Your June roundup: news from the world of finance, business and technology
FCA pushes ahead with plans to change overdraft fees
The FCA has confirmed that their shake-up of banking overdraft fees will come into force within the next 12 months — 6 April 2020 to be precise.
Calling the current fees “dysfunctional” and capable of “causing significant consumer harm”, the proposed changes mean banks and building societies won’t be able to hike their prices up for unauthorised overdrafts (compared to authorised overdrafts) anymore.
Because overdraft fees vary wildly across banks — some charge by the day, others by interest on the amount owed, others by different rules still — it makes it almost impossible for consumers to “meaningfully compare or work out the cost of borrowing as a result of complex and opaque charges.”
What will the new, standardised fee structure look like? Simpler, fairer and cheaper options for customers across the board.
New findings by the ONS show ageing population causing economic strain
A new study released by the Office of National Statistics (ONS) has predicted that 24% of the population will be 65 or older by 2042.
It’s also estimated that 50.55% of those aged 65 to 69 will be economically active in 2067 compared to just 10.21% in 1992.
But what does an ageing population mean for the UK economy? Well for starters, the old age dependency ratio (the traditional measure of population age structure) is becoming outdated as more people are working later into life and beyond the current State Pension Age of 65.
There is expected to be a significant strain on the welfare budget and healthcare services in the years to come with an ever ageing population — the main message from the ONS being that “reliance on the state is not a safe bet.”
As Octopus Wealth’s own CEO, Richard Wazacz, commented: “The fact that many of us can expect to live longer is to be celebrated...but an ageing population will still put pressure on health services and the welfare budget – not to mention our individual household finances. It’s never too early to think of retirement, it can be too late.
Monzo valued at over £2 billion
Led by the US-based investment firm Y Combinator (best known for backing Airbnb, Dropbox and Reddit), Monzo has now overtaken competitors Revolut to become the second most valuable fintech in the UK, after OakNorth, the small business lender.
Monzo’s expansion has been rapid — with 2 million people now using the digital bank and usage up from 13% to 30% in the last 12 months.
Head of Compliance, Jocelyn Tasker, said the company’s biggest challenge now is “moving fast while staying between the lines.”
UK and US announce fintech partnership
During Donald Trump’s recent visit to the UK, it was announced that the UK and the US would be entering into a new Financial Innovation Partnership (FIP) together.
The partnership will see more collaboration between the two when it comes to technical expertise, regulatory issues and commercial opportunities.
Commenting on the partnership, economic secretary to HM Treasury, John Glen, said that as two countries “at the cutting edge of innovative fintech,” the collaboration would allow both to “further harness new technologies, share experiences and service customers.”
LGBT pay gap
LGBT+ workers earn on average £6,703 less than their straight co-workers, a new study has revealed.
YouGov compared the salaries of over 4,000 workers across different industries, revealing that those who identified as LGBT+ were earning less than those who identified as straight.
What’s more, one quarter of LGBT+ workers say they didn’t want to reveal their sexuality at work, with one third having experienced homophobic remarks at some point in their career.
This year’s Pride festival (Saturday 6 July) marks 50 years of LGBT+ activism since the Stonewall riots.
Facebook launch Libra
Facebook has joined the cryptocurrency world with its own digital currency — Libra.
Expected to hit the market in 2020, the “global currency and financial infrastructure” will be powered by a version of blockchain created specifically by Facebook.
Intended to serve the 1.7 billion people around the world who currently don’t have access to a bank account, Libra will allow Facebook’s billions of users to make financial transactions online through their digital wallet, Calibra.
Facebook also has plans to integrate Libra payments in order to make day-to-day transactions. Considering Uber and Lyft are early investors in the project, in the not so distant future it looks like we could be paying for everyday services using Facebook’s new cryptocurrency.