An Interview with Fintuity’s Head of Strategy, Ed Downpatrick – We Have Cause to Be Optimistic
We sat down with Edward Downpatrick, Fintuity’s Head of Strategy to assess some of the key topics facing us as we emerge from the Covid lockdown and life slowly returns to some normalcy.
As we begin to emerge from the depths of a year long lockdown, how do you see the economic recovery panning out?
Recoveries rarely move in straight lines and there is plenty of room for disappointment on the way back to something approaching normalcy. Dates for international travel are a moveable feast and the travel industry and its constituent businesses, such as airlines and hotels, will continue to suffer, as will those who hope to carry on enjoying it in a vaguely affordable manner. People will go on holiday at some point and we can be sure that they are quite likely to fly there and stay in hotels when they arrive. The bigger question is when and whether the companies involved have enough resources to survive another disjointed holiday season.
Markets appear to be feeling optimistic, but not dangerously so. This is a far remove from the intensely fearful attitude held just over a year ago, and more restrained than that reflected by the multi-year highs many markets enjoyed since the first lockdown. The recovery we saw last year was a narrow one, led by a paucity of sectors, but others can now begin to look to a covid-free or at least, covid-controlled, future.
Many will be keen to return to a business as usual approach as we emerge from lockdown, how do you see the UK finance sector responding in kind?
We will see cheaper loans for businesses and households which will also buoy the property market, despite a lot of banks currently having stricter mortgage conditions in place. These conditions favour those in ‘steady’ professional services jobs such as accountancy, the law, and management consultancy. Loans should be cheaper and more readily available as the Bank of England provides measures to encourage and expand lending. These measures will support up to £190 billion of bank lending to businesses which is more than 13 times the net amount they lent in 2019. Lenders have also been put in a position to give those struggling to make repayments the help they need.
The property market has been fairly buoyant during the crisis, do you feel that is trend will continue and if so, in what direction?
There will continue to be significant activity in the property market as businesses all over the country restructure their working procedures. There will be continued divestment out of commercial office space with an uplift in warehouse take-up and rural markets will continue their ever-increasing popularity as people choose to permanently relocate their primary residences. This does not mean metropolitan life is dead, far from it, but its demographic representation will be changed for the long term. UK property sales are at a 16-year high and house prices are soaring. Some of the nation’s biggest lenders are increasing the amount they will lend to first-time buyers and the government is even backing a 95% mortgage scheme to give the young a chance to get on the property ladder. Expect lively activity but people ought to go into high loan-to-value mortgage arrangements with their eyes open.
Are there any upcoming regulatory considerations that we should be aware of say in terms of pensions and investments?
The Financial Conduct Authority has its eyes fixed on risky investments in foreign exchange and cryptocurrency being encouraged by so-called ‘finfluencers’ on social media platforms such as TikTok. The FCA is worried younger people might be in danger as adverts on even the London Underground promote the simplicity of cryptocurrency investments. Further down the line, there might be a reduction in the pension tax relief to help replenish the Treasury’s coffers, but it would not be removed wholesale. We will keep our ears pricked for further announcements from the Chancellor.
The state pension age continues to increase with most us currently being able to retire at 67 or 68 depending on your date of birth. The Pensions Act 2014 means the state pension age will rise from 66 to 67 between 2026 and 2028. This first affects people born on or after April 6, 1960. Under the Pensions Act 2007, the state pension age for men and women will increase from 67 to 68 between 2044 and 2046, based on the current law.
You are the Strategy Director for Fintuity, what sort of reaction have you seen to Fintuity’s services in the past year or so?
Some who had never previously contemplated the importance of financial advice have sought our services. The frontline appeal we made during the first lockdown saw NHS staff and other key workers come to Fintuity’s advisers for support and financial sense checks. Beyond this we were able to help new clients better understand their circumstances, structure their finances, and begin planning for their futures. For many this meant investing in vehicles such as ISAs, with the tax-free benefits they offer, for the first time. Stock markets, overall, have responded to the crisis with resilience and those who have begun to commit funds to the markets have been rewarded.
Finally, any final thoughts?
We would encourage prospective clients to keep seeking financial advice in order to make the best decisions for themselves and their families. Take advantage of ISA allowances if your circumstances permit and if you are a would be home-buyer or seller, there is good news on both sides of the coin. Buyers are increasingly likely to get a mortgage and sellers are likely to get a good price for their property. Let us hope the vaccine programme proves the salvation of the travel and hospitality industries because our lives would be the poorer without them.
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Please Note: All information, references and dates included in this article were accurate at the time of publishing & all views expressed are the views of the interviewee.