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Poor consumer lending practices to blame for 40% in lost business revenues

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Poor consumer lending practices to blame for 40% in lost business revenues

UK businesses are being unknowingly short-changed out of sales revenues – by as much as 40% – due to poor practices employed by consumer credit lenders, a new research report has found.

The study, compiled by specialist finance platform, Duologi, looked at the biggest frustrations that consumers face when borrowing funds to purchase goods and services on credit. It revealed an array of barriers that could be having a hugely detrimental impact on sales across a range of consumer-facing business sectors.

Over half (56%) of people said they have experienced high interest (APR) rates when applying for credit, whilst 28% of consumers have not been provided with full transparency when it comes to their loan; experiencing hidden or unexpected charges during application or at repayment stage.

Many lenders are also falling short in terms of user experience, as 24% of people believe that their credit application process was too slow. One in five (20%) also stated that the lending decision took too long and a further 26% were unable to decipher their application as it was full of confusing financial jargon.

Crucially, these consumer frustrations are causing a high degree of shopping basket abandonment. If encountering any of the issues highlighted above, 40% of people would abandon their purchase. This increases to 49% amongst the 25-34 millennial age bracket, which now comprises more than a quarter of the UK’s population, bringing with it considerable spending power.

The research also asked consumers exactly what they are calling out for when it comes to point-of-sale (POS) finance.

Interestingly, a third (33%) of people want to know that their finance is coming from a reputable place but are not concerned about whether this is a recognisable bank name. In fact, one in five (20%) people said they would no longer trust a loan from a bank, following revelations seen in the wake of the financial crisis.

Three quarters (75%) said that the option of 0% interest would be an important consideration when buying on credit. Interestingly, this figure increases to 81% of people who earn more than £40,000 – highlighting that credit options are not just a way to cater for low earners.

A further 40% of people said a quick and easy process would be top of their list of desirables, while 37% of people said low monthly repayments would be the most important factor.

Almost half (46%) of people think that POS finance should be available both online and instore, and one in five (21%) said that this flexibility of channel would be an important consideration when buying on credit. A further 28% of people think that getting an immediate decision on whether they can borrow would be very important to them.

 

Duologi credit director, Rob Cottingham, commented: “Borrowing on credit is often purported as a simple way to access funds. However, many lenders are clearly still getting the process wrong and this is leading to consumer frustrations which are potentially having a fatal knock-on effect for UK businesses.

“For merchants, whose sale of products and services rests on the ability of consumers to access additional cash, this is a huge problem. The retail industry in particular has seen its fair share of turmoil in recent months, with store closures and falling profits hitting the headlines on a near-daily basis. In these challenging times, it’s more important than ever that merchants find ways to offer flexible, transparent and easily-accessible funds.”

Backed by global investment firm, Oaktree Capital, Duologi offers merchants the chance to increase their sales, boost customer satisfaction and grow profitability through the delivery of tailored point-of-sale finance options.

For the full report visit https://www.duologi.com/Duologi_FindingTheRightBalance_5b4_5d-1.pdf

Finance

Sterling gets vaccine boost to hit 8-month high vs euro

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Sterling gets vaccine boost to hit 8-month high vs euro 1

By Joice Alves

(Reuters) – Sterling rose to a fresh eight-month high against the euro on Wednesday as Britain’s faster COVID-19 vaccine rollout than in the European Union offered support to the pound.

Although Britain’s deaths from the coronavirus pandemic passed 100,000 on Tuesday, its faster initial vaccine rollout has fuelled hopes for economic recovery.

Sterling was up 0.3% at 88.28 pence at 1049 GMT, after hitting a fresh eight-month high of against the single market currency.

Graphic: Sterling 27 Jan, https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrnbbbve/Sterling%2027%20Jan.png

Geoffrey Yu, senior EMEA market strategist at BNY Mellon, said “the general theme of UK doing well with vaccinations is playing a role” in lifting the pound, which is “not expensive and not over-owned yet”.

On the other hand, “the euro is clearly being undermined by ongoing concerns over vaccine rollout speed and supply,” Yu added.

Versus the greenback, sterling was flat at $1.3736, not far off a May 2018 high of $1.3759 touched earlier.

