13 October: Initiative Bolsters Access To Cash As Branches Close
Thousands of retailers and small businesses with a Barclaycard Payments terminal can now offer customers free cash withdrawals without a purchase, writes Candiece Cyrus.
The move will help improve access to cash across the UK, particularly for vulnerable people such as the elderly.
Barclays is the first bank to offer the no-purchase cashback service, which is already provided by the LINK cash machine network and PayPoint, the in-store payment service and ATM provider, in over 2,000 stores.
The launch of the service by Barclays comes after the Financial Conduct Authority (FCA), the market regulator, required banks and building societies to ensure facilities to withdraw and deposit money are easily available and that detailed analysis on the impact of planned branch closures on their customers is carried out. The regulator will also continue to monitor points where cash is accessible.
Cash is the second most frequently used payment method in the UK after debit cards, with over five million people relying on it to a ‘great extent’ or ‘very great extent’ on a day-to-day-basis, according to government figures.
However, banks and building societies are increasingly closing branches as customers have increased favoured online banking services and contactless card payments, and withdraw cash using ATMs rather than over the counter.
The latest news of branch closures came just today from NatWest which confirmed it will shut a further 43 branches across the UK between January and March next year.
Businesses with a Barclaycard Payments terminal can offer customers with a Visa or Mastercard debit card from any bank up to £100 per day. Customers do not have to make a purchase, and the businesses will be paid a transaction fee by Barclays, providing them with an additional source of revenue.
Customers will also be able to request any amount from 1p, and will be able to withdraw coins and non-round amounts such as £5.82.
Tim Allen, head of access to cash at Barclays, said: “While an increasing number of our customers choose to pay digitally, we recognise that for some, cash remains vital.
“This service will benefit communities around the country, beyond our customer base, giving them the choice and flexibility to access their money conveniently. This is part of our broader commitment to preserving long-term access to cash for those who require it.”
10 October: Customers Withdrew £805m In August
The Post Office handled a record volume of personal cash withdrawals in August, amounting to £805 million, writes Bethany Garner.
This represents a 0.5% month-on-month increase, and is 20.5% higher than the volume of withdrawals made in August 2021.
The Post Office also recorded peak levels of personal cash deposits in August 2022, which exceeded £1.4 billion.
The Post Office attributes these record-breaking figures to bank branch closures. According to data from LINK, the UK’s ATM network, 430 additional closures have been announced since the beginning of 2022.
Martin Kearsley, banking director at the Post Office, said: “Despite August traditionally being a quieter month for cash transactions, that’s not what we saw at our 11,500 branches.
“We expect cash transactions to continue to exceed expectations in October and for the rest of the year.”
The cost-of-living crisis may also have sparked a return to cash as a budgeting tool.
Natalie Ceeney, chair of the Cash Action Group, said: “Cash has been in decline for well over a decade, the pandemic accelerated this, but now it’s going back up, and that’s absolutely because of the cost of living crisis.
“Cash helps people budget, as using it means you can literally count the pennies.”
Although cash withdrawals dipped to £785 million in September, they were nonetheless up 14.3% from September 2021.
This dip is explained in part by unexpected Post Office closures on the day of Queen Elizabeth II’s funeral. On the bank holiday, deposits and withdrawals were down 94% compared with the same date in 2021.
3 October: Nationwide Launches Top £200 Welcome Bonus For Current Account Switchers
Nationwide has stormed the current account switching market by offering a £200 windfall to switchers.
To receive the top cash incentive, customers must make a full switch to the provider’s FlexAccount, FlexDirect or FlexPlus current account from another provider – and move across at least two Direct Debits.
Nationwide, the UK’s largest building society, is one of several providers currently scrambling to attract new current account customers with sizable cash rewards for switching.
Santander, First Direct, Royal Bank of Scotland and Natwest are all offering new customers £175 to switch, while Lloyds is offering £150.
These represent the highest rewards any bank has paid new customers since March 2020, according to analysts Defaqto.
Tom Riley, director of banking and savings at Nationwide, said: “With the rising cost of living, many people are reviewing their financial products to ensure they continue to offer good value.
“Nationwide is now offering a market-leading £200 to new and existing members who switch their current account to the society.”
Two of Nationwide’s incentive-paying accounts — FlexAccount and FlexDirect — are free to operate. Eligible FlexDirect customers also receive an interest-free overdraft for the first 12 months.
FlexPlus is a packaged account that includes family travel insurance, mobile phone insurance, free overseas spending and UK and European breakdown cover and costs £13 a month. However, the £200 welcome bonus would offset this fee for the first 15 months.
Nationwide says the £200 cash will be paid into the current account that you switch to within 10 calendar days of the full switch completing. Joint account switchers will only receive one payment – and you won’t qualify for the offer if you’ve carried out any online switch offer since 18 August 2022.
All of the top current account switching incentives require the process to be carried out under the Current Account Switch Service. It means the new bank or building society carries out the process on your behalf, transferring all regular in- and out-bound regular payments within seven working days. As part of the service, your old current account must be shut down.
28 September: Society Blames Reduction In Footfall Due To Covid
Nottingham Building Society is closing 17 of its 48 branches including Sheffield’s Crystal Peaks, Leicester City and Scunthorpe, writes Candiece Cyrus.
The society, which has branches in Derbyshire, Hertfordshire, Leicestershire, Lincolnshire, Norfolk, Nottinghamshire and Yorkshire, blames the move on a significant fall in customers using its in-branch services during the pandemic, with only partial recovery afterwards.
The retrenchment is not linked to the current crisis affecting the UK mortgage market, which has seen several lenders withdraw mortgage deals because of fears of a spike in interest rates on the back of the recent, poorly-received mini-Budget.
However, the society commented on market conditions: “In response to the unprecedented moves in swap rates following Friday’s announcement by the Chancellor, we have taken the decision to run with a reduced mortgage range until such time as market volatility has eased.
“We are committed to keeping a market presence in order to help borrowers get the mortgages they need, and also to help brokers navigate through these very challenging times.”
