View more on these topics

Industry suffers big loss in confidence

Business confidence in the financial services sector has fallen to a three-year low, according to the quarterly CBI/PricewaterhouseCoop-ers survey.

It shows that confidence fell more sharply in the last three months than at any time in the last three years.

According to the report, life offices and the mortgage sector are less pessimistic about being able to weather the storm than banking and fund management, where confidence has fallen fastest.

Overall, only 7 per cent of financial services firms say they are more optimistic about the overall business situation than three months ago while 47 per cent are less optimistic. The balance of minus 40 compares with plus three in June 2001 and is the lowest figure since September 1998.

Life offices, which saw a less pronounced fall in confidence than other sectors, benefited from a rise in business volumes in the third quarter of 2001 as investors moved towards capital-protected products. The sector also increased its profitability over the quarter.

Building societies also ach-ieved growing volumes of business although the dip in confidence was greater than in life offices.

But the survey suggests that fund managers will be bracing themselves for more job losses following the fastest fall in business volumes since December 1997, with further falls expected.

The survey, which was compiled from data collected before last month&#39s terrorist attacks on the US, provides a benchmark for the underlying fundamentals of UK business confidence.

PricewaterhouseCoopers financial services partner John Hitchins says: “With business confidence at a three-year low and worries that consumer confidence may be eroded in the wake of the terrorist strikes on America, the UK financial services industry is distinctly nervous.”

Scottish Life head of communications Alasdair Buchanan says: “Life and pension products are less cyclical. People tend to want to save when the going gets tough.”

Recommended

Davies points to easing of polarisation but strengthening of advice

Howard Davies has told the London meeting the FSA believes it can protect consumers while easing polarisation. He said: &#34IFAs now face a series of challenges – new products, charging caps and, potentially polarisation reforms – but the sector has already shown that it is able to adapt to change.&#34

B&W runs with bond duo

Bristol & West&#39s balanced guaranteed equity bond allows investors to put their investment in a stockmarket-linked bond or to split it between the bond and a one-year fixed rate high interest account.The guaranteed equity bond element tracks three stockmarket indices — the FTSE 100, Eurostoxx 50 and Nikkei 225 over a six-year term. It guarantees […]

Let sleeping dogs lie in polarisation debate

As the dust settled on the FSA&#39s open meeting on polarisation last week, I could only recall Sherlock Holmes and the case of Silver Blaze. “Then there was the curious incident of the dog in the nighttime,” said Holmes. “The dog did nothing in the nighttime,” came the rebuff. “That was the curious incident,” replied […]

EPP exodus feared as Eagle Star quits market

Eagle Star is scrapping its older-style group personal pension contract because of the heavy costs of running such policies.It is also pulling out of the executive pension plan market, claiming that falling sales no longer make offering such a contract profitable.IFAs say they are shocked by the move, which has raised fears that other EPP […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment