Capital Markets Corporate

December 7, 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.

Challenger Challenges Interest Rates Norm

Welsh banking challenger Chetwood Financial has launched the world’s first so-called “dynamic loan”, linking interest rates to borrowers’ credit score. The loan uses technology to monitor a customer’s credit score and reduce its rate at three-month intervals as the risk of the loan improves. But as commentators noted, customers will risk a higher rate of interest if they let their credit score slip. (From City AM, 30 November 2018)

Insurers Told To Cut Carbon

With the UN climate change summit in Poland being held this week, insurers have been told in a new report that they are not doing enough to cut ties with coal-intensive businesses. Climate change lobby groups singled out the big US firms for continuing to invest in the coal industry, highlighting that coal is the single biggest source of CO2 emissions and responsible for over 800,000 premature deaths each year. European firms have already started winding down on coal – but will their US counterparts follow suit?

(From The Actuary, 2 December 2018)

Are Bank Branches Here To Stay?

TSB Chairman Richard Meddings has revealed that plans to cut some of the bank’s 550 branches have now been revised, in a move that seems to be going against the tide of other high street banks. Meddings said that the bank’s physical stores “made a real difference” to customers during its IT crisis and has vowed to keep that resource available as the bank continues on the road to recovery. Could unreliable IT systems save the local bank branch?

(From Daily Telegraph, 1 December 2018)

P2P Lending Entering The Mainstream

Peer-to-peer lender Zopa has become the first of its kind to be awarded a full UK banking licence. Since launching in 2005, Zopa has approved almost £4bn in personal loans, and the new credentials will allow Zopa to broaden its funding base with a new fixed-term savings account and its own credit card. The firm is also expected to roll out a new money management app. According to its CEO, the licence marked the “starting point for Zopa to become a major force in retail banking”. (From Finextra, 4 December 2018)

Offsetting Brexit Volatility

Most economic prognoses are bleak for the UK as Brexit debate drags on interminably. So it’s unsurprising that the demand for derivatives covering UK rates have skyrocketed. In lieu of being able to confidently predict where gilts or sterling may end up, traders are instead using futures and options to offset the potential ups or downs that might hit their portfolios, depending on what sort of Brexit deal is agreed upon. (From the Financial Times, 4 December 2018)

The Dash for Dashboards Is On

Two years after the concept of a pensions dashboard was first set out in the 2016 Budget, the Government has finally revealed its plans to introduce multiple Pensions Dashboards, with the first expected in 2019.

The Pensions Dashboard – where savers can login and see all their pensions savings together – has had already a tumultuous past. The Government’s just-issued feasibility study arrived 11 months later than its original due date of March 2018, and the lack of activity has caused many industry experts to question whether the digital innovation would ever get off the ground.

Only months ago, rumours were rife that former Secretary of State for Work and Pensions Esther McVey wanted to “kill off” the project, believing it was an unwelcome distraction to the rollout of Universal Credit.

Such fears appear to be unfounded, and some form of online portal that consolidates a saver’s pension information will come online next year.

Nevertheless, the latest announcement is not without its critics. The proposals reveal that state pension data will not be available straight away, in a move that will “seriously delay the scope for pension planning tools which look at the whole of an individual’s pension saving.”

All the same, the proposed platform can’t come too soon for some pension holders. A recent study found that one in four savers who plan to retire within the next five years have no idea the size of their pension pot.

Now that the days of a ‘job for life’ are over, leaving many to build up multiple pension pots during their lifetime, taking a whole-of-wealth approach could be vital for the pensions dashboard to succeed as an effective retirement planning tool.

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