ASA bans BNPL Instagram adverts

The Advertising Standards Authority has banned four Instagram adverts issued by one of the largest firms in the ‘buy now pay later’ credit market. The advertisements must not be used again in the same form, and the firm has also been issued with an instruction not to issue any marketing material in future which makes the suggestion that using their credit product could improve the consumer’s mood.


29 million are not comfortable opening up about their money worries

Research issued by the Money and Pensions Service during its annual Talk Money Week reveals that 55% of UK adults are not comfortable talking about their money worries. This was the central finding of a survey of 5,225 people conducted by Opinium on behalf of MAPS, and when extrapolated across the entire adult population, it suggests that some 29 million people are uncomfortable in opening up about personal financial issues.

This is despite the survey also finding that the UK adult population in general has not inconsiderable financial concerns. 48% of respondents – equivalent to around 27 million people – said they had worried about money at least once a week in the month prior to being surveyed, while 16% said they worried about money every day. In the 18-24 age group, the proportion who said they were worried on at least a weekly basis was much higher, at 71%.

When asked to give an overall assessment of whether they were worried about their current financial situation, 35% of respondents said they were concerned. This rose to 45% amongst BAME groups.

60% said that Covid-19 had increased their financial worries, but only 11% of respondents said they had opened up about Covid-related money concerns to family or friends.

The most common reasons respondents gave for wishing to keep their financial concerns to themselves were:

  • Shame / embarrassment (18%)
  • Not wanting to burden others (18%)
  • Saying they weren’t brought up that way (15%)
  • Saying it would cause additional stress or anxiety if they did so (15%)
  • Thinking they should be more successful than they are (13%)

Amongst the 18-24 age group, the ‘shame/embarrassment’ factor was cited by 26%.

Sir Hector Sants, Chair of MAPS, said:

“This year has shone a spotlight on the fundamental links between physical, mental and financial wellbeing. Yet shame and embarrassment about our financial circumstances continues to be a deep-seated barrier keeping many people from openly discussing their concerns and fears about their money. A good start is for everyone to recognise this issue and ensure there are safe spaces for people to open up about their concerns.”

Sarah Porretta, Strategy and Insights Director at MAPS, said:

“The pandemic continues to make the world an uncertain place. It is clear that the impact on people’s financial wellbeing is acute, particularly for young adults and Black, Asian and Minority Ethnic (BAME) communities.

“We know that talking about money – and money worries in particular – can be hard and there are lots of reasons why people find it difficult to reach out and ask for help, and feelings of shame about money can be more common in certain communities. It’s essential to remember that you are not alone; many others are in the same boat or have experienced money worries in the past themselves. Speaking to someone, whether a family member, friend or professional, can help break the money-worry cycle, which can occur when people are concerned about having money conversations, often feeling worse for bottling up their money worries.”

Scott Robert are compliance consultants delivering solutions to regulated businesses.


Over 55s Vulnerable Making Financial Decisions

Large numbers of over 55s feel vulnerable when making financial decisions, but many say they welcome the support of an adviser 

Research by equity release lender More2Life has revealed that many older people feel uncomfortable making financial decisions. However, the study also shows that many over 55s very much welcome the support of a financial adviser.

Research agency Opinionmatters surveyed 1,400 homeowners aged 55 and over on behalf of the lender, and 30% of respondents said they felt “vulnerable” to some extent when making a financial decision. 32% of women and 28% of men said they felt vulnerable.

40% of those surveyed agreed that vulnerabilities increased with age.

When the homeowners were asked how they would react if their adviser offered them support, with the adviser having assumed that they were vulnerable before doing so, 74% of respondents said they would be comfortable with this. However, 8% went as far as to say that they would be upset that their adviser had assumed they were vulnerable when they were not.

Some of the 74% who said they were comfortable with being offered support also gave some caveats to their response, with 37% of this 74% saying they would question their adviser as to why they believed support was required, and 21% of the 74% saying that they would only welcome the adviser’s assistance if it didn’t slow down the application process.

The survey also sought the views of around 600 equity release advisers. 82% of the advisers who responded agreed with the FCA’s plans to introduce a duty of care for firms to protect the interests of vulnerable individuals. 81% called on the regulator to provide more resources to assist them in identifying vulnerable clients and in responding to their needs.