Swap rates, which have increased in recent days, are paid by institutions such as mortgage lenders when they want to secure funding to back their loan offers
Regarding the branch closures, Kathryn Kitson, the society’s head of branch network, said: “Following a thorough review of how our members are using our network, it became clear that we have too many branches for the size of building society that we are.
“Since Covid, while some members have returned, many have not, leaving a number of our branches with very low levels of transactions and usage. Therefore, we’ve made the hugely difficult decision to close 17 branches in locations where the level of activity in the branch has reached a point where it is no longer sustainable.”
Before the end of the year, branches in Crystal Peaks (Sheffield), March (Cambridgeshire), Fakenham and Thetford (Norfolk), Ashbourne and Matlock (Derbyshire), Wollaton and Stapleford (Nottinghamshire) will close.
Leicestershire will see its Leicester City, Melton Mowbray, Rothley and Wigston branches close, with Lincolnshire losing its Bourne, Scunthorpe, Skegness, Spalding and Stamford branches.
The society is writing to customers of the affected branches and helping them find other ways to manage their money. Customers can also visit the online support hub.
6 September: Post Office Partners With Banks To Add 13 Locations To Network
The Post Office has partnered with major UK banks to open a further 13 ‘banking hubs’ across the country, bringing the total to 25, writes Bethany Garner.
The initiative aims to preserve access to cash and in-person banking services amid a shift towards online banking and cashless payments.
At the hubs, anyone holding a UK bank account with participating institutions will be able to pay bills, deposit cash and cheques or make cash withdrawals.
Once a week, representatives from each of the UK’s major banks will also visit hubs to provide specialist services.
Each space will be shared by several major banks and building societies including HSBC, Lloyds Banking Group, Nationwide, NatWest, Santander, TSB and Danske Bank.
Natalie Ceeny CBE, chair of the Access to Cash Action Group, said: “We know demand for cash is declining, but we also know that it continues to play a vital part in the lives of at least five million people in the UK — including some of the most vulnerable in society.
“I’m confident that the new plan will lay the foundations for a positive future for cash access across the UK.”
Branch closures
First announced in 2021, the hubs are a response to ongoing branch closures, which are making it more difficult for those who rely on cash and in-person services to carry out day-to-day banking tasks.
According to data from consumer group Which? the number of bank branches in the UK dropped by 48% between 2015 and 2021.
In 2022 alone, more than 400 branch closures have been announced, ATM network LINK has found.
Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority, said:
“Banks and building societies remain responsible for assessing the impact any closures of their branches may have on their customers, including those with characteristics of vulnerability, and for considering what alternatives could reasonably be put in place.”
Hub locations
The new Banking Hubs will operate throughout the UK. Two — in Rochford in Essex, and Cambuslang on the outskirts of Glasgow — have already opened.
Initially 12 hubs were planned, but with continued branch closures limiting access to cash in new areas, an additional 13 have been announced.
The remaining hubs are expected to open over the next few months, in the following locations:
- Brechin, Angus
- Forres, Moray
- Carluke, Lanarkshire
- Kirkcudbright, Dumfries and Galloway
- Axminster, Devon
- Barton-upon-Humber, Lincolnshire
- Lutterworth, Leicestershire
- Royal Wootton Bassett, Wiltshire
- Cheadle, Staffordshire
- Belper, Derbyshire
- Maryport, Cumbria
- Hornsea, Yorkshire
- Kilkeel, Northern Ireland
31 August: Laybuy To Share Customer Debt Information With Experian
Buy Now Pay Later (BNPL) provider Laybuy will share its customers’ repayment and debt information with credit reference agency Experian from tomorrow (1 September), writes Candiece Cyrus.
The information will be available via Experian to other lenders to help them make decisions on whether they offer individuals credit. Laybuy says the information will be ring-fenced to prevent it from negatively affecting credit scores.
At the same time, it says a history of keeping to a repayment schedule could improve an individual’s score.
BNPL schemes offer consumers the option to pay for purchases in instalments over weeks or months, without paying interest, so long as they keep to the agreement terms.
Gary Rohloff, Laybuy’s managing director, said providing Experian with this data will allow other lenders to make more informed decisions when providing credit, reducing the likelihood of their offering credit to Laybuy customers when they are already struggling financially.
He said: “It will, however, give consumers who make their repayments on time the ability to build up their credit history. This will make it easier for them to access appropriate credit facilities in the future without the need to take on high-interest and higher-risk debt.
“For this reason, the sharing of data with Experian is a win-win for consumers. Not only does it provide better protection for vulnerable consumers, but it also allows those with a limited credit history to build up their credit scores.”.
This move follows Klarna, another leading BNPL firm, sharing its customers’ credit information with Experian and TransUnion, another credit reference agency, from 1 June.
Klarna says the move “will not initially impact UK consumer credit scores” as this would require credit agencies to modify their scoring systems.
Another big BNPL player, Openpay, is yet to follow suit, but a spokesperson said: “We are reviewing our approach to credit checks and recognise that appropriate and proportionate credit reporting can add value for customers.
“Our priority is to ensure that we create a solution that protects customers and provides the best possible outcome for them.”
BNPL facing regulation
Laybuy’s decision is a step in aligning it with traditional lenders such as banks and building societies, and comes after the government announced intentions in February 2021 to regulate BNPLschemes.
Although the industry is not currently regulated by the UK’s financial regulator, the Financial Conduct Authority (FCA), it has faced increasing scrutiny as BNPL schemes have soared in popularity.
According to investment platform, Hargreaves Lansdown, more Brits grappling with the cost of living crisis are using credit from BNPL firms to pay for essentials, with 11% of shoppers using the credit to pay for clothes, and 6% for groceries.
Iceland, the supermarket, is offering customers a BNPL payment method in the form of a card pre-loaded with a cash value to be repaid interest-free over time (see story below).
Last week the FCA warned providers that their promotion of BNPL products, including on social media, should emphasise their financial risks, as well as their advantages. See post below.
