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Scotsman
3 days ago
- Business
- Scotsman
Counting the cost of digital and financial exclusion
BerkahStock - Many Scots are facing digital and financial inclusion, which also places them at an increased risk of being scammed, and too many people are on the brink of financial crisis as high costs persist, according to two recently published reports. Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... One report published this week by Virgin Money and WPI Economics, Tackling the Barriers to Financial and Digital Inclusion in Scotland, highlights the significant impact it is having on the Scottish economy. Key findings include that digital exclusion impacts wellbeing in Scotland to the value of £1.2 billion annually, unbanked households pay £62 million more in bills per year, and digital and financial exclusion causes 36,000 additional scams each year, costing £32m. Advertisement Hide Ad Advertisement Hide Ad There are around 104,000 households in Scotland who do not have access to a bank account. Households without this facility face additional costs with bills and everyday expenses as they are unable to get better rates and payment plans. The report also found that 'digital natives' are no more protected from the impacts of such exclusion than older generations. In Scotland, Gen-Z adults (14 per cent) and older generations (another 14 per cent) are almost three times more likely to experience digital or financial exclusion than Millennials (5 per cent). Half of Gen-Z respondents also stated that they have very low confidence in money management or using financial products. The research revealed considerable concern about scams across Scotland –70 per cent of Scottish adults surveyed said they were worried about the sophistication of scams. Advertisement Hide Ad Advertisement Hide Ad Half of scam victims reported worsening mental health as a result of being targeted by fraudsters, with 46 per cent saying that being targeted has made them less likely to access financial services online as a result. Some 36 per cent of Gen-Zers say they have been scammed, compared to19 per cent of older generations. Gen-Z is also the generation least likely to be confident in avoiding scams – 66 per cent, compared to 79 per cent of Millennials, and 73 per cent of older generations. Raymond Pettitt, director of customer service and operations at Virgin Money, says: 'This research busts the myth that younger generations are immune from digital and financial exclusion. In reality, Gen-Z is falling through the cracks, just like the oldest in our society. We encourage the Scottish Government to act swiftly in partnership with the UK Government, banking industry, and the third sector to create a unified approach to tackling this.' Advertisement Hide Ad Advertisement Hide Ad Focus group discussions carried out for the report revealed that those living in Scotland were fearful about the risk of being scammed. For example, Dave, 39, said: 'Unless it's absolutely vital that I need to do something [online], I would probably not do it or at least have a lot of hesitation. I've heard a lot of crazy scams and I always [think] it is a matter of time before it happens. I try and avoid doing it unless I'm 100 per cent sure, and to be 100 per cent sure is pretty tricky.' The research started from the basis of assuming some digital and financial capabilities. But 5 per cent of Scottish adults surveyed said that they do not have access to a current account. Just over a quarter have no savings, and almost a third do not have a credit card. The report made three key recommendations for Scotland, focusing on the actions the Scottish Government can take to bolster levels of financial and digital inclusion: Advertisement Hide Ad Advertisement Hide Ad 1. The administration should swiftly deliver a new Digital Inclusion Action Plan. 2. Holyrood should use its convening power to establish a Financial and Digital Inclusion Taskforce, drawing on the public sector, the financial services industry, and key third sector stakeholders. 