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THE STANDARD FINANCIAL STATEMENT: HUMANISING AFFORDABILITY ASSESSMENTS IN A DIGITAL WORLD

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SMARTIE

By Simon Howard, MICM FACP, Business Development Director, TALKINGTECH

For the first time, organisations can now use the same format to assess people’s finances when they are in debt.

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Newly-launched by the Money Advice Service, the‘Standard Financial Statement’ (SFS), is a common framework to be used by debt advice providers and creditors to provide a more accurate picture of consumer income, outgoings and debt.  As it’s phased in over the next year, the tool will also deliver a single set of spending guidelines based on that evaluation. 

Human approaches

Until now, consumers could face many different types of affordability assessments. The commonality of the new framework, devised and agreed by over 22 organisations, should ensure a smoother, confidential transfer of information about clients between different organisations. This will reduce the number of times affordability assessments are completed and provide the consumer with more accurate and united debt advice.

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The SFS is a much-needed change to a process that requires a common approach for better outcomes. The FCA’s Lending Guidelines state that organisations must ‘pay due regard to the interests of its customers and treat them fairly’.Income and Expenditure (I&E) assessments are fundamental to responsible lending, as set out by the FCA and are central to the SFS. The main issue is that I&E forms are often inefficient and can deliver a poor customer journey.

Unravelling complexity

There are millions of people in the UK struggling to pay their bills, according to the Debt Advisory Centre -nine million adults think they owe too much and four and a half million people find it difficult to keep up with essential bills. A joined-up process will deliver better clarity and understanding with a single set of spending guidelines.  It will also reduce the need for stakeholders to question details of individual budgets, making the process less stressful and invasive.

SMARTIE-Dashboard

SMARTIE-Dashboard

The need for a more cohesive approach is one of the reasons why the debt industry discussion forum, the Money Advice Liaison Group, has supported the development of a new piece of research called ‘Vulnerability; a guide for debt collection – 21 questions, 21 steps’.  Released in March 2017, it collates the experiences of 1,600 collections and specialist staff at 27 UK lenders and debt collection firms.  The research produced over 20 practical and commercially realistic steps and adapted for use in the utilities, telecoms, retail and government sectors.  Bob Winnington, Executive Officer at MALG, said: “It’s easy to treat people as anonymous entities, especially when companies hold so much data on every customer and customer type.  Our challenge to the debt and service provider industries is for each to regularly analyse and improve their processes, communications and channels to design meaningful and efficient, digital-first, customer experiences.  The introduction of the Standard Financial Statement is another opportune time to do this.”

The savings section in the SFS, designed to build financial resilience, encourages a longer-term view beyond each consumer’s debts and spending commitments.

Providing for digital natives

The current I&E mechanism is not conducive to today’s digital world. For better outcomes, assessments need to deliver more positive experiences. Even back in 2015, three of the top five areas that consumers identified as leading to a positive experience with a company[1] were:

  • Fast response to enquiries or complaints;
  • Clarity and simplicity of information across channels; and the
  • Ability to interact with a company over multiple channels.
SMARTIE-Journey

SMARTIE-Journey

Consumers are used to interacting with organisations and service providers over numerous channels. According to Mintel, one third (34 percent) of consumers with a bank account interact with financial services companies via mobile websites and apps, including the majority (55 percent) of Millennials.The SFS framework will ensure that every customer no longer needs to repeat each creditor’s own I&E process. We urge creditors to make the experience even more intuitive with digital and self-service options in the I&E process.

We know that an average I&E analysis can tie up agents and customers for an average of 45 minutes. This is frustrating for the customer and the cost for the provider to conduct each I&E is between £40-80. These phone-based interactions can lead to more errors as the client might not have the necessary data while speaking to an agent, or they may feel embarrassment in discussing their situation.