Earlier this year leading providers such as Klarna, Laybuy and Clearpay reacted to the FCA’s concerns that customers are caused ‘potential harm’ due to unfair terms and a lack of transparency around how their BNPL schemes work.
The FCA said the customers’ contracts should have been terminated but instead, some customers continued with their repayments unnecessarily or were charged late payment fees.
The firms agreed to make their contracts fairer and easier to understand. This included updating their terms so, for example, customers who returned items to retailers would not need to continue paying for them until the BNPL received confirmation of the return, or the due refund, from the retailer.
22 August: FCA Tells Firms Not To Use Misleading Ads
The Financial Conduct Authority (FCA), the UK’s financial regulator, has warned firms using misleading advertising to promote Buy Now Pay Later (BNPL) services that they could be committing a criminal offence, writes Candiece Cyrus.
The BNPL market is unregulated at the moment, but the regulator has previously used its powers under the Consumer Rights Act to criticise BNPL firms for holding customers to “potentially unfair and unclear terms”.
The FCA is now reminding firms that promotions for BNPL products, including those online and posted by social media influencers, may breach FCA rules if they do not warn of the risk of taking on debt.
It is proactively monitoring the market to ensure its expectations are met and has said it will use criminal and regulatory enforcement powers if it sees promotions that do not comply. So far this year, FCA action against firms that have breached its rules have led to 4,226 promotions being changed or withdrawn.
BNPL schemes have become an ever more popular form of payment for purchases, from clothing to food. A survey by Barclays in June this year found that over a third of shoppers are finding BNPL schemes more appealing, due to soaring prices.
They can be an attractive payment option for many as they allow customers to pay off what they owe, typically over a set number of weeks or months. These repayments are usually interest-free, provided that they are made on time and in full.
The regulator says it has seen firms emphasising the advantages of BNPL products without also including fair and prominent warnings of any risks to customers, such as:
- the risk of taking on debt that customers cannot afford to repay
- the consequences of missed payments
- any other adverse consequences such as the impact on the customer’s credit file
- information about when charges become payable.
Sheldon Mills at the FCA said: “As we face a cost of living crisis, consumers are having to make difficult decisions about their finances and how they pay for goods and services.
“Firms need to ensure consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions. It is vital that adverts are clear, fair and not misleading.”
Laura Suter, head of personal finance at brokers AJ Bell said many consumers use BNPL products without understanding the financial implications: “As the cost of living bites, more and more people will use BNPL. But they should remember the golden rules of using any debt: don’t take it on without a way to repay it, only use it if you’ve exhausted all other options and don’t use it to buy things you don’t need.
“They should also make sure they understand the implications if they miss a payment or aren’t able to repay the debt at all.”
As part of its plans to regulate more of the BNPL market, the FCA recently held discussions with providers, calling on them to provide more support to customers in financial hardship and include signposting for financial advice.
18 August: Iceland Rolls Out Interest-Free Loans As Inflation Tops 10%
Supermarket chain Iceland is offering interest-free loans to help customers battle the cost-of-living crisis. The scheme comes as UK inflation reaches a 40-year high of 10.1%, driven largely by soaring food prices.
The loans, offered in partnership with affordable credit provider Fair for You, allow customers to borrow between £25 and £75 on a pre-loaded card. Repayments are set at £10 a week, but customers can overpay and clear the balance early when it suits them.
The Food Club Cards can be reloaded up to six times per year during periods that coincide with school holidays. They can carry a maximum balance of £100 at any given time.
In a pre-launch trial in Huddersfield, Rhyl and Denbighshire, Iceland found the interest-free loans allowed 92% of customers who relied on food banks to stop or reduce their usage.
To be eligible for the scheme, customers must have a regular source of income — whether from employment, benefits, or a pension — and a UK bank account.
Applications are made online, and customers usually receive a decision in an hour. If they are approved, the card will arrive in the post within seven business days.
The card can be used at Iceland checkouts in the same way as a credit or debit card.
Government backs interest-free loans for vulnerable consumers
Other interest-free borrowing schemes are also on the horizon.
In September 2022, UK consumers who have been turned down for credit elsewhere will be able to apply for a government-backed interest-free loan from £100 to £2,000. Borrowers will be given repayment terms between six months and two years.
This No Interest Loan Scheme was trialled in Manchester earlier in 2022, and is due to be rolled out to an extra 20,000 people across the UK. If the scheme is successful, it will be opened to an additional 500,000 borrowers each year from 2024.
Consumers must be referred to the scheme through their housing association, local credit union, or another lender partnering with the scheme.
The loans will be funded from a mix of sources, including the Treasury, the UK’s devolved governments, and banks such as JP Morgan Chase. They will be administered by local credit unions and other lenders.
Borrowers can repay the loan early without penalty, and request a payment holiday if needed.
Phil Andrew, CEO of StepChange Debt Charity, said: “High-cost credit can create a debt spiral of harm to households who are already in a financially precarious position. People facing financial difficulties need an alternative, and the launch of this pilot is a fantastic first step towards giving people a more positive option.”
Low-cost borrowing options
Consumers with a good credit score have another interest-free option in a 0% purchase credit card.
These cards come with an introductory interest rate of 0%, so you can pay back what you spend without having to pay any interest.
If you carry a balance on the card after the 0% period has passed, you will need to pay interest, usually at rates upward of 20% APR.
You may also be able to access an interest-free arranged overdraft. First Direct, for instance, offers free overdrafts up to £250 to its current account customers.
However you borrow, missing payments or making them late will have a negative impact on your credit score, hence ability to borrow and access competitive rates in the future.
16 August: Virgin Money Ranks Last For Online Banking In Watchdog Poll
Royal Bank of Scotland (RBS) is last in a poll showing the worst current account providers in the UK as compiled by the competition watchdog, writes Andrew Michael.
The Competition and Markets Authority (CMA) says RBS ranks worst compared with 15 banking rivals in terms of the quality of its overall service, overdrafts and the service in its branches.