3. The Scottish Government should commit to using dormant assets to provide funding to organisations and initiatives seeking to tackle financial and digital exclusion, adopting a similar policy to that in action across England and Wales. Virgin Money insists it remains focused on addressing these issues. It states that it is the only bank working with the National Databank to offer free SIM cards in its branches to those facing data addition, its funding through the Virgin Money Foundation has delivered £1.3m to 15 community anchor organisations in Glasgow through its Building Digital Skills fund, which has awarded 93 grants to schools totalling £203,000 via its Volunteer and Connect fund. Advertisement Hide Ad Advertisement Hide Ad Sandy Begbie, Scottish Financial Enterprise chief executive, comments: 'Digital exclusion puts people at a distinct disadvantage in today's society, making it harder to receive benefits, secure housing or get a job. 'When we launched our sector growth strategy, we made clear that tackling financial exclusion was a priority for our industry – one with potential to make a meaningful difference to the lives of people across Scotland. Through our work with regulators, charities and the banks themselves to establish a pilot project delivering bank accounts to school leavers, we want to connect more people to the banking system. 'As an industry, we are determined to ensure that everyone in Scotland feels the benefits of having a strong financial sector, and providing greater access to the financial system is a key part of this plan.' A separate report published this month by Royal London revealed that a significant number of UK households remain financially vulnerable and are struggling to stay afloat. Advertisement Hide Ad Advertisement Hide Ad Its annual Financial Resilience Report found large numbers of people saying they are facing financial hardship. Some 41 per cent of Scots aged 50 to 69 said their discretionary income has reduced in the past year, 39 per cent said it has stayed the same, and only 20 per cent reported an increase. Meanwhile, a fifth of Scots expect to have less money for retirement due to the cost of living crisis. Some 3 per cent have had to delay retirement, and 5 per cent have had to prioritise short-term bills over terms of retirement planning awareness, 37 per cent of Scots aged 50 to 69 said they have thought about how much they might need in retirement, but haven't done the calculations. And just under a third said they haven't even thought about how much they might need. Confidence tends to be lacking when it comes to retirement savings, according to the Royal London report. Only 4 per cent aged 50 to 69 feel very confident that they are saving enough for a good standard of living in retirement, and 36 per cent are not at all confident. Advertisement Hide Ad Advertisement Hide Ad Across the UK, Royal London said that one of the most concerning findings is that one in five adults have less than £100 in cash savings, a figure that has remained unchanged for two years. With little or no financial buffer, the report warns that these individuals are highly vulnerable to rising costs and unexpected expenses. The research also found that, looking at the UK as a whole, one in ten are on the brink of a financial crisis and 2 per cent are already in one. Mid-life UK adults are the worst affected age group, with 16 per cent either in or close to a financial crisis. Only 41 per cent of mid-lifers are satisfied with their current standard of living. But there were some signs of recovery in some people's finances. This year, 59 per cent of UK adults said they had money left over at the end of the month, compared to 49 per cent last year, and there was a small rise – £15,864 per person compared to £15,549 in2024 – in the average amount of people's cash savings. Across the whole sample, more than half of mortgage borrowers said their housing costs had increased in the last year by an average of £327 per month. Among single mortgage borrowers, the rise was £252 per month with those living alone paying £298 per month more. Advertisement Hide Ad Advertisement Hide Ad Sarah Pennells, consumer finance specialist at Royal London, says: 'We have seen some signs of an improvement in people's finances in the last year, but those still struggling with higher bills and food prices face difficult decisions. 'We're seeing a big divide between those who can absorb higher costs and those making daily sacrifices – cutting back on essentials, dipping into their savings, or going overdrawn at the end of the month. 'After more than three years of rising costs and higher bills, we're seeing the impact on people's longer-term finances, as well as their day-to-day spending. 'For those feeling the squeeze, it's worth checking if you're eligible for state benefits, grants or help from local councils. Many miss out simply because they're unaware of what is available.'
