Flagstone Weekly Update - 08 January 2019
8th January 2019
- Billions languishing in forgotten accounts
- Cash ISAs perform poorly again in 2018
- Customers willing to provide financial data to technology firms
- FTSE European 350 Bank Index rose by +1.7% over the last week
- ITRAXX Europe Senior Financials 5-year CDS Index rises slightly by +0.9% over the last week
There is at least £15 billion and could be as much as £77 billion in forgotten investments, pensions and bank accounts, according to the Wealth Manager, Sanlam.
They have urged consumers to seek out these lost funds through tools such as the free online service My Lost Account. This service covers over 30 banks and 44 building societies and can even help when banks or building societies have closed down or merged.
The Money Advice Service has estimated that there is £850 million unclaimed in bank and building society accounts.
The increasing trend of savers switching to find the best rate is having the unwanted side-effect of consumers losing track of where their funds are kept.
Flagstone can help by providing clients with 24/7 oversight of all their savings accounts on the platform, with all their notice, term and deposit accounts from up to 28 different banks, accessible via their Portfolio Manager Screen and summarised in their consolidated monthly statements.
Average cash ISA pay-outs in 2018 were only marginally improved on 2017, despite 2017 being the worst for cash ISA savings this century, according to analysis from the Sunday Times.
The worst performer of 2018 paid just 13p for every £100 saved; worse than the poorest performer from 2017 which paid 18p.
Rates have improved slightly as a result of base rate increases in November 2017 and August 2018, but the vast majority of banks did not pass this increase on to savers. Principality, Virgin and Bank of Scotland’s cash ISAs, which were among the worst performing, didn’t increase their rates at all.
As a result of their poor rates, uptake in ISAs has dropped dramatically over the last couple of years.
A further deterrent for savers has been that ISAs have become particularly complicated, with many accounts restricting withdrawals and offering conditional bonuses that significantly change the rate you receive. For example., the Post Office ISA offered a rate of 1.51% in January 2016, but this included a variable rate bonus of 0.65% for 12 months. The account now pays just 0.51%.
30% of UK adults would be happy for trusted tech companies or third-party apps such as platforms to access their financial data, according to a study by the Prepaid International Forum (PIF).
The level of willingness was noticeably higher amongst younger generations, with 34% of 18 to 24-year olds happy to provide this information, compared to 24% of those 65 or older.
The survey is an indication of the future uptake of initiatives which will make use of Open Banking, the initiative that begun in January 2018 to allow third parties access to the data of big banks. The initiative allows third parties to analyse spending habits and help customers find better deals, aimed at creating innovation in the sector.
Alastair Graham, spokesperson for PIF, said that Open Banking is “encouraging innovation by new fintech companies who are adding real value to consumer and business banking in a way the banks would never have done so in the past and are struggling to do so even now”.
BANK FTSE AND CDS INDEXES
Despite slowing global and eurozone economic growth, the FTSE European 350 Bank Index rose by +1.7% over the week, up to 3,765 from 3,700, as financial markets reacted positively to the strong U.S. job figures and the pending talks between China and the U.S. to try to resolve their trade dispute.
The ITRAXX Europe Senior Financials 5-year CDS Index spread (series 30) has continued its more expensive trend, rising slightly by +0.9% over the week to 113.1bps from 112.0bps, as financial markets react to further evidence of a slowdown in global and eurozone economic growth as well as the likely defeat in the UK parliament of the UK Government’s Brexit withdrawal agreement with the European Union (EU) which could result in a further eurozone recession and cause financial difficulties for European businesses.