RBS is owned by NatWest Group, which itself is 48.1% owned by the UK government, a legacy from the 2008 global financial crash.
Virgin Money also languishes towards the bottom of the findings, ranked second-worst for overall service quality and last for its online and mobile banking services.
The CMA commissioned polling from Ipsos Mori to quiz 1,000 customers of each of the UK’s 16 largest current account providers to make it easier for others to compare banking services. The research took place between July 2021 and June this year.
Customers with personal current accounts were asked how likely they would be to recommend their provider, their provider’s online and mobile banking services, services in branches and overdraft services to their friends and family.
Newer providers Monzo and Starling Bank are in joint top place in terms of overall quality of service. The pair also top the list for online and mobile banking services.
First Direct ranks the highest in terms of overdrafts and Metro Bank is first for its service in branches.
The CMA also looked at the performance of business bank accounts in separate polling work carried out by BVA BDRC.
Once again, Starling Bank and Monzo top the findings, being ranked first and second respectively in terms of both their overall quality of service and also their online and mobile banking offering.
Handelsbanken leads the way both in terms of its overdraft and loan services to small and medium-sized enterprises (SMEs) as well as for relationship and account management.
Adam Land, senior director at the CMA, said: “As the rising cost of living bites, it’s important that people and businesses have the information they need to manage their money and make savings. These results show how banks are treating their customers at a time when many are feeling the pinch.
“When times are tough you find out who’s fighting your corner and if your bank doesn’t match up to the competition – you can vote with your feet and make a switch.”Customers who find a different bank to their existing one that can offer them a better deal can use the Current Account Switch Service to help make the swap. The service is free to anyone with a personal or business or current account in the UK.
8 August 2022: Post Office Cash Withdrawals Hit Record High
The amount of cash withdrawn over UK Post Office counters hit a record high of £801 million in July – an increase of 20% compared to this time last year, and a 8% rise on the £744 million withdrawn in June, its latest figures show.
The Post Office attributes the unprecedented rise to a ‘growing reliance’ on cash for households trying to manage budgets often on a day-to-day basis in the face of rising living costs – coupled with the continued popularity of UK ‘staycations’.
Its research found that 71% of Brits plan to take out cash before leaving to go on holiday in the UK, while almost a third had been ‘caught out’ without any cash while away.
July marked only the second time that personal cash withdrawals have exceeded £800 million, according to the Post Office. The last time was in December 2021, although withdrawals traditionally peak at Christmas.
Cash being paid in over Post Office counters also saw a rise in July – albeit a much smaller 2% – compared to the previous month, to a total of £1.25 billion, while business cash deposits rose by a similar amount.
Last month also marked the first time that cash deposits and withdrawals together exceeded £3.3 billion in a single month in 360 years, with a total of £3.32 billion being handled at Post Office branches.
Martin Kearsley, banking director at the Post Office, said: “Our latest figures clearly show that Britain is anything but a cashless society. We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget.”
The Post Office also processed more than 600,000 cash payouts in July for people eligible to receive support with their energy bills from the government. This £90 million funding is aimed at helping people pay energy bills or topping up household fuel meters .
29 July: Virgin Money Launches Buy Now, Pay Later Card
Virgin Money is entering the Buy Now, Pay Later (BNPL) market with a new credit product called Slyce, writes Mark Hooson.
Like other popular BNPL products offered by the likes of Klarna and Clearpay, Slyce will allow users to make purchases and spread the cost over three, six, nine or 12 months.
If the balance is paid off within six months, the Slyce card charges no interest or fees. However, users who choose to spread repayments over nine or 12 months will be charged an ‘instalment fee’ of 7.5% and 10% respectively.
The Slyce card comes with no late payment fees while you can pay off the debt in full at any time without penalty. It can also be used overseas with no foreign exchange fees.
While BNPL lenders such as Klarna and Clearpay are only available at the point of sale among participating merchants, Slyce is effectively a ‘portable’ BNPL product that can be used with any merchant, on or offline.
Also, unlike the BNPL sector, Slyce will be regulated which means applicants will be subject to affordability checks.
The Slyce card, which is aimed at ‘Gen Z’ consumers aged between 18 and 25, pairs with Virgin Money’s credit card app, allowing users to monitor balances, make payments and track their credit scores.
Virgin Money is currently inviting people to join a waiting list for Slyce, stating that it will be launching “soon”.
Consumer groups have raised concerns about the rising use of BNPL products. In June, Citizens Advice urged the government to expedite plans to bring the sector into regulation.
A spokesperson said: “Every day spent waiting for regulation is yet another day that shoppers are left unprotected and ill informed. We’ve seen a shopper threatened with debt collectors after splitting the payment of a t-shirt and, more recently, a worrying two-in-five BNPL customers borrowing money to make repayments.”
Research conducted by Student Beans found 42% of people aged 16-24 used a BNPL product last year.
July 22: Fifth Of Adults Increase Borrowings As Credit Card Rate Rise Looms
Consumers are taking on more debt than a year ago, according to data released by the Office for National Statistics (ONS), writes Bethany Garner.
It found that 21% of adults borrowed more money or took out more credit in June 2022 than they did in the same month last year. A further 46% said they will not be able to save any money in the next 12 months.
These higher levels of borrowing and lower levels of saving come in the midst of the ongoing cost-of-living crisis, which saw UK inflation reach a 40-year high of 9.4% in June.
As the cost of essentials such as energy, housing and food continue to climb, consumers are more likely to take on debt to make ends meet.
The ONS survey also found that 29% of adults experienced difficulty paying their household bills last month. Gas and electricity bills proved a particular pain point, with 46% of adults responsible for these bills saying it was ‘somewhat’ or ‘very’ difficult to pay them.
At the same time, the cost of credit is set to rise later in the year. Royal Bank of Scotland (RBS) announced this month it will be raising interest rates by up to 3 percentage points for some customers in September.