Humanising the collections process means interacting with customers in a way that they feel comfortable with. Research commissioned by Experian[2] showed that people struggling with debt prefer to create their repayment plans online:

  • 62% say managing debt online is easier and more convenient
  • 56% agree that managing it online would enable them to retake control more easily
  • 49% don’t want to be hassled by phone calls and overdue letters
  • 26% believe having to talk to someone would add to their stress about the debt

We work with creditors to deliver a multi-channel approach so that the agent, customer or both can complete I&E forms across multiple devices, including smartphones, tablets and PCs, as well as on the phone. Completion rates and accuracy are increased because the process allows the consumer to check details and input those facts via the channel of their choice.

The result is that data is validated, error rates are reduced and the affordability assessment is more accurate. Crucially, this approach secures consumer buy-in and accountability.

[1] Research by Economist Intelligence Unit in 2015

[2] *Survey conducted by Opinium Research 23 to 25 September 2015 amongst 2002 respondents to a nationally representative sample.

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Using payments to streamline everyday transport

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By Venceslas Cartier, Global Head of Transportation & Smart Mobility at Ingenico Enterprise Retail

Once upon a time the only way to get from A to B on public transport was with cash – and likely a pre-paid ticket bought from a physical office. Nowadays, thanks to technological developments, options range from contactless and mobile payments, to in-app tickets and more. As payment methods advance, consumers and merchants are naturally moving towards Mobility as a Service (MaaS) systems, integrating various forms of transport services into a single mobility service, accessible on demand.

This move towards MaaS does not only streamline the consumer experience, it has other positive impacts too. Incentivising public transport use reduces environmental pollution, improves mental wellbeing by reducing travel-related stress, and aids productivity by freeing up time otherwise spent driving. With this in mind, let’s take a look at the current trends affecting the transport sector, as well as how payments can optimise transportation for both operators and consumers alike.

Optimising transport with payments

The payment process is integral to any service. A payment service provider (PSP) can provide a range of key benefits to operators by proving a gateway to the transportation open payment ecosystem, and ensuring they meet objectives in 3 key areas.

  1. Environmentally, by reducing the use of personal cars and alleviating pollution and congestion.
  2. Societally, making urban mobility more inclusive in terms of improving access to all areas and for all socioeconomic classes.
  3. Economically, by optimising investment in eco-structure and fostering financial transactions, therefore improving the wealth of the city.

Payments professionals’ expertise and technological solutions can make payments easy again for transport operators. They can provide a range of options so that the customer can choose which one is right for them, leveraging the capabilities of the mobility services’ infrastructure (contactless, mobile wallets, P2P, closed-loop, QR code, and blockchain).

Furthermore, they can help promote inclusion and sustainable urban development. For example, methods such as prepaid virtual cards, or mobility accounts linked to a prepaid account can reduce the risks of excluding the unbanked. The environmental impact per kilometre can also be reduced, along with the use of vehicles with lower emissions per person per kilometre.

Finally, PSPs can put merchants’ minds at ease, providing payment liability, allowing aggregation of all due amounts from all mobility service providers, and collecting payments in one single transaction from users while dispatching revenue between mobility service providers.

Managing coronavirus

Venceslas Cartier

Venceslas Cartier

COVID-19’s disruption to the travel industry cannot be overlooked. In fact, research suggests that public transit ridership is down 70% across the globe since the onset of the virus, longer distance travel has seen reductions of up to 90%, and payment by cash has seen a 60% drop.

Being realistic, these behavioural shifts are unlikely to revert anytime soon, so it’s important for merchants to keep this in mind when thinking about payment methods. More than 70% of consumers and travellers say they are likely to avoid the use of cash over the next six months. As a result, more than 40 countries have already raised their contactless payment threshold, further helping consumers to avoid contact with frequently touched pin pads.

However, the pandemic has only accelerated the way things were heading already and highlighted the benefits. Within the context of the pandemic, transportation needs to reinvent itself and adapt its processes to suit the shift in commuter habits that we’ve already seen and will continue to see in the future.

