From our friends over at the : Business: BreakingNews.ie
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From our friends over at the : Business: BreakingNews.ie
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By Eamon Quinn
Introductory mortgages are likely to cost consumers in the long-term but may not automatically be undesirable for some squeezed householders.
That’s one of the findings of a major piece of research by the Economic and Social Research Institute (ESRI) on the way that financial institutions design financial products, not necessarily to the benefit of consumers.
The study, ‘Do some financial product features negatively affect consumer decisions?’, by Pete Lunn, Féidhlim McGowan, and Noel Howard, draws on the growing discipline of behavioural economics to assess ways consumers are misled or confused by the pricing of mortgages, loans, and point-of-sale insurance and calls for the “pre-testing” of new financial products on behalf of consumers.
On mortgages, introductory offers can confuse potential homeowners worn down by assessing offers, while banks selling the mortgages knowingly sell the products to target buyers who can be befuddled by the “overall complexity of mortgage products”.
“Evidence from multiple methods implies that introductory offers on mortgages have the potential to cause consumer detriment. Experimental evidence also suggests that this salient mortgage feature may be more enticing when consumers are experiencing decision fatigue,” the ESRI found.
[quote]The affordable initial monthly repayments attract present-biased consumers who do not necessarily consider the long-term repayment schedule after the reset rate.[/quote]
“Advertising and empirical evidence indicates that these consumers are often specifically targeted by sellers of these mortgages,” they write.
Nonetheless, the ESRI writers suggest that introductory mortgage offers may not in all cases be a bad thing because there is some evidence that savvy “income-constrained households” use them to their advantage.
The researchers add to the evidence that consumers are poor at deciding the cost of credit charged on credit cards and on so-called payday loans.
Publishing the cash costs rather than APR rates are likely to be the best way for some consumers to understand the costs better.
And they say there is widespread research against selling insurance on goods and services at the point of sale, which “has a detrimental impact on deliberation by consumers”.
From our friends over at the : Irishexaminer.com
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By Geoff Percival
Greencore’s future as a stock market-quoted company is clouded, a leading analyst has claimed.
It follows the Irish sandwich maker’s shock U-turn on its international growth strategy by deciding to sell its US operations and focus entirely on its British convenience food business.
Greencore has reached agreement to sell its entire US business to contract food manufacturer Hearthside Food Solutions for just under $1.1bn (€950m).
The deal requires shareholder approval and US regulatory clearance, but Greencore hopes to complete it by the end of next month.
The analyst said that post-disposal Greencore could become a takeover target for either private equity buyers or industry peers; given that it will have a lot less debt and sole supply agreements with a number of leading food retailers still in place.
They also suggested that Greencore could have a new chief executive within the next 12 months, questioning whether Patrick Coveney will want to remain the head of a business re-focused on the low-growth UK market having been the main driver of its US growth strategy of recent years.
Mr Coveney yesterday said there had been no strategy to sell up in the US and the group’s improvement plan there was working well.
But, he said Hearthside’s unsolicited offer, received in August, was a strong and unique one that could grant a level of value for shareholders better than Greencore could deliver from the US over the medium term.
“The proposed sale of our US operation represents a compelling and immediate realisation of value for Greencore’s shareholders. We have always had a firm conviction on the underlying value and growth prospects of our US business and believe that this offer fully reflects that,” Mr Coveney said.
Merrion analyst Darren McKinley said the decision to sell out of the US marks “a significant U-turn” for Greencore’s management, “who had talked up the US growth prospects as the rationale for buying Peacock [the US food group Greencore bought in a high profile “transformational” deal in 2016].
“They now state that the price offered was a fair reflection of this growth opportunity and that it permits them to re-focus on their UK market leading business,” he said.
Noting the $250m, or so, Greencore has extracted in value for its legacy US business, Mr McKinley said of the decision to sell: “While surprised by the announcement, we prefer this to asset impairment/write downs in the US, which has been the case elsewhere and was a concern within the Greencore marketplace.”
From our friends over at the : Irishexaminer.com
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From our friends over at the : Business: BreakingNews.ie
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Credit Unions have come out on top in a national customer experience survey for the fourth year in a row.
Amazon claimed second place while hotel group Radisson Blu was third.
The survey was carried out by Amarách Research on behalf of The CX Company, and shows an overall drop of 4% in consumers' experience.
Social media giants like Facebook and Twitter, along with Ryanair dropped down the chart.
Telecoms and utility firms were among the worst performing companies, while travel related organisations like Mytaxi and Luas also fared poorly.
The Irish League of Credit Unions Head of Communications, Paul Bailey, said: “It is clear that members want even more services from credit unions. With more and more members choosing to interact online, we are working hard to ensure that the excellent member experience also comes through via our online offerings.
"But credit union members can rest assured. However they choose to interact with their local credit union, there will always be someone on hand to deal with any queries they have.
"And all decisions within the credit union are made by real people who take time to understand members’ real needs”
From our friends over at the : Irishexaminer.com
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