This week it felt like the wheels were turning to end many of the support measures in place during lockdown.

The FCA had a consultation paper out on whether the payment deferral period and measures should be extended. There is definitely some pressure to not have this extended.

Afterall with 1.8m customers on mortgage payment holidays and 60% rolling over, this would just kick many issues further down the road. However, there is also precedent elsewhere that this may not be as simple as just removing support. In Australia this was extended for a further 4 months, and interestingly in Canada is also backlash on interest charges…. I suspect the discussion is far from over here and we will likely see more developments in the UK too.

There was also positioning in the media on the ending of the Furlough scheme too. This is quite likely in my view (primarily because of the huge cost of the scheme), however, with this, it will crystalize much of the economic impact across the country… which is the concern.

Both of these are very much a double whammy… starting to flow through in the Autumn. Although the economic impact from COVID is likely to be less than feared, unemployment is still likely to surge as a result… we need to be prepared.

And the wild card here is still the virus itself. With increasing rates in many countries around the world again, we could start to see enforced mass re-lockdowns (Melbourne is an example, and regional restrictions in more other places like Preston and Aberdeen in the UK). All of this could happen again, but without all the previous support measures… potentially quite different dynamics on the economy.

Lastly, a couple of other interesting news items from the week.

• There is still potential for negative interest rates… somewhat unchartered territory
• It does seem like there has been less borrowing – on credit cards and also in areas like second charge mortgages too… consumer dynamics have changed
• Overdraft interest rates increased to 40% based on rules from earlier in the year with implementation postponed to August.
• More movement on price caps in the energy sector, good news for consumers, but will give scant relief to a business sector with already squeezed margins and shedding jobs.
• The post-COVID office is still under discussion. A nice graphic from the BBC.

Have a good weekend everyone… looks like a scorcher…@chris_w_tweet

This week continued to feel a quieter week and being the last week of July, the news cycle slowed somewhat. Here are the key stories this week.

It has been reporting week for the banks and most have posted significant increases in reserves for losses due to loan arrears and write-offs. At Lloyds was an eye-watering £3.8 billion however, the pattern was also replicated at Barclays and Santander. Interestingly it also appears 65% of payment holiday arrangements have been rolled over too. All is this is an indication of yet more difficult times to come for many customers and pointing to a wave of volumes of customers in arrears. (the increase in rent arrears advice also an early indicator)

With the furlough scheme due to end in October and covering 9m people, reported projections are pointing to a 10% unemployment rate when it finishes. It is looking increasingly likely regional lockdowns will complicate the picture will be further too, with more restrictions in and around Manchester on Friday.

Different views on when and how to return to the office are clearly starting to emerge. RBS is saying stay at home, with Barclays wanting people back. Undoubtedly real estate is being looked with some of us clearly happy to continue to work at home. It is however not for everyone with many people desperate to return to the office for some respite (always worth remembering).

Ofcom this week released their guidance on vulnerable customers. It is interesting how the various industries are starting to align, and at increasing speed too.

The pressure on fin-tech, noted before, crystallized a little with a note of concern from Monzo on how COVID has impacted their business model and revenue streams. This is not a great headline for all account holders. Monzo likely need to be very careful with the headlines, consumers funds are largely protected as a bank, but customers becoming uncertain and moving money really will not help either. (on an entirely unrelated thought… think how quickly a bank run could happen online)

We have been having a discussion on the impact of COVID on predictive credit risk models (including credit bureau scores etc) for a while, however we are not alone. In the financial markets, where sophistication is greater and AI is more widely used, they are having trouble keeping up too. History is not a good predictor of the future when you have unique black swan events happening it seems..!

Lastly a couple of other interesting stories

• Questions on the length of immunity to COVID… it could only be months… would mean this is here to stay longer term
• Linkedin as a recruitment tool for intelligence services… a reminder it is now online too (with the TikTok discussion in the background too as I write this).

Some things to think about this week. Have a good weekend everyone…. @chris_w_tweet