The world of finance for both business and personal customers has, as a result of the Coronavirus changed forever. From the initial catastrophic impact that Covid-19 has had on businesses which have been forced to close through to personal finances which have been impacted through being furloughed. The society we once enjoyed with the freedom of movement has been shut where we are battling an unseen enemy.
No one knows what the future holds as we do not know when there will be an end to the lockdown and ultimately control of the Coronavirus.
- Will the economies of the world recover?
- What will the recovery look like?
- Will the landscape in our high street change?
- Will we all have employment to go back to?
- How will businesses cope?
- Will groups of industries and business that were booming in February 2020, like the travel industry be around after all this?
- How will banks and Financial Institutions adapt?
- What role will organisations like the Financial Ombudsman have?
There are so many questions which cannot be answered as the rulebook is being ripped to pieces on how we manage our finances and protect an individuals and businesses interests. The rights that we once enjoyed when dealing with financial concerns could well change forever as individuals in their thousands are affected by the coronavirus. Businesses both big and small are facing a global impact that nobody has ever experienced. The finance industry will look at protecting itself and challenge the rights that individuals and businesses once enjoyed to protect their own business models.
Will Coronavirus lead to Banking Complaints and Disputes?
By the very nature of the impact being seen through businesses and individuals there is no doubt when we start to take stock and look at our situation individually and address the financial concerns that we may have we will be challenging Banks and Insurers. From recouping monies for goods and services not being provided such as holidays and flights both home and abroad through to claims against insurance policies being challenged. There will be a raft of complaints and concerns registered against financial institutions across the board.
Banks will be challenged regarding their financial response in relation to protecting personal and business customers.
Insurance Companies will look at claims for any type of policy both in relation to coronavirus such as business interruption policies but also other forms of insurance which are not necessarily linked to coronavirus. Insurance companies will have to try and recoup some of the monies they will have to pay as a direct result of the lockdown and the raft of claims that will originate from this. The best way to cut costs and protect their margins will be to look at other forms of claims from policies such as life cover or home and contents insurance. Rather than just agreeing to pay out they will challenge these and try to avoid the monetary loss.
Credit card Companies and Mortgage Lenders should now be looking at offering individuals repayment holidays for mortgages and loans. There should be a reduction in interest rates or removal of interest being applied altogether in relation to credit cards and current accounts. None of these requests should adversely affect an individual and their finances. If they do then these at a later date need to be challenged.
How will your Personal Finances look during and after the Coronavirus?
The impact financially for both the personal and business community will be an enormous. Individuals have been furloughed or wait for benefits to filter through. This will negate some of the negative impact of the lockdown. However, with regard finances this is just pushing the problem down the road. We all hope that we can see our way out of these tremendously difficult times but marching its way soon after will be the financial impact of having to pay back the monies that are being borrowed in their hundreds of billions of pounds.
Will there be tax rises?
Will pensions be affected?
How will businesses and their ability to employ adapt?
Will there be jobs or mass unemployment?
Future financial prospects and family life including the ability to historically take holidays wherever and whenever individuals like could well have ended or certainly be seen to contract. Individuals appetites for going abroad may well have been dampened.
The Financial Ombudsman is also there as protection to impartially assess any dispute. Again it is not known how the Financial Ombudsman will adapt to what will clearly be in increase in complaints made by individuals and businesses against firms but also how it will adjudicate in order to protect consumers or businesses rights but balance against the changes that the financial institutions will experience.
Perhaps a positive from this is our analysing the way we live and how we want to live in the future.
There will be many different aspects of personal finances that need to be looked at and reviewed and if necessary challenged in order to protect an individuals or families finances.
- Travel insurance - have you booked a holiday where the travel insurance is not paying all the holiday firm is not refunding monies?
- Home insurance - with the call from employers to work from home is your current contents and building insurance cover sufficient to protect this?, Or have you had a claim that has been declined on the grounds that your policy did not cover this work from home?
- Has your credit card company refused to refund a purchase? - Under section 75 of the consumer credit act if goods or services of been purchased by your credit card and have not been provided then you can seek a refund in full. We are in unusual times so these will probably now be challenged, where they once weren’t.
- Has your bank declined to refund a purchase? Whilst not covered by law, chargeback is an agreement through Visa, MasterCard and AMEX to offer similar protection as with a credit card on purchases for goods and services. Again we would anticipate that firms will challenge any claims of this nature in order to protect their own business model.
- Will your life cover be affected? There is no doubt that premiums will increase to cover losses but its anticipated that firms will challenge claims for both life cover and whole life cover when they are made in order to protect the firm’s bottom line.
- Pet insurance? This is one of the areas which is not directly affected by coronavirus but where there is likely to see an increase in cases challenged or declined. Pet insurance is reliant upon annual boosters. However, with vets undertaking only emergency operations these could well lapse. Potentially this could invalidate your policy.
- Wedding insurance? Couples will have booked venues, cakes, wedding paraphernalia and honeymoons all of which are now in question or which have been cancelled. There could be claims against wedding insurance but also claims if payments have been made via credit cards or your bank account to the various lenders in order to recoup monies lost as a result of cancellation.
- Car insurance? We have been informed by the government to only travel if absolutely necessary. Woe betide anyone that has to put in a claim whilst we are now in lockdown in relation to their car insurance. Car insurers will look now at challenging claims to establish if the travel was essential. In the future claims will also be challenged and premiums increased again to reduce the potential losses that the insurance industry are likely to see as a result of coronavirus.
- If you do have a packaged bank account and you have suffered a loss in relation to foreign travel that could well be an ability to reclaim this part of the travel insurance package on the account. Be mindful that claims will be challenged for the very reason of the firm trying to protect their own financial position.
How will your Business Finances fare During the Coronavirus?
Businesses are suffering an immediate financial impact. There are so many different avenues open now where the government is looking at protecting businesses that any business owner should fully explore all that is to offer and take on board and request any form of assistance possible.
- Coronavirus business interruption loan scheme (CBILS) where banks have been provided with £330 billion in funds which government is guaranteeing the lion share in order to lend to business.
- Job retention scheme. Firms are provided with the opportunity to furlough staff where 80% of their wages are covered by HMRC.
- VAT delay. Firms are able to delay one quarters VAT for a period of 12 months.
- Business Rates, most small businesses will either receive a grant of £10,000 or £25,000 if they have rateable value in certain bands and types of business.
There is a huge amount of help being provided by the government yet we are seeing even at this early stage the banks taking a stance which is negative and destructive for businesses. If this continues and the attitude of the banks does not alter with a huge change in the way that they conduct their business the Financial Ombudsman will no doubt look at their behaviour on behalf of individuals and businesses in relation to various products and services.
It is difficult to remain positive when the world outside is losing its head. However, the world will recover although it will no doubt be different. One aspect that must be protected is a personal and business customer’s ability to challenge the actions of the financial institution through a complaint process that ultimately can be overseen and reviewed by the financial ombudsman.