Scotsman
5 days ago
- Business
- Scotsman
with £1.8 BILLION on non-essentials
The results were released by Virgin Money | Virgin Money Credit card spending trends have been revealed, including spikes in travel and home improvements – totalling £1.8 billion on non-essentials. Sign up to our daily newsletter Sign up Thank you for signing up! Did you know with a Digital Subscription to Edinburgh News, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Virgin Money has released a report on spending between March and May by its customers this year, which also showed marked increases in clothes purchases compared to the same period last year. Consumers spent a total of £93.3 million, up from £86.2 million year on year, with a 26 per cent increase in spending on Vinted. Advertisement Hide Ad Advertisement Hide Ad Other top locations for fresh garments included Next, Zara, and ASOS. While £495.4 million was spent on travel during the spring, a 15 per cent increase compared to the previous quarter and a 12 per cent year-on-year increase, there was a 13 per cent increase in airline services compared to the same quarter. A spokesperson from Virgin Money said: "Clearly, the change in season got people more in the mood to spend.' Naturally, heading into spring you can understand people will look for a seasonal change of wardrobe and a spring clean can get you in the mood for some DIY. Advertisement Hide Ad Advertisement Hide Ad 'But the numbers show across the board that people were spending more and confidence to do so is increasing.' Clothes spending soared | Virgin Money 'The change in season got people more in the mood to spend' When it comes to food and drink, a total of £194.3m was spent on eating out and on takeaways this spring, a 12 per cent increase compared to same period last year and 10 per cent up on the previous three months. Subscription spend was also on the rise with £3.8 million shelled out, with Sky and Netflix remaining top choices for their customers. But it was home improvements that saw a huge rise in spend, totalling £89.1 million, with the season seemingly driving DIY jobs. Advertisement Hide Ad Advertisement Hide Ad This was an increase of more than £8.8 million compared to spring 2024, according to the bank's data. While almost £10.5 million was spent in B&Q mild and pleasant conditions in the UK during the spring, the numbers also revealed many were jetting off with £495.4 million spent. And Jet2, Atlantic and British Airways were the airlines to benefit most with Premier Inn, and Centreparcs also seeing high spend for hotels and accommodation. A spokesperson from Virgin Money added: 'We always find it fascinating to delve into the detail on where people are spending. 'The shift from winter to spring has clearly driven many to get back in the swing when it comes to trips away, with spend majorly increasing.'
BBC News
7 days ago
- Business
- BBC News
Richard Branson praises East Yorkshire school's £5 entrepreneurs
Sir Richard Branson has praised pupils at an East Yorkshire school for their entrepreneurial Primary School, near Brough, has been involved in the "Make £5 Grow" programme since the scheme, pupils come up with a business idea and are loaned £5 to set it up, with the aim of returning a the years, more than 240 pupils from the school have taken part, with ideas including homemade jewellery, artisan soaps, candy floss, ice creams, and breakfast tuck shops. Writing on his blog, Sir Richard, who is one of Britain's best-known entrepreneurs, said it was brilliant to see more than 200,000 students from about 3,000 schools had taken part in the programme since its launch in said he had "loved" reading about the projects at Newport Primary School, which demonstrated why entrepreneurship should be taught in schools. "Their involvement began when a planned school trip to Northumberland was cancelled due to Covid restrictions [and] the school set up a school camp-out, which grew into a larger entrepreneurial project," Sir Richard said."The students have since experimented with various business ideas, including car washing, homemade sweet treats, ice creams, making arts, crafts, and jewellery."Describing the experience of setting up a business, one pupil said: "The best part was seeing people love what we made."The scheme is run by Virgin Money, which Sir Richard founded in O'Connell, the school's head teacher, said the children had been "empowered" by the programme because it had "planted the seeds of confidence, creativity, and community-mindedness that will serve them far beyond their school years". Listen to highlights from Hull and East Yorkshire on BBC Sounds, watch the latest episode of Look North or tell us about a story you think we should be covering here.