Assuming an initial APR (annual percentage rate) of 12.90% (the current rate for RBS’ The Royal Bank Credit Card), this rise would equate to an increase in monthly interest payments of £1.63 on a balance of £100, £8.09 on a balance of £500, and £16.23 on a balance of £1,000.
An RBS spokesperson said the majority of customers will pay less than an additional £1 per month when these changes take hold, however.
Purchase rates for RBS credit cards are currently capped at 21.9% APR, and not all cards will be affected. The increases will not impact introductory 0% rates.
RBS is the only major UK provider to announce an increase in interest rates so far. Both Santander and HSBC say they do not have plans to increase credit card APRs.
If you are currently paying interest on credit card debt, you can usually save money by moving it to a 0% balance transfer credit card.
These credit cards come with an introductory interest rate of 0% APR, giving you breathing space to pay off the balance without accruing any more interest.
You may have to pay a fee (calculated as a percentage of the amount you’re transferring). However, if you have a good credit score, you may be able to use a card that enables you to transfer your balance free of charge.
6 Jul 2022: Budgeting App Plum Launches Debit Card
A new debit card has emerged onto the burgeoning fintech scene, writes Bethany Garner.
London fintech, Plum, has launched a debit card to accompany its AI-powered personal finance app. Users will be able to load money onto the VISA debit card from any linked bank account or funds that have been ‘set aside’ in the app, and use it overseas without incurring fees.
The card is constructed from 57% sea salt and 43% crude oil, making it degradable and recyclable.
Plum — which has 1.3 million customers — is a budgeting app which offers an automatic AI savings feature that calculates sums of money and regularly transfers it into a Plum savings pot, without impacting day-to-day spending.
It also recently launched an investing platform.
Initially, the Plum debit card will only be available to its premium-tier Plum Ultra customers. A subscription to Plum Ultra costs £4.99 a month but customers can access the new debit card at no extra cost.
Victor Trokoudes, CEO and co-founder of Plum, said: “This card will give Plum users even better visibility and control of their finances, as they can set their own spending allowances. This means they can properly compartmentalise their spending.”
29 June: Scammers Capitalise On Covid Anxieties To Rip Off Victims
Fraudsters exploited the Covid-19 pandemic to steal £1.3 billion through scams in 2021, a rise of 8% from £1.2 billion the year before.
According to data from trade association UK Finance, criminals took advantage of their victims’ “doubts and fears”, often using social media platforms and fake websites to access their victims.
The number of fraud cases linked to online and app-based ‘remote’ banking surged, rising by 20% to 88,450 and culminating in £199.5 million in losses. The number of cases linked to payment cards showed a 0% change and cases linked to cheques decreased by 35% year-on-year.
Over £583 million was stolen as a result of 195,996 cases of authorised ‘push payment’ (APP) fraud, with around 40% due to impersonation scams. This sort of fraud involves tricking a customer into authorising a payment to an account controlled by the criminal.
UK Finance found that criminals are impersonating organisations such as the NHS, banks, government departments and the police, contacting customers by phone, text, emails, social media posts and fake websites to trick them into parting with their money. This resulted in £214.8 million in losses in 2021.
Over £170 million was lost to investment scams, and £64.1 million to purchase scams – the most common type of APP scam, accounting for 51% of cases. Purchase scams are where customers pay for goods that never materialise.
Last year also saw £30 million lost in romance scams, with cases increasing year-on-year by 41%. This type of scam results in a victim paying money to someone that they have met online with whom they believe they are in a relationship.
CEO scams, where a criminal impersonates a boss or manager to convince staff to make an urgent payment or share their bank details, rose by 29% year-on-year, with losses of £12.7 million.
In total, less than half the amount stolen (47%, or £271.2 million) was returned to scam victims, says UK Finance, which has reiterated calls for cross-sector action to target the criminals.
Katy Worobec, managing director of Economic Crime at UK Finance, said: “Fraud has a devastating impact on victims and the money stolen funds serious organised crime, as well as imposing significant costs on the wider economy.
“Authorised fraud losses rose again this year as criminals targeted people through a variety of sophisticated scams, with much of the criminal activity taking place outside the banking sector, often involving online and technology platforms.
“This is why we continue to call for other sectors [telecoms, social media, and online platforms] to play a greater role in helping protect customers from the scourge of fraud.
Upcoming legislation – the Economic Crime and Corporate Transparency Bill – is seen as an important development that will enable the government to widen information sharing and improve the tracking of stolen money.
UK Finance advises that consumers stop and challenge requests for money or financial information, and contact their bank immediately, along with the UK reporting centre for fraud, Action Fraud, if they think they have been scammed.
23 June: 100-Days Left To Use Old School £20 And £50 Notes
There are just 100 days left to spend paper £20 and £50 notes before they are pulled from circulation in England and Wales by the Bank of England (BoE) on 30 September.
Paper £20 and £50 notes issued by Clydesdale Bank, Royal Bank of Scotland and Bank of Scotland, as well as the paper £20 notes issued by Bank of Ireland, AIB Group, Danske Bank and Ulster Bank in Northern Ireland, will also be withdrawn after 30 September 2022.
The BoE advises that paper £20 and £50 notes are used or deposited by this date. It said over 160 million £50 paper banknotes and around 314 million £20 paper banknotes are estimated to still be in circulation. The new polymer versions of the notes will continue to circulate.
Sarah John, the BoE’s Chief Cashier, said: “The majority of paper banknotes have now been taken out of circulation, but a significant number remain in the economy, so we’re asking you to check if you have any at home. For the next 100 days, these can still be used or deposited at your bank in the normal way.”
After 30 September, shops and businesses will not accept paper notes. However, many UK banks and some Post Offices allow customers to deposit them in their bank accounts.
The BoE also exchanges withdrawn notes via post. It requires photocopies of a form of ID and proof of address for exchanges of £70 or more. It says the sender carries the risk of items being lost in transit. The money can be paid into a bank account (typically within 10 working days) or by cheque (or in new notes to UK addresses if the exchange is less than £50).
