Tag: personal finance

Community Access to Cash pilot schemes are under way

Nine communities across the UK are taking part in a trial to help address the challenge of improving access to cash. Two – Cambuslang and Denny – are in central Scotland.

The Community Access to Cash Pilot (CACP) initiative chose the communities based on the location, the issues the communities faced, and the local people willing to lead the pilots.

Each community will trial a number of different solutions, based on meeting the needs of local communities. These include:

  • Three new local ‘banking hubs’ in dedicated retail spaces on the high street, which combine the cash-transaction facilities of a Post Office with access to community banking services offered by the key retail banks, allowing the privacy and security people expect in a bank branch
  • Speedy and automated local cash deposit facilities for small businesses, so that retailers don’t have to close to travel to a nearby town bank branch to deposit their takings
  • Existing Post Office branches restructured and refurbished with cash services streamlined to make it easier for local residents and businesses to withdraw and deposit cash quickly and safely.
  • Pop-up Post Office services, allowing small communities to access basic banking services over a Post Office counter within an existing small shop
  • Widespread ‘cashback’ from local stores, restaurants and pubs – as well as from PayPoint counters, and new app-based digital services – to widen the options for people to get cash locally, and to help business reduce their own costs of depositing cash
  • New, free to use ATMs
  • Digital education services to help those who want to access digital banking services

The original plan was for each pilot community to start implementing their solutions over the remainder of 2020, with the aim that they are all fully operational by the end of 2020. The pilots were to operate for the first six months of the 2021, reporting back their findings in the summer of 2021. However the timetable has been revised due to the Covid pandemic.

The pilots operate in a wider context of a UK-wide cash infrastructure under threat, millions dependent on cash, and a government commitment to legislate to protect cash access. The aim of these pilots is to trial solutions which could have wider applicability across the UK.

CACP is chaired by Natalie Ceeney CBE, the author of the Access to Cash Review and brings together the resources and expertise of the financial services industry (including all of the major retail banks) with those of the Access to Review panel.

The team is also working closely with a wide range of local and national consumer groups and charities to bring in depth expertise to help support the work.

Speaking when the initaitve was launched last year, Natalie Ceeney, Chair, Community Access to Cash Pilot, said: “Cash remains critically important to both individuals and communities across the UK. The rapid switch to digital is threatening the viability of today’s cash infrastructure.

“This can lead to consumers left without cash access or forced to leave their own village or town to get cash elsewhere, often at significant inconvenience and cost. In turn, local retailers lose custom, as consumers spend their cash elsewhere, and then struggle to bank their cash takings without shutting up shop to drive to a bank branch some miles away, losing revenue and frustrating customers. It’s critical that we find ways to protect the viability of cash, for consumers and communities alike.

“These pilots are designed to find sustainable ways to keep cash viable locally, which, if successful, can then be rolled out more widely. The government has already committed to legislate to protect cash, and the financial services regulators are working closely with banks to identify practical next steps. Our aim is to use the pilots to critically inform this work.

“The work we’ve done with local communities has shown us in some detail what is needed. It’s clear that to keep communities viable, people need to be able to get cash easily, in a variety of ways. ATMs are important, but don’t meet everyone’s needs, particularly the most vulnerable, so being able to get cash over a counter, in a safe space, is still important to many. Small businesses equally need to be able to deposit cash, and locally, so that they don’t need to close their shop to bank their cash.

“These pilots will use innovative technology to help people access and deposit cash. The pilots will also work with key existing service providers to explore how they can support the cash infrastructure, by creating local drop in spaces for community banking, retailers offering cashback widely and Post Offices enhancing their services to create a new model of ‘Post Office Banking Hubs’.

“The commitment of the major banks, the Post Office, LINK and key consumer groups to all work together on this initiative gives us confidence that we can create solutions which keep cash viable in a sustainable way.”

Nick Read, Chief Executive, Post Office: “Our branches provide critical cash deposit and withdrawals services for millions of personal and business customers every week. We will use these pilots to trial new designs in selected branches; and introduce automated cash deposit facilities for business and personal customers who may have previously used this service at a bank branch.

“Everyone should have the right to use cash and be able to easily and securely access it wherever is most convenient to them. We are pleased to be playing a key role in these pilots and our Postmasters who are taking part will be in a position to share important insights that will make a real difference as to how we continue to best meet peoples’ cash needs in future.”

Alison Rose, CEO, NatWest: “We know that cash is an important part of the way that many communities across the UK bank with us, which is why we have worked with the industry to help create this pilot programme.

“The lessons we learn from working with communities to develop innovative solutions are really important as we continue to invest in sustaining access to cash and financial capability.”

John Glen MP, Economic Secretary to the Treasury and City Minister: “Cash remains important to the daily lives of millions of people across the UK, and protecting access to it is a key Government priority.

“I welcome the Community Access to Cash Pilot Initiative, which will test innovative new approaches to support access to cash in local communities that can be extended across the UK. Thank you to Natalie Ceeney and all industry participants for their important work to ensure we support consumers and businesses who continue to need to use cash.”