Other trends to keep an eye on

Contactless has been steadily growing on the transport scene, as have mobile payments and in-app purchases. In fact, the recent move to mobile and online ticketing is the most promising method so far, having seen significant growth in the last few years and having been accelerated by COVID-19 as discussed above. Once consumers move to these easy, convenient, and seamless methods, it’s rare that they revert – so it’s a good idea for operators to think how they can cater to these preferences.

Speed and convenience are a must for busy travellers – but not at the expense of data security. Finding the right payments partner is therefore crucial so operators can safeguard their customers’ personal data, while also keeping on top of other security regulations/features such as P2P encryption, PCI certification, and tokenisation.

Next steps for operators

Public transport is essential for many peoples’ everyday lives – COVID-19 or no COVID-19. As such, mobility service providers can make a great difference to their service and operations by implementing the right solutions.

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Grey skies ahead – Malta prepares for a gloomy 2021 if they can’t tackle financial crime

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Grey skies ahead – Malta prepares for a gloomy 2021 if they can’t tackle financial crime 2

By Dhanum Nursigadoo, ComplyAdvantage

With the summer drawing to a close, many countries who rely significantly on warm weather tourism will be assessing the impact of Covid-19. Being a small island in the middle of the Mediterranean you would expect Malta to be taking a significant economical hit – just like we are seeing in other popular European holiday destinations – but this doesn’t take into account the strength of the Maltese economy.

Emerging from the eurozone crisis with one of the most dynamic economies strategically positioned between three continents, Malta has had one of the lowest unemployment rates in the EU and has recently seen its GDP growth expand year-on-year.  But perhaps the most important aspect of the Maltese economy has been its attraction for foreign businesses with only a 5% tax on profits. It is no secret that Malta is a tax haven, probably one of the most effective tax havens in the world.

But you can’t pick and choose who takes shelter, and it’s no secret that money launderers have been taking advantage of the regulatory landscape in this archipelago.

The conditions of a tax haven suit criminal enterprises, who can take advantage of the opaque environment and blend their illegal activities with the same operations enjoyed by high net worth individuals and corporations who are looking to reduce their tax bill. And last year Malta’s keenness for secrecy and avoidance resulted in a damning report by Moneyval – the Council of Europe’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) body – which found that while the nation had made some efforts to curb money laundering there was still much to be desired in order to bring the tax haven up to standard. Overall, they were of the opinion that Malta viewed combating money laundering as a non-priority and this resulted in branding Malta with low to partial ratings for 30 out of the 40 Financial Action Task Force (FATF) recommendations.

The findings of the report were stated to have the potential to “create within the wider public the perception that there may exist a culture of inactivity or impunity”. This follows on from a series of international high-profile stories regarding Malta and financial crime. Most shocking was the murder of journalist Daphne Caruana Galizia – who investigated corruption and money laundering in her native country – and was killed by a car-bomb three years ago leading to international outrage and condemnation.

Now Malta is in a race against time to turn their reputation around or they will suffer genuine consequences. The FATF have threatened to place Malta on a “greylist” of high-risk jurisdictions unless they have shown a genuine commitment to combatting financial crime and implemented the recommendations of the Moneyval report. If they fail, this would make Malta the first EU country to make the list and join others such as Panama, Syria and Zimbabwe.

The pandemic has actually given Malta more time to meet these obligations, and it has been widely reported that an initial summer deadline has now been moved to October due to the widespread disruption.

As we head into the autumn, there are signs that Malta has begun to take action. The Malta Financial Services Authority (MFSA) has created and established an empowered AML now headed up by Anthony Eddington, formerly of the UK’s Financial Conduct Authority and who has previous experience of tackling anti-financial crime at Deutsche Bank. This team has already begun working closely with international experts, specifically partners in the US through the US embassy in Malta and the United States Commodities Futures Trading Commission (CFTC). In May this collaboration led to 25 new cases focused on money laundering in particular, and with plans to increase standard inspections and on-site investigations into businesses in Malta, it appears there is a change to the country’s priorities.

