PwC weekly media briefing 8 April


This week’s topics: 

  • The impact next week’s reopening will have on retail and hospitality  

  • New research from PwC into the treatment of vulnerable customers by financial services firms

  • New figures on the latest UK defined benefit (DB) pension deficit

Reopening of non essential retail, hospitality and leisure 

Lisa Hooker, Consumer Markets leader at PwC, said:

  • There is a lot of excitement around the reopening of non-essential retail, hospitality and leisure on Monday. Our recent Consumer Sentiment survey shows there is pent up demand, with sentiment being at its highest level since 2008. Retailers will want to open for longer hours and make sure they have new ranges and plenty of stock available to take advantage of this appetite to spend. 

  • Eating out and fashion are the categories earmarked for big spending. As the weather gets warmer, there will be a desire to refresh wardrobes and shop for the new season, which will help fashion retailers begin to recover from the 27% decline in sales last year. There will also be reasonable demands for homeware and garden furniture, as people look to welcome guests to their gardens. 

  • Of course there will be some retailers who will not reopen next week, as we saw some big names exit in the early part of the year. For some high streets it will get worse before it gets better but there are big opportunities for growth into the gaps that are emerging. Value discounters, food takeaway outlets and tradesmen services are likely to replace existing retailers in the months ahead. 

How do financial services firms treat vulnerable customers?

Following the Financial Conduct Authority’s (FCA) final guidance on the fair treatment of vulnerable customers (published in late February), PwC surveyed 25 financial services firms on how they approach the treatment of vulnerable customers.

Angus Goldie, PwC partner and UK RegTech Leader, said: 

  • It’s encouraging to see that so many staff feel empowered to treat vulnerable customers fairly - 60% of respondents strongly agree that all staff in their firm understand their responsibility to treat vulnerable customers fairly, and 36% strongly agree that staff are supported to do the right thing for the customer regardless of the time or cost to the firm.

  • However, while firms have made a lot of progress - particularly on customer-facing aspects of their business - there’s a need for more focus on product and service design and other non-customer facing functions. 

  • We found that 17% of product and service design teams, and 20% of senior management/board, are receiving training on vulnerable customers either on a one-off basis only or not at all.

  • Our research found that firms still have some work to do in taking the crucial next steps after identifying and recording vulnerabilities. This includes making changes across the product lifecycle and customer journey to meet customer needs. We found that technology limitations are a barrier to taking these next steps for many firms - 20% of respondents said that their firm’s technology does not support them at all to monitor and evaluate customer outcomes.

Latest UK defined benefit (DB) pension deficit

For the second month running, the aggregate deficit for the UK’s 5,000+ DB pension schemes remained at zero at the end of March, according to PwC analysis. Meanwhile, PwC’s Adjusted Funding Index, which incorporates strategic changes available to most pension funds, showed a £180bn surplus.

Raj Mody, global head of pensions at PwC, said:

  • This is a paradigm shift for defined benefit pension schemes. The industry has become conditioned to expect pension funds to have deficits. It's not surprising that - after years of cash repair payments and investment returns - eventually they have reached a fully funded position, in aggregate at least. We'd expect this to hold for various reasons. As the economy recovers this will likely be positive for asset values relative to liability values. 

  • There will be short-term volatility so trustees and sponsors will want to have contingency plans, even if in many cases this is simply monitoring and riding out the volatility because the company covenant and pension fund can bear it.

Something to listen to: COVID-19 has disproportionately impacted women's employment. So how can we empower women throughout the economic recovery? Listen to this podcast to learn what needs to be done now to drive real change. #PwC_LEAP

Something to read: What can local businesses do to maintain the momentum of the #shoplocal drive? Craig Skelton considers the findings of PwC UK's #StoreOpenings report with Local Data Company and looks at the opportunities. Read here

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