In-person exchanges can be made at the Bank of England Counter at Threadneedle Street in London, which is open from 9.30am to 3pm Monday to Friday.
Why are we changing to polymer pound notes?
The Bank of England has identified that there is a continuing demand for cash, although it is in decline. It expects cash to remain a “critical way for people to pay in the foreseeable future”.
Polymer notes are an upgrade to paper notes in that they are meant to be cleaner. Polymer is a type of thin, flexible plastic that is resistant to dirt and moisture. While it’s not indestructible, the BoE claims that it lasts two-and-a-half times longer than its predecessors.
With a see-through window as well as holograms, the new notes are more difficult to counterfeit. They are also meant to be more environmentally friendly. The Carbon Trust has certified the carbon footprint (the measure of associated greenhouse gas production) of a polymer £5 note as 16% lower than its paper predecessor.
The BoE has issued four denominations of banknotes since the mid-1980s. The polymer £5 note, featuring Sir Winston Churchill, was released 13 September 2016 and its paper version withdrawn 5 May 2017. The polymer £10 note, featuring Jane Austen, entered circulation a year later, on 14 September 2017, while its paper version was withdrawn 1 March 2018.
February 2020 saw the introduction of the polymer £20 note featuring JMW Turner, while the new £50 note featuring Alan Turing was first issued 23 June 2021.
22 June: Fifth Of Brits Unable To Access Affordable Credit
One in five people in the UK feel excluded from the financial services market, with the figure rising to a third among ethnic minority groups. This leaves them unable to access credit, or only able to use expensive borrowing facilities.
The Financial Inclusion Report, compiled from a poll of 4,500 individuals by specialist lender Plend, Nationwide building society, fair finance campaigners Responsible Finance and debt charity StepChange, says this amounts to a crisis often affecting what it terms those most at risk in society.
The report found that single women believe they are significantly less able to access credit than women living with a partner, while 47% of people with children feel they are locked out of the financial system.
Almost 40% (36%) of Brits feel they are financially unprepared for an unexpected emergency, while 28% say the pandemic has caused their financial position to worsen.
Plend says the problems caused by financial exclusion are aggravated by limited comprehension of the UK’s credit scoring system in the UK. The report found that just 41% of adults know their credit score, with 60% not knowing how scores are calculated.
Rob Pasco, CEO and co-founder of Plend, which caters for people who are refused credit by traditional lenders, said: “It’s outrageous that financial discrimination and exclusion is on the rise. It has a detrimental effect across society as a whole and widens the poverty gap.
“Having a thin or invisible credit file is just one of the reasons many people are financially excluded from accessing affordable credit products and basic financial services – the lending industry has failed to address this problem at a time when the need has never been greater due to the cost of living crisis.”
20 June: Government Cracks Down On Buy-Now-Pay-Later To Protect Borrowers
Buy Now Pay Later (BNPL) lenders will have to follow tough new rules to protect customers from borrowing beyond their means.
The government today announced that BNPL companies such as Klarna and Sezzle offering short-term credit will need to carry out new checks on borrowers to make sure they can afford the repayments.
Under the new rules, lenders will need to be approved by the Financial Conduct Authority (FCA), the UK’s financial services regulator. Adverts for BNPL will also need to be fair, clear and not misleading.
For the first time, BNPL customers with complaints will be able to take their concerns to the Financial Ombudsman Service (FOS).
Announcing the proposals, John Glen MP, Economic Secretary to the Treasury, said: “Buy-Now Pay-Later can be a helpful way to manage your finances but we need to ensure that people can embrace new products and services with the appropriate protections in place.
“By holding Buy-Now Pay-Later to the high standards we expect of other loans and forms of credit, we are protecting consumers and fostering the safe growth of this innovative market in the UK.”
The government plans to publish a consultation on draft legislation at the end of the year. Secondary legislation should follow in mid 2023 before the FCA consults on its rules for the sector.
Other forms of short-term interest-free credit, such as those used to pay for dental work or larger items like furniture, will also be expected to comply with the new rules.
The Wall Street Journal reported last week that Swedish BNPL lender Klarna was in discussions with investors that could value the company at $15 billion – down from its 2021 peak of $46 billion.
The BNPL sector has been criticised for making it too easy for consumers to get into debt. Research by debt charity Step Change earlier this year found half (49%) of those with a BNPL loan found it difficult to keep up with household bills and credit repayments.
It also found 40% had taken ‘negative coping actions’ to keep up with credit repayments in the previous 12 months, such as using credit to repay credit, falling behind on housing payments or utility bills, asking family or friends for help or cutting back to the point of hardship.
Earlier this month, Apple announced its intention to move into the BNPL space with Apple Pay Later, a US-only service that allows iPhone users to spread the cost of a purchase over up to four instalments over six weeks on credit, with no fees or interest.
Regulator Finds ‘Serious Failings’ Among Lenders, Demands More Consumer Support
The Financial Conduct Authority (FCA) is writing to more than 3,500 UK lenders to demand greater support for consumers struggling with the soaring cost of living, after discovering “serious failings” at more than 30 credit providers.
The regulator is concerned some vulnerable customers are not receiving the guidance or advice they need to tackle the challenges of managing their finances against a backdrop of runaway inflation and soaring energy prices.
With household bills expected to continue to rise in the second half of this year and potentially beyond, the FCA told firms it was important to “act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need”.
The FCA says it has looked at how borrowers in financial difficulty are treated by lenders. While some companies provide beneficial support, the regulator says most firms need to have “better conversations to fully understand their customers’ individual circumstances”.
The FCA found that some lenders do not discuss the potential benefits of money guidance or free debt advice. At the same time, serious failings were discovered at more than 30 firms, largely operating in the consumer credit sector.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “The financial services industry has a significant role in helping consumers manage their finances, and it should expect us to pay close attention to how they do that over the next few months.”
Sarah Coles at Hargreaves Lansdown said: “Lenders shouldn’t be charging more in fees than it actually costs the business, and the FCA found that some were applying charges inconsistently, and in a way that risked making everything even worse for their customers.