84% of the advisers said identifying vulnerable clients was one of their biggest priorities and 94% said it was very important to have an understanding of issues surrounding vulnerability. However, only 12% of adviser respondents believed it was easy to identify these clients.
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Those surveyed were equity release advisers, so it isn’t surprising that 52% said their clients were of “advanced age”. 42% said they had clients with significant financial worries, while 37% said that their clients had experienced life-changing events which had contributed to their vulnerability.

64% of the advisers reported that their clients were keen to have family members accompanying them to assist with the advice process. This represents a significant increase from the equivalent figure of 36% in the 2018 survey – it was 48% in 2019.

Dave Harris, CEO of More2Life, commented:

“Vulnerability is a tricky topic for advisers and lenders as while we are committed to supporting people who need additional help, clients may very well not identify themselves as being vulnerable. So the challenge becomes helping them make the right financial choices for both the short and the long term while at the same time encouraging them to realise they may be vulnerable and that this is entirely okay.

“Today’s research suggests that three-quarters of older homeowners would welcome support if they were vulnerable which should act as a reassurance to advisers as they have these conversations with their clients.  That said, there is still a disconnect between believing that vulnerable people need more support and being vulnerable themselves, so advisers are keen for more resources and tools to help with these tricky conversations.”

Scott Robert are expert compliance consultants delivering solutions to your regulated business.


Mortgage approvals at highest levels since 2007

The Bank of England’s monthly money and credit statistics report shows that the number of mortgages approved for UK house purchases in October 2020 was 97,400, which is the highest monthly figure since September 2007.

The total number represents a rise of 6% from the 92,100 approvals reported in September. Approvals have also risen more than tenfold since the low point of 9,400 in May 2020 at the peak of the Covid-19 first wave, but approvals are also 33% higher than in February 2020, which was before the effects of the pandemic began to be felt.

Approvals for re-mortgages with new lenders remain below the levels seen prior to the pandemic. The total number of re-mortgage approvals in October was 9,400, which was similar to September’s figure, and this figure is around 40% lower than the volumes of re-lending seen in February 2020.

Net mortgage borrowing for October was £4.3 billion, which was actually lower than September’s figure of £4.9 billion. The lowest monthly figure seen here this year was £200 million, which occurred in April, and net monthly borrowing has now recovered to pre-Covid levels when you consider that average net monthly borrowing in the six months to February 2020 was £3.9 billion.

Effective interest rates on new mortgages taken out in October were 1.78%, an increase of 0.04% from the previous month. These rates are still slightly below the 1.85% seen in January of this year. Effective interest rates on all mortgages currently stand at 2.12%, and this figure is little changed since September.

The data also shows that the consumer credit market remains weak, with many consumers continuing to prioritise paying down debt – total net repayments on consumer credit debts were £600 million in October, including net repayments of £400 million on credit cards. UK households have repaid £15.6 billion of debt since March of this year.

The annual growth rate for the credit market is now minus 5.6%, which is the lowest recorded figure since records for this started to be kept in 1994.

Effective rates on new personal loans averaged 5.15%, which is an increase of 37 basis points when compared to September but is still somewhat lower than the 7% figure reported in the early months of the year.

Aneesh Varma, founder and chief executive at Aire, which provides credit assessment services, commented:

“Levels of consumer borrowing on credit cards have fallen by almost a fifth since before the pandemic. Lenders might reasonably expect these levels to tick up again during November and December as people put Christmas on credit.

“The fundamental challenge for lenders is that the impact of Covid-19 is not equal. Some people with spotless credit histories and healthy savings going into the pandemic are now defaulting on their credit commitments through no fault of their own, while others have more disposable income now.”

Scott Robert assist businesses in all areas of FCA Regulation from attaining FCA Authorisation to SMCR assistance.


Financial Advisor Face to Face Meetings

For many financial advisers, conducting face-to-face meetings has been a crucial part of their service. It also goes without saying that these meetings have all but ceased in 2020, but new research suggests that Covid-19 will deliver long-term changes to the way many advisers service their clients.

In a survey by asset manager Schroders, advisers were asked how they would conduct their client meetings if life was able to return to normal in 2021. Only 6% of respondents said they would conduct all of their meetings face-to-face in these circumstances, with a clear majority (60%) saying they would be likely to have an even balance of face-to-face and virtual meetings.

When asked to name their three biggest areas of concern, 84% of the advisers surveyed mentioned regulatory issues. 46% listed professional indemnity insurance and 45% mentioned finding new clients.

