Capital Markets Corporate

February 7, 2020

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

The Robots Are Coming for Fund Management Jobs

The CIO of Japan’s Government Pension Investment Fund has asked Sony’s computer science lab unit to build him a cyberhound using AI to help oversee the external fund managers who manage GPIF’s $1.6 trillion in assets. The potential for using this AI is that the watchdog could catch investors who are straying from their comfort zones, help screen potential portfolio managers based on their previous track records and distinguish between luck and skill in generating returns. However, the main AI issue is the ‘black box problem’ which is where the inputs and outputs of the system may be clear, what happens in between remains opaque. For institutions such as GPIF, which have an obligation to be transparent, there is some way to go before they can solely rely on AI. Nonetheless, it is clear that robots are coming after fund management jobs. (From Bloomberg Opinion, 31 January 2020)

Will contingent charging ban limit access to advice?

The Financial Conduct Authority (FCA) has made a host of proposals in an effort to change the perception of the scandal-hit defined benefit pension transfer market. A recent study, however, suggests that the proposals are doing little to shake up opinions in the advice industry. Aegon’s Retirement Advice in the UK report, which surveyed 227 financial advisers reveals that 84% believe that the FCA’s proposal to ban contingent charging will limit access to advice – up from just 67% of advisers believing it would limit advice access. (From International Adviser, 4 February 2020)

Goldman Sachs and Amazon partner up to offer small business loans

Goldman Sachs and Amazon are expected to start offering loans to smaller businesses via Amazon’s lending platform next month. The move is a part of Goldman Sachs’ plans to expand their financial service offerings in a bid to generate more revenue, following reports that new customer ventures accounted for less than 3% of the firm’s revenue just last year.  Equally, the move would be in line with Amazon’s aim to become an infrastructure provider.. (From Financial Times, 3 February 2020)

New rules to help people with health issues get cheaper travel insurance

The Financial Conduct Authority (FCA) has introduced new measures to help consumers with pre-existing medical conditions have better access to more affordable travel insurance. Insurers will have to implement the new requirements by 5 November 2020. The rules require insurers to signpost consumers to a directory of specialist firms that will cover them if they have more serious health concerns. The FCA estimates there are up to 14.1 million consumers with a pre-existing condition who look to purchase travel insurance each year and the watchdog’s research shows that consumers with serious pre-existing medical conditions could save around 40% on travel premiums by switching to a specialist provider. (From Your Money, 5th February 2020)

FCA wants Government to ban scam ads

The Financial Conduct Authority (FCA) has said it is powerless to stop advertisements for investment scams appearing on the internet and has urged the Government to intervene. Products that could be identified as scams are often advertised via internet search engines and often appear when individuals use the term “high investment returns”. The Online Harms Bill was included in the Government’s Queen’s Speech in December. It is a joint initiative from the department of Digital, Culture, Media and Sport, and the Home Office. (From FT Adviser, 5th February)

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