“Banks need to up their game, but if you’re having trouble managing your debts, it shouldn’t put you off getting in touch and talking to them. They should help you find a solution, which will do far less damage to your credit rating than if you just miss payments.”
14 June: Watchdog Proposes Rules To Protect Access To Bank Branches
The regulator for the UK’s financial services sector wants banks and building societies to think more carefully before closing branches and removing cash machines.
Guidance proposed by the Financial Conduct Authority (FCA) will ask companies to undertake more detailed analysis on how factors such as shorter opening hours would affect customers.
The regulator is concerned that some organisations are currently not doing enough to understand the impact of such changes, or to keep customers informed about them. It hopes the proposed changes to its guidelines will better protect customer access to services.
Sheldon Mills ,executive director of consumers and competition, at the FCA, said: “We expect firms to continue to offer easy and accessible banking services to their customers, and this is even more important as the country faces a cost-of-living crisis.
“We saw firms successfully do this and support consumers through the pandemic, and this standard needs to continue with firms really thinking about their customers, especially those in vulnerable circumstances, and ensuring they continue to meet their needs.”
9 June: Barclays axes 14 branches as 2022 closures hit 117
Barclays has announced 14 more branch closures, which will bring total closures in 2022 to 117 by the end of the year. The bank’s branch estate, which stood at 666 at the end of last year, will number 549 at the end of 2022.
Barclays has attributed the closures to the growth in customers banking online. It says 70% of banking can be done digitally, and it has 10 million digital customers compared to none nine years ago. It says only 10% of its customers carry out banking in-branch.
Here are the remaining 54 branches that will close this year. The latest 14 confirmed closures are in bold:
A Barclays spokesperson said: “We continue to review and adjust our branch footprint to ensure it reflects the way that our customers are increasingly choosing to do their banking.
“We will always give 12 weeks’ notice of any branch closures, explaining the rationale for the decision, as well as highlighting alternative branches and ways to bank. This includes working with the local community to find different, more flexible ways for our colleagues to continue to provide local banking support, such as through pop-up presences.”
The news comes amid efforts by the banking industry, government and campaigners to improve access to cash across the UK.
Cash use in the UK has declined in recent years, with hygiene concerns and social distancing restrictions implemented during the pandemic helping to accelerate the trend.
However, many people use cash daily and will be affected by branch closures and the contingent lack of free-to-use ATMs. The government has cited the vulnerable and elderly as among them.
The Access to Cash Action Group aims to help provide cash and banking access for communities where services are limited. It includes all major retail banks, charities Age UK and Toynbee Hall, as well as the Federation of Small Businesses, which represents small businesses and the self-employed.
9 June: Citizens Advice Alarm At ‘Debt Pays Debt’ BNPL Culture
More than 40% of shoppers who use buy now pay later (BNPL) services are borrowing from other sources to make their payments, Citizens Advice has found.
Of these, 26% used a credit card – the most popular option – but others used overdrafts or payday loans.
Citizens Advice – which is campaigning for BNPL to be made a regulated market – says consumers aged 18 to 34 are the most likely to make BNPL payments using debt, with 51% falling into this age range, while 39% were aged 35 to 54, and 24% were over 55.
Millie Harris, a debt adviser at Citizens Advice East Devon, said: “Most of the people I speak to who are using BNPL live off overdrafts and credit cards, so are using these for repayments. It’s just relying on one debt to pay off another.”
As the UK grapples with the ongoing cost-of-living crisis, accruing extra debt through BNPL services has the potential to squeeze household budgets even further.
Growing demand
BNPL services exploded in popularity during the coronavirus pandemic. Research from the Financial Conduct Authority (FCA) found around five million UK consumers made £2.7 billion worth of purchases through BNPL in 2020 — four times higher than the previous year.
Citizens Advice has found that as many as one in 10 BNPL customers did not fully understand how repayments would work when they used the service.
Ms Harris said: “It’s just a few clicks at a checkout. Too often that means people don’t realise how serious it is; that it is credit and there are consequences if they do not repay it.”
Market regulation
In response to the growing uptake of BNPL, Citizens Advice is calling for the sector to be brought under FCA regulation.
In late 2021, the UK government launched a consultation on the BNPL market, seeking views on how its regulation should be approached.
Meanwhile, the FCA has successfully persuaded the most popular BNPL companies — Klarna, Laybuy, and Openpay — to make their repayment terms clearer to customers under the Consumer Rights Act.
Credit agencies are also beginning to examine how consumers handle BNPL debt when compiling credit reports. Whether or not consumers make payments on time will be tracked from June 2022, and will appear on credit reports from 2023.
This reporting means that letting BNPL payments slide could jeopardise more important credit applications down the line, such as mortgages or personal loans.
Tech giant Apple is launching its own BNPL service – Apple Pay Later – in the US later this year. Apple Pay Later will be integrated with online retailers that accept Apple Pay.
30 May: More Barclays Branches ‘Casualties of Digital’
Barclays has announced the closure of a further 27 branches in addition to the 13 that it announced in March would be shutting down. Having already shut 63 branches since the start of the year, the latest announcement will bring the bank’s total branch closures in 2022 to more than 100.
Barclays cited the rise in banking via digital channels as the reason behind the closures, with its digital customers growing to 10 million over the last nine years. It estimates that over 70% of transactions can now be carried out digitally, and said that fewer than 10% of transactions are currently carried out in branches.
A Barclays spokesperson said: “We continue to review and adjust our branch footprint to ensure it reflects the way that our customers are increasingly choosing to do their banking.
“We will always give 12 weeks’ notice of any branch closures, explaining the rationale for the decision, as well as highlighting alternative branches and ways to bank.”
Barclays has pledged to work with communities to find alternative ways to provide local banking support. This includes use of the Post Office and adding to its existing 50 ‘pop-up branches’ across the country in locations such as community centres, libraries and business hubs.