Importantly, the report highlighted a problem for countries that choose to become tax havens. In some cases it was not that the Maltese authorities deliberately turned a blind-eye, but simply that they did not have the necessary knowledge to effectively tackle financial crime in the first place. Law enforcement appeared unable to even recognise when crime was occurring.

But this blurring of financial compliance will not help businesses if Malta does indeed become “greylisted” this year. While not as devastating as being blacklisted (the two occupants of this list are Iran and North Korea) there are significant detrimental effects to being put on the FATF greylist. Although this signals that the country is committed to developing AML/CFT plans (unlike the blacklist) it still sends out a warning signal to the world that this is a high-risk area, with the country in question subject to increased monitoring and potential sanctions from the IMF and the World Bank. Make no mistake, being put on the greylist will be catastrophic for Malta’s economy.

It remains to be seen how the work to avoid such a calamity will affect Malta’s tax haven status. Perhaps with an increased fight against financial crime there will be less ability to defend one of Europe’s most competitive tax regimes. But if Malta does not show they are genuinely committed to tackling this problem, then the pandemic disruption to the island’s tourism may be minor in comparison to the grey clouds that now approach their shores.

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How will the UK prepare a supply chain for the distribution of the Covid-19 vaccines?

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How will the UK prepare a supply chain for the distribution of the Covid-19 vaccines? 3

By Don Marshall, Marketing role at Exporta.

The challenge of mobilising a supply chain for the introduction of a global and nationwide vaccine will be enormously complex. The process will be costly, and it’s likely the figures will stretch to the hundreds of millions for both the production of the vaccine itself and its distribution across the UK. We must prepare and plan a supply chain strategy to ensure it reaches those most in need in a timely and safe manner.

The task of immunising a whole population is something that has never been planned or likely imagined by anyone within a standard supply chain. A supply chain that goes directly from the manufacturer to the end consumer, or user/ patient in this case, is complex and goes beyond the scope of any single logistics company. It would have to be conceived and delivered via a large joint effort and collaboration between multiple organisations. Effectively distributing the vaccine will depend on the source of manufacture, its storage requirements, and protection of the vaccines from manufacture through to patient administration.

The majority of vaccines require storage within a specific temperature range and need to be handled safely and in hygienic conditions. Depending on where the vaccines are manufactured, the transport legs will vary; if they are coming from overseas, air freight will increase cost and complexity. In addition to supplying the vaccine, syringes, needles and containers also need to be taken into account when preparing the supply chain.

Securing the specific types of boxes or containers i.e. the lidded containers normally used for transporting pharmaceutical products will mean acquiring them from all available stockists and manufacturers. Delivery vehicles would then need to be considered, with temperature-control factored in. The medical supply chain can inform their approach to distribution by assessing data from previous supply chains, and how large quantities of vaccines have been sent out in the past. Collating successful vaccine delivery examples from other parts of the world would be advantageous here, the more we can do to prepare for a logistical challenge of this magnitude, the better.

The distribution of this COVID vaccine will be unique in its scale and for that reason, additional supply chains will need to be mobilised. Apart from medical supply chains, those best suited for this type of transportation are the fresh/frozen food industries and supermarkets. I would mobilise these businesses to assist with the vaccine’s distribution wherever possible and use their car parks and facilities for the temporary medical centres needed to administer the vaccine to the public.

Using the food industry and supermarket networks would leave the current pharmaceutical supply chains intact for health services, pharmacies and the NHS. It would protect those vital services and continue to serve communities across the UK. Inevitably, it would place a short term strain on food supply chains, but these are supply chains that are well-equipped and versed in coping with excess demand i.e. the spike endured from the brief spell of public panic buying at the start of the crisis. With adequate resourcing and planning, I believe the UK supply chain can and will handle this challenge.

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