78% viewed the impact of wealth transfer between generations as an opportunity for their business. However, only 21% said they had a defined strategy for targeting younger customers.

71% of respondents said they expected little change in UK base interest rates.

As many as 74% of respondents said they now considered ESG (Environmental, Social and Governance) issues in their fund selection process, representing a significant rise from the 43% figure in the 2019 survey. 52% think that coronavirus will change client attitudes to sustainable investing.

The survey found that, over the last 12 months, advisers have become more likely to recommend that their clients invest in developed international equities, emerging markets and alternative investments. They are now less likely to recommend UK equities, government bonds and corporate bonds.

The Schroders UK Financial Adviser Survey was conducted in early November 2020 and was completed by 125 financial advisers.

Gillian Hepburn, Intermediary Solutions Director at Schroders, commented on the intergenerational challenge issues by saying:

“Despite financial advisers continuing to agree that wealth transfer is a significant opportunity, the average age of clients remains high. The requirement minimum levels of investment are also increasing with very few advisers delivering a proposition for younger investors.

“At a time when financial advisers are reporting that finding new clients is one of their main challenges and with Covid-19 contributing to this, potentially some of these new clients are already within the next generation of their existing client bank. Perhaps of greater concern should be divorced or widowed clients where less than 10% of advisers have a differentiated proposition and there is the potential to lose assets as significant numbers of these women change their adviser at the points of wealth transfer.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed by Scott Robert and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article


Survey shows millions are keeping money secrets from their partner

A new survey has revealed that 40% of UK adults are keeping secrets from loved ones about products such as credit cards, loans and savings. People are actually most likely to keep their financial affairs secret from their partner, who might have been thought of as the person closest to them.

The survey suggests that, in total, 21 million financial products are being kept secret.

59% of the millennial generation, defined here as those in the 25-34 age group, admitted to keeping a financial matter secret. Just 26% of over 65s said they were keeping a similar secret.

Perhaps unsurprisingly, people were most likely to want to keep their debts secret. Across all age groups, 37% said they had concealed the existence of credit cards and 23% had not admitted to having a personal loan. Where millennials said that they were keeping financial secrets, 40% said they were not disclosing that they had a credit card, 31% were not mentioning a personal loan and 23% were hiding an overdraft.

Partners generally underestimate the extent to which they are being kept in the dark. 45% of the respondents who were in a relationship had an undisclosed financial product, but only 23% of people in relationships suspected their partner was keeping a secret.

Around 30% of those in relationships said their partner was unaware how much they earned.

However, a number of survey respondents also said that opening up to their partner about their financial worries had been of benefit, as they had then been able to work together to find mutually agreeable solutions.

5,225 UK adults were surveyed by research agency Opinium during October 2020. The survey was carried out on behalf of the Money and Pensions Service for its annual Talk Money Week. This ran from November 9 to 13 and is an initiative designed to get consumers having conversations about financial issues.

Sarah Porretta, Strategy and Insights Director at the Money and Pensions Service said:

“We know there are numerous reasons why people keep money secrets from those closest to them; a secret savings account could act as a buffer for those who want to escape a difficult relationship; an unpaid bill could be kept under wraps in order to protect anxious family members. For many who keep money secrets, it can be a feeling of shame or embarrassment that debts have spiralled out of control.

“Yet we also know that many people will be struggling with money worries due to the financial impact of Covid-19, so if you feel this is getting on top of you, having a conversation with someone – a friend, family member or expert – can bring a different perspective and allow you to feel more in control as a result. Opening up is a valuable start to making problems more manageable, for the benefit of our health, relationships and overall wellbeing.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed by Scott Robert and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article


Academics propose strategies to help mortgage prisoners

The London School of Economics has called for additional steps to be taken to assist mortgage prisoners. These are borrowers who might have mortgages with lenders who are no longer active, such as Northern Rock and Bradford & Bingley, and where the mortgage books have been sold to investors rather than to active lenders. The borrowers could theoretically re-mortgage to active lenders but have been unable to do so as they wouldn’t satisfy the stringent affordability tests that now apply, even though the monthly repayments might be lower than what they are currently paying. 

The LSE is now calling on the Government to step in and help an estimated 250,000 people who are affected by this issue. It says mortgage prisoners are 40% more likely than other mortgage borrowers to default on payments as a result of Covid-19 issues. 