Scotsman
7 days ago
- Business
- Scotsman
‘Hidden' costs of digital and financial exclusion in Scotland
Raymond Pettitt | Supplied A report published today by Virgin Money and WPI Economics, 'Tackling the barriers to financial and digital inclusion in Scotland', highlights the significant impact that digital and financial exclusion is having on the Scottish economy. Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Key findings include: digital exclusion impacts wellbeing in Scotland, to the value of £1.2 billion annually; 'unbanked' households pay £62 million more in bills per year; and digital and financial exclusion causes 36,000 additional scams each year, costing £32m The report also finds that so-called 'digital natives' are no more protected from the impacts of digital and financial exclusion than older generations. In Scotland, Gen-Z adults (14 per cent) and older generations (14 per cent) are almost three times more likely to experience digital or financial exclusion than millennials (5 per cent). Half of Gen-Z respondents also stated they have very low confidence in money management or using financial products. Advertisement Hide Ad Advertisement Hide Ad The research also reveals considerable concern about scams across Scotland: 70 per cent of Scottish adults surveyed said they were worried about the sophistication of scams 50 per cent of scam victims reported worsening mental health as a result of being targeted by scammers. Some 46 per cent stated that being targeted has made them less likely to access financial services online as a result 36 per cent of Gen-Z say they have been scammed compared to 19 per cent of older generations. Gen-Z is also the generation least likely to be confident in avoiding scams: 66 per cent compared to 79 per cent of millennials and 73 per cent of older generations. Raymond Pettitt, director of customer service and operations at Virgin Money, said: 'This research busts the myth that younger generations are immune from digital and financial exclusion. 'In reality, Gen-Z is falling through the cracks, just like the oldest in our society. We encourage the Scottish Government to act swiftly in partnership with the UK Government, banking industry and the third sector to create a unified approach to tackling this, to avoid leaving both generations behind.' The report makes three key recommendations for Scotland, which build on the recommendations made for the UK as a whole. These centre on the actions the Scottish Government can take to bolster levels of financial and digital inclusion within Scotland specifically: Advertisement Hide Ad Advertisement Hide Ad The Scottish Government should move swiftly to deliver a new Digital Inclusion Action Plan. Building on this research, this actionable plan should focus on longer-term support, prevention and tackling structural barriers to digital inclusion in line with the work of the Digital Inclusion Alliance and building on the Connecting Scotland programme. The Scottish Government should use its convening power to establish a Financial and Digital Inclusion Taskforce drawing on the public sector, the financial services industry and key third sector stakeholders. To address the different generational needs highlighted throughout this research, the Taskforce should focus on joint action for addressing barriers, better coordinating existing initiatives and providing clarity on delivery responsibilities and outcomes. The Scottish Government should commit to using Dormant Assets to provide funding to organisations and initiatives seeking to tackle financial and digital exclusion, adopting a similar policy to that already in action across England and Wales.
Yahoo
25-06-2025
- Business
- Yahoo
How Nationwide's £7m woman became Britain's most controversial banker
The great and the good of Britain's co-operative and mutual sector were at No 10 earlier this month for a summer garden party hosted by Business Secretary Jonathan Reynolds. The soiree to celebrate the sector attracted executives from the likes of John Lewis and the Co-op, but arguably the biggest hitter represented was Nationwide, the 140-year-old behemoth that counts one in every two adults in Britain as a customer. As the UK's largest mutual society, it has long been the poster-child for the sector and prides itself on being run for the benefit of its 17m members rather than profit-hungry shareholders in the City. Yet to some, Nationwide's mutual ethos is now under threat from Dame Debbie Crosbie, its chief executive. The 55-year-old banker has courted controversy through aggressive dealmaking that some say is at odds with the purpose of a mutual. Nationwide's £2.9bn acquisition of challenger bank Virgin Money triggered protests last year. Concerns were heightened last week when it emerged that Nationwide was preparing to hand Dame Debbie a generous new pay package that could earn her a maximum payout of nearly £7m. Critics say the arrangement mirrors the worst of bonus culture at big banks. 'It's like Nationwide is saying we've made the society far bigger by buying a bank [Virgin Money], and now because it's bigger, we have to pay our people even more,' says James Sherwin-Smith, a Nationwide customer who has launched a campaign to join the board to provide a voice for members. 