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.

Digital banks see weak growth in 2019

The rate that customers set up accounts with digital banks such as Revolut and Monzo declined in the second half of 2019, according to a recent report by Accenture. Customer growth rates fell to 150%, down from 170% in the first half of the year, while the average account balance fell from £350 to £260. Managing Director of Accenture Strategy, Tom Merry, explains that this trend could be a result of signing up customers who are less inclined to use a start-up bank as their primary account. (From The Telegraph, 24 February 2020)

Would climate activists be better off buying BP?

Climate protests for divestment have been all over the news recently, with activists targeting companies for their fossil fuel investments. But an FT reporter (who admits to working for BP for a year when she ‘didn’t know any better’) claims that divestment might not be the answer. Her argument is that selling an asset doesn’t eradicate the problem at hand, often making the asset more affordable to a new group of investors – who may be more irresponsible and less concerned about the environment. This isn’t a new concept as divestment has been a hotly contested topic for years. The question now is whether climate activists might actually be better off buying fossil fuel investments – as ironically this could be more effective. (From FT Alphaville, 20 February 2020)

Barclays faces investigation for spying on staff

The Information Commissioner’s Office has trained its sights on Barclays’ use of software to spy on employees. The case, which is currently being reviewed by regulators, follows the bank’s decision to allow managers to track how long staff spent away from their desks. While monitoring was anonymous at the outset, an additional function was enabled earlier this month allowing managers to identify individual employees’ activity. A breach of data protection laws could prompt fines of up to 4% of its total turnover. (From The Telegraph, 21 February 2020)

IFS urges Rishi Sunak to raise taxes in the Budget

The Institute for Fiscal Studies has urged the new chancellor Rishi Sunak to raise taxes to fund the Government’s planned spending commitments. The think tank also pointed out the likely breach of election pledges to balance day-to-day spending with tax income by the middle of the current parliament. The alternative to higher taxation would be to continue extracting savings from other Whitehall departments – already drastically pruned back by austerity cuts. (From The Guardian, 26 February 2020)

RIOs on the rise

Retirement interest-only (RIO) mortgages have been made cheaper and more widely available, according to a recent analysis on ‘later life’ lending options. The mortgages were introduced in March 2018 to meet increasing demand for secured borrowing among older consumers alongside options such as equity release. Only two providers launched five RIO products by July 2018, but the latest data reveals 74 products on the market, with average rates falling. (From What Mortgage, 24 February 2020)