This winning solution was developed to meet the specific requirements of Mattioli Woods and demonstrates an innovative approach to a contemporary problem – namely, the low interest rate returns corporates are able to earn on their short-term cash.
Photo of Mark Slaviero, Mattioli Woods and Suzanne Burgoyne, Lloyds Bank accepting on behalf of Nathan Imlach.
Mattioli Woods is one of the UK’s leading providers of pension consultancy and wealth management services, advising over 4,000 clients throughout the UK and with assets under advice and administration in excess of £3.02 billion.
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As a pension consultancy and wealth management services provider, Mattioli Woods is bound by client money regulations, which has a knock on effect on the number of bank accounts the company has. In fact, the company holds over £65m in more than 3,000 bank accounts, both for Mattioli Woods itself and its customers. The company splits its interest income on these accounts accordingly.
But with interest rates continuing to be at historic lows, it is difficult to offer customers a good rate of return on their investments, thereby making it harder to compete for new business. The company was therefore looking for a solution which would increase the interest income on the cash in its customers’ accounts.
Mattioli Woods turned to Lloyds Bank, one of its long-term banking partners for help and negotiated an innovative tailored arrangement. Under the new structure, the company’s accounts were re-classified as retail-like funds, which attract a higher rate of interest than corporate accounts. “In order to do this, Lloyds Bank first had to secure approval from its retail pricing committee, which was granted in due course,” explains Nathan Imlach, Finance Director, Mattioli Woods.
As a result of this reclassification, Mattioli Woods now benefits from a higher rate of return, some of which is passed on to the company’s customers. “This makes the rates offered by Mattioli Woods more attractive than rates offered by many of our competitors,” says Imlach.
He continues: “The new structure has also resulted in a lower administrative burden for Mattioli Woods – and because processes have been streamlined, cost savings have also been made for customers.” The decision to re-classify the funds was an innovative approach to an issue which many corporations are currently facing and was made possible by Lloyds Bank’s interpretation of ILAS (Individual Liquidity Adequacy Standards).
The approach that the bank suggested was tailored to the company’s specific business practices, but would not have been suitable for all pension providers. Unlike many other pension providers, the client accounts held by Mattioli Woods are classified as ‘own name accounts’, where the member is co-trustee and is required to approve transactions made on the accounts. This was a key factor in determining the best solution for the company.
“The solution has proved so successful that Mattioli Woods decided to move funds held with other banks to Lloyds,” adds Imlach. There may also be opportunities to improve the benefits of the solution in the future: once the overall balance of the accounts reaches £100m, an even higher interest rate may be applicable.