Contactless on the up as more people move toward cashless lives
Data from UK Finance shows that cash usage hit a new low last year, while the number of contactless payments increased by 36% to 13.1bn. This means that almost a third of all payments in 2021 were contactless, with the increase attributed to the pandemic, an increased contactless card limit of £100 and the popularity of smartphone payment methods such as Apple and Google Pay. The analysis also shows that one in eight people used buy now, pay later checkout credit services such as Clearpay and Klarna last year. The data reveals that between 2006 and the end of 2021, cash as a percentage of all transactions has fallen from 62% to 15%. UK Finance notes that the number of people that used cash once a month or less rose from 13.7m in 2020 to 2.1m last year, while a third of adults were registered for at least one mobile payment service in 2021. The banking trade body’s report said: “It appears that the pandemic and associated lockdowns have accelerated some peoples’ movement towards living cashless lives.”
Banks increase offers for switching savers
Research from analysis firm Defaqto shows that there has been a jump in banks looking to lure customers with higher cash incentives. Over the last six months, 22 current accounts have rewarded people with lump sums when they switch. This is up from just three in the same period last year. The size of the rewards have also increased in many cases, with the £175 offered by First Direct the biggest incentive since March 2020. Katie Brain, of Defaqto, said: “At a time when the cost of living is starting to affect a lot of people, it can be worth reviewing your current account and switching to benefit from the cash incentive offered.” She also advised savers to look into whether the deals come with a minimum monthly deposit or monthly fee. Those looking to switch to First Direct will need to deposit at least £1,000, while those signing up for Santander's £160 incentive will see a monthly £2 fee. It is also noted that not all switching bonuses are handed out immediately, with Santander making the payment until 90 days after the switch. Rachel Springall of data firm Moneyfacts highlights that those seeking rewards from accounts may also want to look at cashback offers and competitive overdraft tariffs.
Savers are seeing better rates
Analysis shows that rates for savers have improved recently thanks to increases in the base rate, which earlier this month went up by 50 basis points to 1.75%. The average rate on easy access accounts has jumped from 0.18% in August 2021 to 0.7% now. Research also shows that average rates on one-year fixed deals have gone up from 0.6% last August to 1.97%. The maximum savers can now earn on one-year fixed accounts is 3%, with this offered by a few challenger banks.
Bank of America's overdraft fees fall 90% amid new policy
Bank of America (BofA) says the revenue it gets from overdrafts has dropped 90% from a year ago. This comes after it reduced overdraft fees to $10 from $35 and eliminated fees for bounced cheques. BofA took in $1.63bn in overdraft fee revenue in 2015, the first year banks were required to publicly report overdraft fee revenues to regulators. Its overdraft fee revenues have since been declining as the bank took incremental steps to reduce its reliance on fees. It is noted that the likes of Wells Fargo, JPMorgan Chase and Truist all changed their overdraft fee practices shortly after BofA announced its reforms.
Advisers call for better regulation of crypto investment
A poll of financial advisers shows that fewer than 2% are invested in crypto, with two thirds saying they did not have faith in crypto-related investments and a number of respondents saying they would take crypto more seriously as an investment were it to be regulated. One adviser said that while such assets “have the opportunity to provide great returns … They are simply too risky and dangerous to be invested heavily in at this point.” The adviser added that while they may play a role in client portfolios in the future, “for now, great regulation is required.” Another adviser said: “A lot of work needs to be done by the regulators and we need more protection for consumers.” While cryptocurrencies are currently unregulated by the Financial Conduct Authority, the asset class was brought under money laundering regulations in 2020. This means certain cryptoasset firms must be registered with the FCA before conducting business. Warning of the risks posed to retail investors by the digital asset, the Bank of England last year called for new regulations around cryptocurrencies as a “matter of urgency.”
Number of savers opting out of pension jumps by 29%
The number of people opting out of their workplace pension scheme has risen by 29% between March and July this year, according to analysis by Penfold. The pensions provider warned that the impact opting out has on long-term financial prospects is “significant”, calculating that a 20-year-old who contributes £200 a month who then pauses contributions for three years would see the final value of their pot reduced by £28,074, from £268,675 to £240,600, representing a decrease of more than 10%.