Hopes for a large U.S. fiscal stimulus package has fuelled risk sentiment in markets in recent weeks, benefiting sterling. Market participants are expecting Federal Reserve Chair Jerome Powell to renew a commitment to ultra-easy policy.

“It’s FOMC today so the adjustment in dollar positions may be playing a role as well,” Yu said.

As Britain left the bloc in December, the City of London said the capital’s loss of some financial business due to Brexit has not been catastrophic and it will thrive even if the European Union “irrationally” blocks access.

“For now Sterling continues to trade more on hope, vaccines, than current reality,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.

(Reporting by Joice Alves in VARESE, Italy. Editing by Alexander Smith and Andrew Cawthorne)

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Dollar advances as investors shy away from risk

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Dollar advances as investors shy away from risk 2

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar edged higher against a basket of currencies on Monday, as a burst of volatility in stock markets around the globe sapped investors’ appetite for riskier currencies.

Concerns over the timing and size of additional U.S. fiscal stimulus sent major U.S. stock indexes briefly more than 1% lower before they recovered to trade little changed on the day.

The sharp move in stock markets soured FX traders’ appetite for risk, Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto, said.

“Your high beta currencies – currencies that are highly correlated with equity markets and global risk appetites – are tumbling in synchrony with equity indexes,” Schamotta said.

Market sentiment turned more cautious at the end of last week as European economic data showed that lockdown restrictions to limit the spread of the coronavirus hurt business activity.

The U.S. Dollar Currency Index was 0.19% higher at 90.396, after rising as high as 90.523, its strongest since Jan. 20.

The euro was down around 0.28% against the dollar. German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in Europe’s largest economy, which will stagnate in the first quarter, the Ifo economic institute said on Monday.

The Australian dollar – seen as a liquid proxy for risk – was 0.16% lower against the dollar.

U.S. stocks have scaled new highs in recent sessions even as concerns about the pandemic-hit economy remain. Investors are trying to gauge whether officials in U.S. President Joe Biden’s administration could head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive.

Despite the dollar’s recent rebound – the dollar index is up about 1.3% since early January – analysts expect a broad dollar decline during 2021. The net speculative short position on the dollar grew to its largest in 10 years in the week to Jan. 19, according to weekly futures data from CFTC released on Friday.

The U.S. Federal Reserve meets on Wednesday and Chair Jerome Powell is expected to signal that he has no plans to wind back the Fed’s massive stimulus any time soon – news which could push the dollar down further.

Sterling strengthened on Monday against the weaker euro as Britain’s COVID-19 vaccine rollout over the weekend offered support to the British currency.

(Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci and Sonya Hepinstall)

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London and New York financial services treated the same, EU says

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London and New York financial services treated the same, EU says 3

By Huw Jones

LONDON (Reuters) – An EU forum for discussing financial services with Britain will be similar to what the United States has, and it must be in place before market access will be considered, the bloc’s financial services chief said on Monday.

Britain’s Brexit trade deal with the EU from Jan. 1 does not cover financial services, leaving its City of London financial center largely cut off from the EU.

Both sides are committed to creating a forum for financial regulatory cooperation by March, but talks have not started yet, the EU financial services commissioner told the European Parliament.

“What we envisage for this framework is similar to what we have with the United States, a voluntary structure to compare regulatory initiatives, exchange views on international developments and discuss equivalence related issues,” Mairead McGuinness told the European Parliament.

U.S. and EU regulators took about four years just to agree on rules on cross-border derivatives.

Trading in euro shares has already left London, along with a chunk in swaps trading. That questions the value of any future EU access given that many banks and trading platforms from the UK have opened units in the bloc.

McGuinness said regulatory cooperation will not be about restoring market access that Britain has lost, nor will it constrain the EU’s unilateral equivalence process.

Equivalence refers to EU access when Brussels deems a non-EU country’s rules are similar enough to the bloc’s.

“Once we agree on our working arrangements, we can turn to resuming our unilateral equivalence assessments… using the same criteria as with all third countries, including anti-money laundering and taxation cooperation,” she said.

Britain plans to amend some EU rules.

“The United Kingdom intention to diverge requires a case-by-case discussion in each area. Equivalence and divergence are polar opposites,” McGuinness said.

“I am optimistic that over time, through cooperation and trust, we will build a stable and balanced relationship with our UK friends.”

(Reporting by Huw Jones; Editing by Dan Grebler)

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