Capital Markets Corporate

October 16, 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.

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The race to be the next Hargreaves Lansdown
A rising number of investment managers, such as Schroders, Standard Life Aberdeen and M&G, are targeting wealthy clients directly, according to reports. With the aim of reviving revenues, fund groups are increasingly competing with their distributors, becoming wealth manager themselves in order to control the entire value chain. It is added that while the revenue of traditional stock-picking groups have been hit by fee pressure – with investors opting for cheaper passive funds – wealth managers’ businesses have been more resilient, with revenue margins approximately 30% higher than those of asset managers. (From Financial Times, 11 October 2020)

Top asset owners commit to big carbon emissions cuts
Members of the Net-Zero Asset Owner Alliance, including thirty of the world’s largest asset owners with portfolios worth a combined £3.8trn, have pledged to cut carbon emissions linked to companies they invest in by up to 29% within the next four years. Aviva, the Church of England and Axa – among others – will be identifying the top 20 emitters in their portfolios, primarily focusing on reducing emissions in key sectors including oil, gas and utilities. It is highlighted that the move forms part of the group’s wider efforts to align their portfolios with the Paris climate goals and achieve net-zero emissions by 2050. (From The Guardian, 13 October 2020)

Unemployment rate hits highest level in three years
As the Covid-19 crisis continues, the Office for National Statistics (ONS) reports that the UK unemployment rate has surged to its highest level in more than three years. The rate grew to 4.5% in the three months to August, compared with 4.1% in the previous quarter, with 1.5 million people unemployed. In addition, redundancies rose to their highest level since 2009, with the number standing at 227,000 between June and August. (From BBC News, 13 October 2020)

Help to Buy homeowners caught in re-mortgage snare
Homeowners who took out an equity loan through the Government’s Help to Buy scheme are being saddled with costly debt due to a contraction in products in the high loan-to-value segment of the mortgage market. Tens of thousands of homeowners have encountered a problem when attempting to take out a new mortgage when their existing deal ends. Lenders are refusing to allow borrowers to take another 75% mortgage, due in part to borrowers’ commitment to repay the Government’s original equity loan and attempts by lenders to reduce their exposure to riskier borrowers. As a result, people who purchased a property through the scheme are facing higher interest repayments to their existing mortgage provider and on the Government-backed loan. (From The Times, 9 October 2020)

Suspected scam DB transfers rise to record level
The proportion of suspected scam defined benefit (DB) pension transfers reached a record 62% in September, up 11% from August. The rise in scams has been partly driven by rogue advisers attempting to exploit consumers seeking to access their pension wealth in response to intense financial strain caused by the coronavirus pandemic. Proposed amendments to the Pension Scheme Bill may reduce the high proportion of inappropriate DB transfers by granting trustees the power to block a proposed transfer if it shows signs of being a scam. (From Money Marketing, 14 October 2020)

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