LEISURE & HOSPITALITY
Gambling giant fined £17m for safeguarding failures
Entain, which owns well-known brands such as Ladbrokes, Coral, Gala and Foxy Bingo, has been fined £17m for "completely unacceptable" safeguarding failures. The firm settled following the largest ever enforcement action by the Gambling Commission, which uncovered anti-money laundering and social responsibility failures. Entain Group will pay £14m for failures at its online business LC International, which runs 13 websites including ladbrokes.com, coral.co.uk and foxybingo.com. It will also pay £3m for failures at its Ladbrokes Betting & Gaming operation which runs 2,746 gambling premises. Additional licence conditions will ensure a business board member oversees an improvement plan, while a third-party audit will review its compliance with licence conditions and codes of practice within 12 months.
Pubs hit by energy and supply chain inflation
Hospitality bosses are calling for an emergency VAT cut as the sector deals with soaring energy bills. New research has suggested that most bars and restaurants are dealing with “significant” energy cost hikes whilst a majority are also seeing dramatic increases in their food and drink costs. The new data also reveals that supply chain issues mean pubs and restaurants are dealing with reduced product lines. The British Beer and Pub Association has warned that only one in three pubs are currently making a profit as a result of rampant inflation. It has reiterated a call for an emergency VAT cut for the hospitality sector similar to that introduced during the pandemic.
MEDIA & ENTERTAINMENT
Apple orders staff back to the office for three days a week
Apple has told staff that they must return for three days a week from next month. The tech giant has been trying to implement a hybrid working policy at its global headquarters since last summer but corporate employees have now been told that they will be required at Apple’s offices for a minimum of three days each week, starting from September 5. The policy will initially be introduced at Apple’s California HQ before it is extended to the company’s other sites around the world.
House price growth slows to 7.8%
House price growth slowed from 12.8% to 7.8% between May and June, a decline that marks one of the steepest monthly drops in annual growth ever recorded by the Office for National Statistics (ONS). The slowdown was so large partly because the annual growth rate was based on huge house price rises recorded in June 2021, the final month in which buyers could benefit from the full stamp duty holiday. The ONS figures show that the average property value climbed to £286,000 in June, an increase of £20,000 on a year earlier. While annual house price growth cooled from 13% to 7.3% in England and from 14.1% to 8.6% in Wales, it remained steady at 11.6% in Scotland.
Asos finance chief announces exit
Mat Dunn is leaving his role as chief financial officer of online retailer Asos. The firm said Mr Dunn, who is also chief operating officer, is leaving under “a phased plan.” His exit comes two months after José Antonio Ramos Calamonte was promoted to chief executive. As well as seeking a new CFO, Mr Calamonte is also looking for permanent replacements for the heads of marketing and human resources. The chief operating officer role is to be dropped. Mr Dunn will continue in his role until at least the end of October and will remain on the staff for the rest of the year “to provide transitional support,” Asos said.
Inflation hits 10.1%
Office for National Statistics (ONS) data shows inflation hit 10.1% in the 12 months to July, up from 9.4% in June. In passing the 10% barrier, inflation now stands at the highest rate since February 1982. July’s reading exceeds a consensus forecast from economists, who had predicted that the Consumer Prices Index would hit 9.8%. While energy, petrol and diesel costs played a part in driving up inflation, food and non-alcoholic drinks were the largest contributor to July’s increase. The inflation rate is expected to rise further in October, when the energy price cap goes up and delivers higher bills. The typical household energy bill is forecast to reach £3,582 in October and £4,266 in January. The Bank of England expects inflation to peak at 13.3% later this year.” Chancellor Nadhim Zahawi said getting inflation under control is his “top priority,” warning that while “there are no easy solutions,” the Government is “helping where we can.” Meanwhile, analysis by the Resolution Foundation shows that while inflation hit 10.1% last month, the poorest tenth of households saw a rate of 10.9%. For the wealthiest 10%, the cost of living increase stood at 9.4%.
Soaring prices set to prompt rate hikes
City economists expect the Bank of England to hike interest rates in a bid to tame soaring inflation. Robert Wood, UK economist at Bank of America, said the Bank “seems to be sensitive now to any signs of increasing persistence,” adding that officials are likely to increase the base rate by 0.5% next month and in November after inflation hit 10.1% in July.
Recession warning dents consumer confidence
A Bank of America survey shows that consumer confidence dipped four points at the start of August. The decline was driven by Bank of England (BoE) forecasts that warn Britain is headed for a 15-month recession, beginning in the closing months of the year. Bank of America said: “Confidence remains weak, consistent with recession, and all components worsened.” It added that while consumer inflation expectations had been falling for three months, they “jumped in the first half of August, shortly after the BoE’s new forecasts for inflation were published.”