26 May: ‘Gen Z’ Leaves Physical Wallets At Home To Pay By Phone
Mobile phone payments are on the rise, with 61% of consumers now saying they are confident leaving their wallet at home and are instead paying with their phone, according to research by card issuer, Marqueta.
The survey found that Gen Z consumers – those born between 1997 and 2012 – were the most enthusiastic about mobile payments. More than three quarters (77%) of Gen Z respondents said they can happily go about their day relying solely on mobile payment platforms, such as Apple Pay and Google Pay.
Nearly 8 in 10 (77%) of UK consumers said they have used some sort of mobile wallet at least once in the last 12 months.
Of these, 83% feel they can purchase whatever they need with a digital wallet, and a further 64% actually prefer to pay with their phone because it has more built-in security features such as face or fingerprint identification.
Anna Porra, European strategy director at Marqeta, said: “Confidence in mobile wallets is growing, and people feel increasingly comfortable that their mobile phone can handle their payments and not leave them stranded.”
Contactless becoming norm
Marqeta’s survey of 4,000 consumers across the UK, USA and Australia, also revealed that, when consumers do bring a physical wallet, the majority rely on contactless payments rather than cash or chip & PIN.
Almost all – 96% – of UK consumers said they had made a contactless payment in the last year. Of these, 42% said they have been making contactless payments for so long they have even forgotten their PIN. Among UK respondents under the age of 24, this rises to 54%.
Regardless of their age, the majority of UK respondents – 63% – say needing to enter their PIN while making a payment is irritating.
The majority of consumers found cash equally outdated. 63% of survey respondents expect cash to eventually disappear altogether. Of these consumers, 59% expect the disappearance of cash to happen within the next five to 10 years.
Ms Porra said: “While the pandemic was the catalyst for the shift to contactless and mobile wallets, it is the convenience, security, and speed of these payment options that have made them sticky.”
Physical banking in decline
Most consumers were found to prefer digital banking as well as digital payments. In the UK, 46% say they can ‘count on their hands’ how many times they have used a physical bank in their lifetime.
About a third (33%) went so far as to say it would have no impact on their lives if all the UK’s physical bank branches closed tomorrow.
For UK respondents aged 18 to 24, the concept of in-person banking is even less familiar: 50% of this group said the idea of visiting a physical bank branch was ‘completely alien’ to them.
Despite their lack of enthusiasm for in-person banking, the majority of respondents said they want more personalisation from their banks: 80% of consumers said they want their bank to offer them more personal rewards, while 60% would like their bank to provide tailored budgeting advice.
A significant number of consumers were equally interested in how cryptocurrencies could be incorporated into their day-to-day financial lives. Marquette found that 26% of UK consumers own cryptocurrency, and of those who do 82% are interested in using it in the same way as they would a debit card at point of sale.
10 May: New laws to protect access to cash and help scam victims
The Financial Services and Markets Bill announced in today’s Queen’s Speech will ensure the continued availability of cash withdrawal and deposit facilities across the UK. The stated aim is to make sure the country’s cash infrastructure is “sustainable for the long term”.
In the face of largescale closure of bank branches across the UK (see stories below), the government has acknowledged that cash remains an important payment method “for millions of people across the UK, particularly those in vulnerable groups”.
Further details will be provided on the mechanics of maintaining the cash infrastructure when the Bill is published.
The Bill will also enable the Payment Systems Regulator to force banks to reimburse victims of authorised push payment (APP) scams, which are thought to cost hundreds of millions of pounds each year. This is to ensure victims are not left paying for fraud through no fault of their own.
24 March: Lloyds Follows HSBC With Swingeing Branch Closure Programme
Multi-brand financial institution Lloyds Banking Group is to close 60 branches – 24 Lloyds Bank, 19 Bank of Scotland and 17 Halifax.
It cites a reduction in branch usage for the cull, saying online banking usage is at a record high in 2022. Rival bank HSBC gave the same reasons for its decision, announced last week, to close 69 branches later this year (see story and details below).
Lloyds says it has 18.6 million regular online banking customers and over 15 million mobile app users, with the numbers increasing by 12% and 27% respectively in the last two years.
It says all the branches slated to close continue to have alternative banking and cash access within one mile.
Vim Maru, a director of Lloyds Banking Group, said: “Just like many other high street businesses, fewer customers are choosing to visit our branches. Our branch network is an important way for us to support our customers, but we need to adapt to the significant growth in customers choosing to do most of their everyday banking online.”
Lloyds Bank Group branch closure details
HSBC Closes 69 Branches
HSBC is to close 69 of its 510 UK branches between July and October this year. The bank says less than half its 14.75 million customers actively use its branch network, with the average footfall declining over 50% since 2017.
It attributes this to the growing popularity of mobile and online banking – a trend exacerbated by the restrictions associated with the coronavirus pandemic.
Jackie Uhi, head of HSBC UK’s branch network, said: “The way people bank is changing – something the pandemic has accelerated.
“We know that the majority of our customers have a preference to do much of their day-to-day banking online or via mobile, so we’re removing locations where we have another branch nearby, and where there is a significant reduction in customers using face-to-face branch servicing.”
HSBC customers are able to carry out day-to-day banking transactions at Post Office branches. The bank says all of the branches that are closing this year have a Post Office within 1.5 miles, 97% of which are within one mile.
For customers concerned about retaining access to cash, 90% of the closing 69 branches have 10 or more free-to-use ATMs within one mile, with all closing branches having at least five.
The bank says it is working with ATM provider LINK and the Cash Action Group on an industry-wide effort to provide banking services in areas where branches are no longer viable.
Following the closures, HSBC UK will have a branch network of 441 branches in the following formats:
- 96 full service branches offering a full range of services, predominantly based within large cities and towns where branches see a broad range of requests.
- 172 cash service branches supporting communities that have a greater need for access to cash, alongside over-the-counter servicing and the ability to deal with complex issues such as bereavement and Power of Attorney.
- 173 digital service branches providing ‘traditional’ cash and cheque transactions and access to other products using self-service technology.
The full list of closures is below:
