Category: Cash Management

Consumer Credit Firms Must Raise Advertising Standards
BankingCash Management

Consumer Credit Firms Must Raise Advertising Standards, Says FCA

Credit firms need to do more to ensure their adverts and promotions do not mislead potential customers. The findings come as Financial Conduct Authority (FCA) statistics show that one in five adverts from consumer credit firms, for products including payday loans, fell short of the FCA’s financial promotion expectations – although most firms were quick to make changes once the shortcomings were pointed out.

The rules state that any advert must be clear, fair and not misleading for consumers. The FCA examined over 500 advertisements for a range of consumer credit products after assuming responsibility for the sector on 1st April 2014 and found a number of examples where key information which should have been included in the advertisement was either missing or difficult to find.

Clive Adamson, director of supervision at the FCA, said: “It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading.

“Firms have responded well when challenged about ads which have not met the standards. We will continue to work with firms and monitor their performance in this area to ensure the high standards we are looking for are met.”
The FCA found examples where consumers were encouraged to hit the “apply” button for a product before having a chance to access important information, a tactic which is against its rules.

Main Catalyst Behind People Switching Banks
BankingCash Management

Main Catalyst Behind People Switching Banks

Penney Frohling, Partner in Financial Services at EY, commenting on the Payments Council’s six-month results for the new Current Account Switch Service, says: “EY’s Global Consumer Banking Survey found fees to be the main catalyst behind people switching banks in the UK, followed distantly by the experience they had received. With customers willing to shop around to find the lowest fees and to avoid high charges and interest on their overdraft, banks need to compete on the services they are offering, and make sure that they are not being under-cut by competitors who are providing interest-free overdrafts and better rewards or loyalty packages.

“But banks can’t be complacent about customer service. The survey found a 50% increase in disgruntled customers who intend to close an account in the next 12 months. People who are left unsatisfied with how their banking problems have been dealt with are a serious retention risk.”

Omar Ali, UK banking and capital markets leader, commenting specifically on competition in UK banking, adds: “The number of people switching banks has doubled since the new legislation was introduced. More people than ever are aware they have the option to switch if they are unsatisfied with their current provider, and as awareness grows, it can only be expected that this trend will continue. However, it is not having the material impact on the market share of the top four high street banks that Government hoped for. Rather, the majority of switches are from one of the major incumbents to another.

“In order to compete effectively with existing providers, new entrant banks will either need to innovate; taking a specific area of the market and creating substantial change to the traditional model, or they will need a compelling proposition on fees and better service quality than existing providers.

“The fact that core banking services are ultimately still seen as free in the UK is also a barrier to open and fair competition between the large established players and new entrants. In most consumer markets price is one of the key drivers of effective competition. How can you compete on price when the customer thinks the service they are getting is free? Greater transparency on pricing and charges for core banking services in the UK would help to open the market up and in many cases make banking fairer for the consumer.”

Preston Joins Move Your Money
BankingCash Management

Preston Joins Move Your Money

 

The people of Preston in Lancashire are being urged by their council to join Move Your Money in a bid to create a better financial system.

Preston City Council believes that since the financial crisis people are increasingly concerned about where their money goes and how it’s used, and it wants to help. Whilst a number of councils across the UK have committed to move their money, Preston is the first council in the UK to actively encourage individuals and businesses across the city to switch banking providers.

Preston City Councillor Martyn Rawlinson Cabinet Member for Resources said: “Now, more than ever people want to know what’s happening to their money. Is it safe? Is it invested properly and in investments that not only guarantee a financial return but are ethically sound too? Is the money being used in a way that it doesn’t harm the environment or even contribute to making people ill? By taking a greater interest in what happens to our money we can make a difference, not only to our community but across the world as a whole.”

He added: “As a Council we are investing £100,000 in establishing the Guild Money Credit Union that will help people in Preston with both savings and loans. This is a great way for the Council to use its money as a positive resource to help local people. However, we recognise that the Council could do more. That’s why we are supporting this national Move Your Money campaign and also looking at our own investments. We want to see if as a Council, we can invest in a more ethical way.”

“Obviously we have to invest wisely and protect taxpayer’s money but we need to get balance right. We have to ensure we invest in the right institutions and in the right financial products that help people, not damage people or communities wherever in the world they may be.”