Two of the nine locations are in Scotland:

Cambuslang:

Cambuslang is a town of c.28,600 people, the third largest town in South Lanarkshire, but since 2018 has been unbanked following the closures of branches by three banks in quick succession.

According to the latest version of the Scottish Index of Multiple Deprivation (SIMD), some 40% of areas (data zones) in Cambuslang East and 25% in Cambuslang West are in the bottom 20% of the SIMD.

The Cambuslang community are keen to address two key issues, first, supporting financially vulnerable customers in accessing cash, and second, supporting small businesses to be able to access and bank cash.

The local leaders of this pilot, Cambuslang Community Council, are passionate about the opportunity to support their community though better access to cash, education and, ultimately, influencing the coming legislation change.  

The Cambuslang community will be piloting:

  • A Post Office Banking Hub in an empty retail outlet, with the Post Office offering transactional services in a private environment, with community banking support from the major banks, debt advice, and support for financial issues
  • A ‘Drop and Go’ cash deposit facility for small businesses in the Banking Hub to make it easier for local businesses to bank cash, whichever bank they are with
  • Cashback with purchase offered by a large number of local stores
  • Cashback without purchase offered by PayPoint convenience stores
  • Widespread advertisement of what the banks can offer vulnerable customers
  • Digital education services to help those who want to access digital banking services, designed for the Cambuslang community
  • A Vulnerable Customer Directory – ensuring that everyone is aware of the services that the retail banks can offer to vulnerable customers 

Denny (Falkirk): 

Denny is a small town located between Edinburgh and Glasgow, with a population of circa 8,000, and with 16% of the population over 65 years old. They are a semi-urban location that has seen a reduction in their access to cash facilities.

They are looking to improve the cash deposit and withdrawal facilities for both small local retailers and consumers, and also want to support their community to be able to budget and access cash digitally.

The Denny community will be piloting:

  • Cashback with purchase offered by a large number of local stores
  • A refreshed Post Office with improved cash facilities which can better meet community needs
  • Cashback without purchase offered by PayPoint convenience stores
  • Digital education services to help those who want to access digital banking services
  • A Vulnerable Customer Directory – offering support to those who need it
  • A digital solution to coin recycling supported by Shrap – an innovative new service which allows consumers to store change on a card or app, saving retailers from managing small change  
  • A Vulnerable Customer Directory – ensuring that everyone is aware of the services that the retail banks can offer to vulnerable customers

Gareth Shaw, Which? Head of Money, said: “These initiatives could have a really positive impact on communities that have seen sharp cuts to their cash machine and bank branch networks in recent years, which have forced some cash dependent consumers to travel unreasonable distances or face hefty charges to withdraw their own money.

“However, in order for cash to remain a viable option for people across the UK, the government must take action. It needs to urgently set out when it will introduce the legislation it promised last year to protect access to cash, and put a wider strategy in place that ensures people who depend on cash are not cut off from the money they need to pay for essentials.”

85% of Scots are changing how they manage their money because of COVID-19, says new research

www.equifax.co.uk  

New research by credit reference agency Equifax reveals that the financial uncertainty of 2020 means 85% of people in Scotland will change the way they manage their personal finances in the immediate and long-term future.

Although one third (34%) of Scots said 2020 brought greater financial uncertainty, 16% have entered this year feeling positive about their finances. 54% of those who experienced financial uncertainty in Scotland said they are now trying to be more frugal, compared to 46% of the wider UK. 

Key data: 

  • 46% of residents in Scotland are trying to spend less disposable income each month  
  • 31% of Scots feel confident about their finances going into 2021 compared to just 19% of the UK as a whole 
  • 70% of 18-34-year-olds across the UK said 2020 brought them financial uncertainty, steadily decreasing across all age groups with only 11% of those aged 65 plus feeling the same 
  • As a result, 63% of 18-34-year-olds plan to change the way they manage their money in the immediate future, with 32% starting to save or put money aside 
  • 52% of UK women compared to 38% of men who experienced financial uncertainty in 2020 said they will be more frugal in 2021 
  • 41% of UK women plan to ‘buy more things I need and less things I want’, compared to 33% of men 

Lisa Hardstaff, Head of Customer Experience at Equifax commented: “Our latest research suggests vital personal finance lessons have been learned in this pandemic, and more people are looking to better manage their money.

“54% of those surveyed in Scotland said they are trying to be more frugal and it’s encouraging to see that 13% are proactively researching ways to manage their money. 19% of the region are also starting to put money aside and will be using spreadsheets and apps to help them budget.”  

Despite the huge financial uncertainty of last year, the research revealed that 28% of residents in Scotland used credit less than they did in 2019. However, 14% used short-term ‘Buy Now, Pay Later’ services for their online Christmas shopping. 