'The society is being led towards becoming a bank in everything it does.' Nationwide's members will be given a chance to vote on Dame Debbie's pay at a crunch annual meeting on July 25. Mr Sherwin-Smith, who plans to vote against, notes that the deal would make Dame Debbie 'the most highly paid building society CEO ever'. The vote could be seen as a referendum on the chief executive's leadership, though it is non-binding. How has the Glaswegian executive managed to become Britain's most controversial banker? To understand why Dame Debbie's leadership has riled some people up, it's important to understand the position Nationwide plays in British life. It is second only to Lloyds Bank as Britain's largest mortgage lender, providing nearly £16bn of loans to new homeowners alone. At the same time, it is a flag-bearer for the UK's historic mutual sector, meaning it is owned by members rather than shareholders. Nationwide was established in the 1880s in south London as the Southern Co-operative Permanent Building Society – it became Nationwide in 1970 – to help people buy a home. It has an egalitarian spirit at its core that sees members prioritised. The mutual has for decades been a counterpoint to the banks. Historically it has swept up small building societies when they go bust – like Portman, Cheshire, Derbyshire and Dunfermline – and offered lower-cost mortgages over generations rather than competing with banks for market share. Nationwide survived the financial crisis unscathed and even outright rejected the banking model, with members defeating a vote to convert into a bank in 1997. Dame Debbie was hired to run the mutual in 2021, replacing Joe Garner who had been at the helm for six years. The daughter of an engineer and social care worker, Dame Debbie had previously run TSB and was widely credited with helping stabilise the institution that had been battered by an IT meltdown leading to a £49m fine. The new chief executive backed the society's mutual model upon joining saying it makes it 'a purposeful and unique force for good.' Yet some say Dame Debbie's new pay deal contradicts that spirit. Under the terms of the new deal, her maximum windfall will rise by 43pc from £4.8m to £6.9m if she hits all of her financial targets – making her the best paid boss in the mutual's history. The plan puts her well beyond her building society peers. Susan Allen, chief executive at Yorkshire Building Society, earns around £1.6m a year, while Steve Hughes, the boss of Coventry Building Society, was paid £1.2m last year. The change in policy has been spearheaded by Tracey Graham, the chair of the Nationwide pay committee, who said Dame Debbie could be rewarded with even larger pay rises in future in order to better compete with banks. 'We remain materially behind some of our UK banking peers, and the committee recognises that future policy changes among other firms may further increase the existing gap,' she said in a pay report. John Cronin, from SeaPoint Insights, says Nationwide needs to pay well to attract the best: 'She is in the top tier of bank leaders. The time will come where she could easily be courted by the likes of Natwest and Lloyds.' The Nationwide Group Staff Union has cautiously backed the plan, saying the deal must be 'justifiable and proportionate'. It said: 'Debbie Crosbie's leadership as one of the few women heading a major financial institution is significant, and we support progress toward greater diversity at the highest levels of the industry.' But not everyone is satisfied. Baroness Sharon Bowles, a Nationwide member, says: 'I am unhappy about it because I'd like to see that they were giving more back to their members. If they want to wear the community bank label in some way, then they should be a bit more like their customers.' Lady Bowles says she understands the issue of having to pay well for top talent but plans to vote against the package in an effort to rein in excessive pay across finance. 'It's unpalatable, but it's the reality of the situation.' Luke Hildyard, head of the High Pay Centre, says it is 'hypocritical' for Nationwide to set pay like a bank while also promoting itself as an alternative to profit-maximising lenders. Nationwide has spent large sums running adverts featuring actor Dominic West as a stereotypical 'fat cat' claiming Nationwide is not like a banks, a move that has riled competitors. Santander filed a complaint with the advertising watchdog last year and one ad was banned for misleading customers over branch closures. Hildyard says: 'One of the most egregious business practices people associate with the big banks is the high pay and bonus culture. For Nationwide to say we need to ape those pay practices is pretty hypocritical. It contradicts the purpose of mutuals, which is to ensure that everybody prospers together.' Lord Sikka, emeritus professor at Essex Business School and a Labour peer, is urging Nationwide members to vote against Dame Debbie's pay and not to 're-elect any director as they all have their snouts in the trough'. Nationwide has stressed that the payout would only be triggered if there was outstanding performance at the lender. However, the group has not specified its chosen performance measures and targets yet, saying only that they will provide a 'clear link with customers' interests and our short and long-term financial and strategic aims'. A spokesman said the society had become the second-largest provider of mortgages in the UK only because it can 'attract, retain and motivate talented leaders to run a business of this scale and prioritise member value'. The pay controversy is not the first time Dame Debbie has put noses out of joint during her four-year tenure of Nationwide. The Virgin Money deal, the biggest bank takeover since the financial crisis, also made her a target for criticism. At the time, Dame Debbie said the move was a major boost for the mutual sector because 'more people will experience the benefits of mutual ownership and the customer-focused approach of a building society.'