Capital Markets Corporate

August 30, 2019

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.

Demand for Pension Freedoms Intensifies
The demand for pension freedoms is likely to intensify as figures from the ONS show nearly one million people will reach the age of 55 next year. More than £28bn has already been withdrawn from schemes since pension freedom rules were introduced in 2015, with retirees no longer having to purchase an annuity to access their pension income. The impending increase in 55-year olds suggests more jobs for older workers will also be needed to help fund retirement plans. (From FT Adviser, 27 August 2019)

Slow Road to Gender Equality
Progress towards gender equality and women’s representation in financial services remains slow, despite strides by policymakers and some companies to address this issue. Though there have been recent initiatives to add more women to companies’ boards, lower pay and inflexible working hours mean many of those working in front-office roles still leave before reaching the top positions within their companies. A report presented to Parliament last November indicates there are still significant pay gaps between men and women working in insurance, accountancy, banking and asset management firms, reaching levels of up to 60%. (From Financial Times, 24 August 2019)

No Rest for the Debt-Ridden
Figures compiled by Moneyfacts show that interest-free periods best-buy balance transfer credit cards have shortened by nearly 20% in a year, leaving those looking to repay debts with more limited choice. The average free borrowing period among the top 12 best-buys has also taken a hit, falling to 23 months compared to 28 months a year ago. The changes come as the financial regulator looks to crack down spiralling debts. (From This is Money, 25 August)

Dollar Dethroned by Digital Currency?
The dollar’s position as the world’s reserve currency has been challenged by Bank of England governor Mark Carney, who suggests it could be replaced by a global digital alternative to counter the effects of dollar stockpiling. Carney believes the dollar has reached a level of dominance that makes it a barrier to a sustainable recovery, and that a new digital currency could prove to a viable solution. (From The Guardian, 23 August 2019)

First-time Buyers Encouraged to Remain Local
Plans reportedly being considered by ministers could see first-time buyers get a discount of up to 20% on new developments should they choose to continue living in the town they grew up in. This comes after Boris Johnson’s renewed focus on helping young people to get on the housing ladder, with Robert Jenrick, the housing secretary, stressing the importance of allowing young people to remain in their local communities. It is suggested that the cost would be borne by developers. (From The Times, August 28)

Shining a light on economic abuse

Lloyds Banking Group has become the latest high street banking institution to acknowledge and act against economic abuse: a form of domestic abuse whereby sufferers’ finances are controlled, exploited or sabotaged by a partner. With one in five people in the UK experiencing financial abuse in a relationship – and 60% of these being women – financial providers are increasingly accepting responsibility for protecting customers against this form of abuse. But is enough being done?

In early 2019, the Government shared a ‘landmark’ Domestic Abuse Bill, which went on to receive its first House of Commons hearing in July. The Bill stands out from previous similar legislation as it contains the first ever statutory government definition of domestic abuse to specifically include economic abuse.

The UK’s financial services industry has been slightly quicker off the mark in tackling this form of abuse. In 2018 UK Finance, the trade body for the UK banking and financial services sector, set up its own Financial Abuse Code of Practice, designed to raise awareness within banking institutions so staff know what financial abuse looks like, are trained to provide support to customers and have systems in place to help sufferers regain control of their finances. Almost 20 organisations have now publicly committed to implementing the code.

One such organisations is Lloyds, which this week announced it would launch a specialist economic abuse support team which can provide financial guidance as well as directing customers to specialist charities for emotional and practical support.

Lloyds follows in the footsteps of HSBC, which has introduced a raft of measures to protect economic abuse victims. These include allowing victims to use an untraceable sort code so their location cannot be discovered by their abuser if personal items like a bank card or account statements are taken from them. Customers can also separate joint accounts and remove additional cardholders to prevent further abuse, as well as use a letter from a recognised charity or victim support organisation as proof of identification and verification of address.

These practical steps are vital if victims are to distance themselves from their abusers and ever regain financial control. As one case study in the Guardian details, too often victims find their finances are still being manipulated and damaged many years after they have summoned the courage to leave their abuser.

Giving banking staff the skills to spot financial abuse can also provide a valuable lifeline for those who are too afraid to tell anyone what is happening; particularly important when a third of financial abuse victims suffer in silence.

Amidst the chaos of Brexit, the future of the Government’s Domestic Abuse Bill remains uncertain and is currently sitting in limbo within the Parliamentary process. This perhaps puts even more onus on the financial services industry to do all it can to assist economic abuse victims.

While positive action is clearly being taken, the industry has more to give. Not all banking institutions have yet committed to the UK Finance code, and appropriate measures must be rolled out effectivity across the entire industry for all customers to benefit.

From a communications perspective, many victims will not be able to take advantage of anti-abuse measures if they do not know they exist – so it is vital these services are made highly visible through concerted communications campaigns, appropriate training of staff and working in conjunction with relevant charities.

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