Clare Seal, author of Real Life Money and frugality champion added: “One of the silver linings of last year is that as a nation we are now being more open about financial concerns and mental health issues. In fact, 8% of the region said they are proactively seeking more financial advice from family and friends.”  

As the Christmas credit card bills land on people’s door mats, Equifax has a wide range of useful articles and tips in its Knowledge Centre.  It also has an online budget planner that allows people to monitor their income against their outgoings, to help them take control of their finances now and in the future.    

“A financial planner not only helps manage outgoings each month, it allows people to prioritise important financial commitments like mortgage payments, council tax, etc” concluded Lisa Hardstaff.

“It can also help to see where money can be saved, such as unused memberships or cutting back on food bills.  If we are in the Year of Frugality have a clear view of all outgoings is essential.” 

Buy now, Regret later?

Which? is calling for Buy Now, Pay Later firms like Klarna and Clearpay to be fully regulated to provide greater protection for consumers, as new research from the consumer champion finds concerning industry practices encourage people to spend more than they planned to.

The consumer champion’s findings show that these slickly designed, easy-to-access credit products are encouraging impulse buying, with nearly a quarter of BNPL users (24%) saying they spent more than they planned to because BNPL was available.

With one in ten (11%) BNPL users reporting that they have incurred late charges when paying this way, Which? is concerned about the dangers involved with this growing form of unsecured credit, particularly when the risks are not always made clear, and is calling for the financial regulator to be given new powers to fully regulate the BNPL industry to prevent consumers from being harmed.

The research suggests pushy marketing strategies, combined with sales features that make payment easier – such as ‘express checkout’ services on some retailers’ websites – could be driving people to overspend and leading to people falling into debt, a concern also shared by debt charities such as StepChange.

Which? also found that a quarter of BNPL users (26%) said they had not planned to use this type of payment option until it popped up at checkout, while two in ten (18%) said they used BNPL because they were offered a discount to do so.

One in ten (13%) also said they used it by accident because it was selected as the default payment option at checkout. One survey respondent said: “I was tricked into [using] it because the box was already ticked”.

BNPL firms also advertise heavily on their partners’ websites. Which? looked at 80 of these sites and found the largest BNPL ads take up as much as 80 per cent of the screen, with fashion retailers most likely to carry these prominent ads.

These factors are evidence of the firms’ application of consumer psychology to drive sales, a strategy one BNPL provider has promoted to its retail partners.

In 2017, Klarna, one of the leading BNPL firms in the UK, commissioned a study with the University of Reading into online shopping behaviour. The report, intended for partner retailers, explains how to design ‘customer journeys’ that will persuade people to make ‘emotional’ purchases instead of ‘logical’ ones.

However, as Which? research shows, these frictionless customer journeys can lead to shoppers spending more than they can afford, without necessarily being aware of the risks.

41 per cent of people in the Which? survey who were aware of BNPL either did not believe or did not know that missing a payment could lead to the BNPL firm passing your debt on to a debt collection agency.

As a result of its findings, Which? is now calling for providers of this type of BNPL service to be regulated by the Financial Conduct Authority.

In its submission to the regulator, the consumer champion said that, while supportive of innovation, it believes that the BNPL market must have consumer protections in place in line with other regulated unsecured credit products.

Giving the FCA the powers to regulate the BNPL market would allow it to more effectively monitor how BNPL firms treat consumers, and if necessary, take action to prevent consumers from being harmed.

Jenny Ross, Which? Money Editor, said: “While Buy Now, Pay Later services offer speed and convenience at the checkout, our research shows their design makes it far too simple for shoppers to spend more than they were intending.

“This could lead to people building up debts that they may struggle to pay back, which is particularly concerning if they don’t understand the risks of using this type of product.

“Given that many people’s finances are stretched now more than ever, we believe that the FCA needs to regulate this market to ensure consumers are not harmed and that action can be taken if these firms are treating customers unfairly.”

A spokesperson for Klarna responded: “While we cannot speak for the sector as a whole, it is wholly incorrect to claim that Klarna uses ‘pushy marketing strategies’. All Klarna customers are provided with our terms and conditions, which clearly outline the potential consequences of non-payment.

“If a customer misses a payment, we will proactively contact them to remind them via text, email, in-app notifications and letters. Klarna will only refer unpaid debts to a debt collection agency as a last resort after a period of several months.

“Klarna is fully engaged with the FCA review of the unsecured credit market.”

Scottish investors consider Brexit and low interest rates to be the biggest threats to their wealth

–         Only 3% of Scottish investors say their finances are in better shape than 12 months ago

–         Brexit and low interest rates cause most concern for Scottish investors

–         Just a third (34%) of these investors see inflation as a major threat

Investors in Scotland view Brexit and low interest rates as the biggest threats to their wealth, according to a new survey of over 1,000 UK savers and investors, and 500 High Net Worth Individuals commissioned by Rathbone Investment Management. Continue reading Scottish investors consider Brexit and low interest rates to be the biggest threats to their wealth