“It’s much easier now for people to swap banks, in fact 2.4 million people did just that last year alone. The Move Your Money campaign makes it even easier by listing the best banks for you given your financial circumstances. And, it can all be done from the comfort of your own home from the Move Your Money website. Please have a look, sign up to the campaign and let your money work for you in the way that you want it to.”

Charlotte Webster, Campaign Director, Move Your Money added: “We’re thrilled that Preston City Council is on board with the Move Your Money Campaign. It’s vital people know where their money is and what it’s being used for. As we’ve seen over the last few years many banks and financial institutions have invested our money in a way that’s more in their interests than ours. Fundamentally, this led to greater risk taking, followed by a financial crisis that has affected each and every one of us.”

She continued: “Money can be used in so many positive ways to help local people and communities across the world. The more that people take an interest the more that banks will listen and invest in a way that benefits everyone, not just the few. Our Scorecard ranks over 70 British banking options across a number of criteria including ethics and customer service, so you can see just which bank is right for you.”

Other councils across the UK that have committed to moving their money to better banks, or setting up their own, include the Greater London Authority; Lambeth; Liverpool and Brighton.

Pay-Day Loans Masking  UK’s Credit Crisis
BankingCash Management

Pay-Day Loans Masking UK’s Credit Crisis

Pay-day loan and ‘debt management’ industries could be masking the full extent of the personal debt crisis in the UK, according to top 25 accountancy firm, Wilkins Kennedy LLP.

The latest figures published today show that there were 101,049 individual insolvencies in England and Wales last year, down by 7% on 2012. This included 24,536 bankruptcies (down 22.8% on 2012), 27,546 Debt Relief Orders (DROs) (down 11.7% on 2012) and 48,967 Individual Voluntary Arrangements (IVAs) (up 4.9% on 2012).

There were 109,477 individual insolvencies in England and Wales in 2012. This included 31,756 bankruptcies, 46,694 Individual Voluntary Arrangements (IVAs), and 31,027 Debt Relief Orders (DROs).

However, Wilkins Kennedy note that the growth of the payday loans and debt management industry means that many individuals that are effectively bankrupt are not caught by these figures.

Louise Brittain, Insolvency Partner at Wilkins Kennedy says: “we know that massive and highly targeted marketing campaigns are attracting more and more individuals into using Debt Management Plans and Pay Day loans as ways to manage their debts.”

“In many cases the arrangements are rolled over from one month to the next, and because of the punitive interest or high, front-loaded fees, very little capital is repaid and the individual’s financial difficulties get worse, not better.”

“However, because these companies are not required to register their schemes, it is difficult to know exactly how big the scale of the problem really is. I am concerned that many people using Debt Management Plans and Pay Day loans will at best eventually end up formally insolvent or at worst taking desperate measures to repay their creditors.”

Wilkins Kennedy adds that this year’s bankruptcy figures are likely to be swollen by recent difficulties in the legal sector. The profession has been suffered as a result of legal aid cuts, and over 130 firms were unable to secure Professional Indemnity Insurance, without which they are unable to practice and must be dissolved.

Louise Brittain comments: “This has been a bruising year for the legal profession – with even major names like Cobbetts and Manches experiencing financial difficulty, and some smaller firms faring far worse. Problems with obtaining Professional Indemnity Insurance also put the nail in the coffin of over a hundred firms that were already struggling financially, forcing the individual partners to liquidate.”

Nick Hamilton to Join Oakley
BankingCash Management

Nick Hamilton to Join Oakley

Oakley Capital Management Limited appointed Nick Hamilton, Head of Institutional Business at Colonial First State in Sydney to work in its retail asset management business.

Prior to joining Colonial First State, Nick spent nine years as Head of Global Equity Products at Invesco Perpetual.

The appointment follows the news that Craig Newman, former Head of Sales at Invesco Perpetual has joined Oakley Capital Management as Head of Retail Asset Management.

Craig Newman said: “Nick brings a wealth of experience in growing assets, building businesses and leading teams. Nick shares our vision of building a market leading asset management business of the future.”

Oakley Capital Management is providing the infrastructure which will allow the team to manage retail and institutional clients’ money from the beginning of May 2014. This transitional arrangement will provide an environment in which the team can have the autonomy and flexibility to best serve the interests of clients’ money immediately after Neil Woodford’s employment with Invesco terminates on 29th April 2014.

Exact details about the firm and its offerings will follow in due course, but Neil Woodford’s unconstrained, fundamental and disciplined approach to investing will remain the same.