The LSE report makes six recommendations: 

  1. Allow borrowers to access government-backed equity loans. Some mortgage prisoners are unable to access new deals as they do not have sufficient equity in their homes 
  2. Allow for the decoupling of products such as Northern Rock’s Together loan, which allowed people to borrow more than the value of their property. They might for example have received a mortgage for 95% of the value and an unsecured loan, with the same interest rate and term, for another 30%.  The two elements are contractually linked, so borrowers can’t re-mortgage the secured element without triggering a large rate rise on the unsecured element. LSE suggests Government equity loans could be used to repay the unsecured element 
  3. The investors who have bought some of these mortgages could be encouraged to write off parts of the loans, with government incentives to do so 
  4. If the mortgages are genuinely financially unsustainable, the borrowers could sell the property to a housing association and be allowed to remain as tenants. They could have the option to buy their homes back in future if their circumstances improved 
  5. The Financial Conduct Authority should regulate all closed book mortgage owners 
  6. The Standard Variable Rate on closed book mortgages could be capped 

Kath Scanlon, Distinguished Policy Fellow at LSE London, said:  

“The Government took measures after the global financial crisis to make mortgage lending less risky, but these policies also contributed to locking some borrowers in to their existing lenders. The situation has caused real harm for many affected borrowers, yet UKAR and FCA policies to address the problem help only a small minority. And now coronavirus is making the situation much worse. 

“Our research aimed to understand the range of circumstances facing mortgage prisoners and identify solutions so more of them can reduce their payments and/or restructure their mortgage arrangements and keep their home, and we found a strong case for fully investigating a wider variety of solutions. We hope our work contributes to a long-lasting solution for these borrowers.” 

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed by Scott Robert and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article


Guarantor Loan Complaints Increase

FOS quarterly data shows a fourfold rise in guarantor loan complaints since the previous quarter – FOS also publishes its annual report

The Financial Ombudsman Service received 68,735 new complaints in the second quarter of its financial year, which covers the period from July 1 to September 30 2020. This figure is 19% higher than the figure for the first quarter of 2020/21 (April to June) and 20% higher than for the same period in 2019/20.

Payment protection insurance remains the most complained about product, but with 12,742 complaints, volumes here have reduced to just 19% of the total.

Compared to the first quarter, guarantor loan complaints rose massively. Complaints about this product are up by 298%, i.e. by a factor of almost four, to 4,191. Home credit complaints were 144% higher than in Q1, at 3,199. Credit card complaints were up by 26% to 3,828.

Travel insurance complaints have risen by a factor of 2.5 over the quarter, an increase that FOS attributes directly to Covid-19 and the number of cancelled holidays.

32% of all the complaints closed by FOS during the second quarter were upheld, and this rises to 41% when PPI is excluded. Both of these figures are similar to those seen in the first quarter.

The highest uphold rate for any individual product was 88% for guarantor loans. The uphold rate for home credit was also very high, at 72%.

Q2 also saw FOS receive 278 complaints about claims management companies, with 186 (67%) of these complaints relating to PPI claims. The 278 figure represents a 13% increase on the equivalent figure from Q1. 38% of all CMC complaints in Q2 were upheld, and this figure was 34% when only PPI complaints are considered.

FOS has also published its annual report for 2019/20. This is not the same as the annual review, which contains detailed information on the numbers of complaints received and numbers of complaints closed during the last full financial year.

The annual report shows that FOS received considerably fewer complaints during the last financial year than it had budgeted for – 273,026 against 460,000. PPI complaint volumes, in particular, were less than half of expected levels.

FOS resolved 296,712 complaints in 2019/20, 23,686 more than the number of new cases, so it made limited progress in clearing its backlog. Only 23% of complaints were resolved within 45 days. FOS had a target for the year of resolving 95% of its longest running cases – those which would have been with FOS for at least 12 months by March 31 2020 – but was only able to achieve a score of 90% here.

In 2020/21, FOS predicts it will receive 245,000 complaints, of which 100,000 will concern PPI. It expects to resolve 305,000 complaints, including 140,000 PPI cases.

It expects to raise 70% of its income via case fees and 30% via the general levy. Firms will continue to receive 25 free cases per year before paying a case fee of £650 per case.

The report also contains a timely warning for CMCs about the conduct standards FOS has seen from them:

“CMCs’ behaviour has caused operational difficulties and delays in some cases, with some complaints poorly-administered and evidenced. We continued to flag these shortcomings to the CMCs’ regulator, which from 1 April 2019 has been the FCA.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article

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