and Mental Health at Work has uncovered a distinct problem within the small business community that is wreaking havoc on their mental wellbeing. With a cluster of bank holidays falling in May, many feel that taking time off is not an option, and they must choose between the success of their business and the preservation of their mental health.

A survey of over 700 small business owners found that 73% of SME owners take fewer than 20 days off every year, well below the UK statutory annual leave entitlement of 28 days. They’re also working over 46 hours a week on average – 10 hours more than the average working hours clocked up by workers in the UK (36.4 hours according to ONS data).

Despite the need for a break, many small business owners feel that time off simply isn’t possible. Research from Business Advice found that SMEs could stand to lose as much as £2,163 over the course of a year if they opted to shut over the bank holiday periods – that’s almost as much as the median monthly wage in the UK.

With almost one in six (15%) believing a lack of time off is directly impacting their mental health, nine in 10 (90%) said that they believe the government is not currently doing enough to support the mental health of the self-employed. Small business owners are unable to claim the same rights as employees when it comes to statutory sick pay and holiday entitlement.

Eglel Gomaa, owner of Girasole Taste of Italy Restaurant in Seven Sisters, London said “A psychologist who works up the road from my restaurant told me that their clients come for coffee at Girasole because they see it as an oasis. I am so happy to hear that – but there is no one to offer support to me.

“I always put my customers and my team before myself, and that often means that I do not take time off. Bank holidays, though they are great for the restaurant, definitely equate to me having no time off.

“I put my hands up to anyone who starts their own business – it’s no mean feat. I will not be renewing my lease this year because I have faced such hardship, both financially and mentally. After almost 9 years in business, I will be sad to say goodbye to my beautiful restaurant, my fabulous team and my lovely customers.”

Simply Business has partnered with Mental Health at Work, a programme curated by leading mental health charity Mind, and has donated £100,000 to support the mental health of the UK’s self-employed. Alongside a breadth of resources for SME owners, creating alongside Mental Health at Work, Simply Business is also giving one small business owner the chance to win a £2,000 wellbeing package – including holiday vouchers, access to a virtual assistant, and financial and business coaching.

Bea Montoya, Chief Operating Officer at Simply Business, commented: “The worrying state of small business owners’ mental health has been laid bare in our recent research – with over half suffering from poor mental health in the last 12 months alone. During a cost of living crisis, the self-employed are working at capacity. Long hours, rare breaks and sleepless nights are leaving many on the brink of burnout.

“And the situation should concern us all. Small businesses are vital to both our economic recovery and the prosperity of our communities, and this will only compound the challenges of an increasingly economically inactive population.

“It’s critical that the real people behind the country’s SMEs are given the support they need. That’s why we’ve partnered with Mental Health at Work to raise awareness of the challenges facing this audience, and create tailored resources designed to help.”

Andrew Berrie, Head of Workplace Wellbeing at Mind, commented: “We know that small businesses and the self-employed are often overlooked when it comes to public workplace mental health initiatives. These communities face unique challenges, and the events of recent years have only made it more difficult for these small organisations and business owners to prioritise wellbeing at work.

“Results from our survey in partnership with Simply Business shine a light on how crucial it is that we act, right now, to support these groups. The results expose a mental health crisis, with over half of respondents struggling with poor mental health in the last year, many experiencing insomnia, working long hours, and very rarely taking breaks – it’s a recipe for burnout.

“Simply Business and Mental Health at Work are working together to make a real difference in addressing this issue. Together, we’re providing accessible, bespoke support for small business owners and the self-employed, to enable them to make positive changes to their mental health.”