Capital Markets Corporate

November 9, 2018

Our Weekly Newsletter


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.

Gender Pay Gap Reporting Pays Off

Earlier this year, new legislation forcing companies with over 250 employees to publish their gender pay gap came into force, and it seems to have had its intended effect. A study by Leathwaite has found that over the past six month, Britain’s overall gender pay gap has almost halved from 21.5% to 12.5%. (From The Times, 5 November 2018)

Marcus of Success

Marcus, the retail arm of Goldman Sachs, which made headlines last month when it introduced its savings account with a competitive 1.5% savings rate in the UK, has signed up 100,000 customers in its first month of operations. Plans to launch a cash ISA and wealth management service are now also under way. (From This is Money, 5 November 2018)

Re-clarifying Active Investing

The FCA’s CEO spoke at an Investment Association conference this week hinting that a ‘re-clarification’ of active investing is on its way. He said that the rise in interest in ethical, sustainable and governance (ESG) products will lead to a deep change in what is considered active investing. (From FT Adviser, 7 November 2018)

Critics Hit Out At Rising Female Retirement Age

The state pension age for women will rise to 65 next week, to match men’s for the first time. The milestone has prompted warnings from campaigners that the pace of equalisation has left some female retirees potentially facing pensioner poverty. It will be important for regulators and financial services firms to navigate the new environment carefully. (From The Guardian, 6 November 2018)

 Investment Sector Stock Shock

Fund managers are reportedly having an incredibly rocky 2018, with many highlighting that we are on course to have the worst year for investing since the financial crisis. However, in almost all cases, asset managers with the biggest share price falls this year performed strongly in 2017, reflecting a heavy market correction. (From Financial Times, 3 November 2018)

Will we soon see ‘Financial Flipper’ services?

A new raft of start-up companies are now offering to switch consumers’ electricity and gas suppliers automatically in what could be the next step in energy switching. As technology makes it easier to seek out the best deal for consumers, could we see similar enterprises develop for financial products?

Last month saw the arrival of some more “flipping” companies including a small startup called Migrate, joining SwitchCraft, Flipper and Labrador in a growing subsector of services that automatically move people from uncompetitive energy deals.

These new services argue that traditional price comparison sites do not work for consumers because switching supplier is too much hassle and that the short-term savings eventually come to an end. (Interestingly, October also saw the launch of Weflip, the first flipping service from a major price comparison site, GoCompare.)

These flippers were heralded by Frank Field, the chair of the Work and Pensions Select Committee. He noted that: “There is an army of loyal consumers in Britain who, for one reason or another, simply do not have the time or resources to shop around for the cheapest deals.”

So if the technology and appetite is here for energy flippers, how soon until we see the first banking, insurance or even mortgage flippers emerge?

When it comes to bank accounts, consumer champions such as Martin Lewis are loud advocates of switching and often highlight the financial benefits of moving to a new bank. Banks are also unsurprisingly keen to encourage switching, with handsome rewards for those who take the time to make a move. There are a number of services out there to help consumers switch to a new provider. Most are run by bank account providers themselves, but last year the non-profit group behind Direct Debit, Bacs, ran a national campaign offering people the chance to proactively move their banking services.

Savings is on the switch too. A number of retail “savings platforms” are on the market that allow seamless movement of savings across providers.

But what about auto-switching? Could that ever be a reality? The creators of Switchcraft see potential in anything where consumers “buy household services on a repeat basis.” And a recent start-up called Bean offered users the ability to scan their outgoings and automatically highlight cheaper deals for them, including their general insurance products.

In fact, many experts think that price comparison websites will soon lead the way on auto-switching – including for some financial products.

Consumer groups would likely see the benefit. A recent super complaint by Citizen’s Advice found that UK consumers were losing out on billions by staying with their service providers. Also, the FCA has recently warned against insurance providers offering less competitive rates to long-term customers. The regulator is now investigating pricing in car and home insurance “price walking”, where rates automatically rise each year. Also, just this week, the FCA was critical of the mortgage industry after noting that a quarter of borrowers do not seek a new deal for six months or more after going onto their lender’s costlier reversion rate.

It’s likely that as more pressure is put on financial services to address loyalty bias and “price walking”, more solutions will be created that allow consumers easier access to new products on a regular basis. The challenge will be to avoid a ‘race to the bottom’ on price, but if the tech is smart enough, we may be on the verge of a retail finance revolution.

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