. Yet the takeover faced stern opposition from some Virgin shareholders, who complained the price was too low, and some Nationwide members after they were denied a vote on the deal. While Virgin shareholders were permitted a say, mutual members were told they would be given no such chance because the lender did not need to seek permission. Fitch, the ratings agency, has warned that the Virgin deal will weigh on profitability for the next three years. For some, the Virgin Money controversy was symptomatic of a wider shift that has seen the mutual become less democratic. Sherwin-Smith, a former payments executive, claims the society's 'autocratic' management style is at odds with the mutual concept. Before the pandemic, annual meetings were held every year in-person, something Sherwin-Smith says helped hold management to account and provide members with a sense of solidarity. But Nationwide now holds them online every year. 'It's a lot harder for members to express their views,' Sherwin-Smith says. 'There are fewer opportunities to do so, and increasingly the members are being treated with contempt. 'They want to run the show and the members are members in name only. That concerns me because if no one is holding management or the board to account, then they can just do whatever they want.' Edwin Fisher, who represents the Building Societies Members Association, is also concerned about Nationwide's harder driving culture under Dame Debbie. 'Nationwide now state 'Our purpose is Banking' whereas the stated purpose and principal purpose is the provision of loans on residential property,' he says. 'Any attempt to apply accountability in some form or another is strongly resisted and suppressed by the board.' Nationwide, which is chaired by former Schroders finance boss Kevin Parry, has rebutted the accusation, saying that since moving the AGM online there has been higher attendance from members. It also said its board had the appropriate skills and experience to hold management to account. The mutual said it consulted members frequently through its Member Voice panel, which has about 6,500 members. It canvassed the views of more than 100,000 of its members on their attitude to its acquisition of Virgin Money, with 92pc positive or neutral. It also said more than 645,000 votes were cast in the last election of directors and more votes were cast in favour of directors than at any point in the past seven years. One of the most eye-catching innovations under Dame Debbie has been the payment of bonuses every year to some of its members. A so-called 'Fairer Share Payment' of £100 was made this year, alongside a 'Big Nationwide Thank You' of £50 tied to the Virgin takeover. While warmly welcomed by those who receive the payments, Sherwin-Smith questions whether it is a good use of funds. He says the Fairer Share bonus, as well as the £2.9bn spent on Virgin, could have been recycled into better mortgage and savings rates for members. Meanwhile, only 4m members out of Nationwide's 17m customers receive the cash, as they must have a mortgage and current account to qualify rather than just a mortgage. The adventurous corporate actions of Dame Debbie contrast with her quiet home life. She lives in Falkirk with her husband, an automotive entrepreneur, and is said to enjoy Hello! magazine and the occasional romantic novel. Dame Debbie, who was comprehensive school-educated and went to her local University of Strathclyde, has defended her record at Nationwide by arguing that she is creating a 'modern mutual' fit for the future. 'It's no longer enough to simply look better than a bank,' she said in 2023. 'Mutuals need to do more than just deliver a change from banking. They need to inspire a change to banking. Banking can, and should, be fairer. As mutuals we should hold a mirror up to the banks to secure change for society.' Could Dame Debbie be tempted to have another foray into the banking market? With TSB up for sale, there is speculation that she could make another bold bid for a bank, especially given her familiarity with the business. Nationwide has played down this prospect – a spokesman said 'we do not comment on rumour or speculation. Right now, we are focused on making the most of our acquisition of Virgin Money' – but analysts believe she may be tempted. Few if any Labour MPs are willing to criticise Nationwide given mutuals and co-operatives are the flavour of the month for the Government, which is attempting to double the size of the sector during this parliament. Dame Debbie was awarded her title for services to the financial sector in June as part of the King's birthday honours. The board look likely to back her £7m pay deal in an attempt to keep her at the society. Yet if members vote against the package, it will at the very least take the shine of Dame Debbie's swashbuckling run. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
