Ethical Technology: Who Decides?

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I have recently received emails asking to engage with me regarding a new product, where payroll can assist, or rather, is required. We all know about the damage pay day loan companies can cause to our employees, along with high credit card charges etc. when there is an ad-hoc need e.g. washing machine breaks down. 

The new products on the block are all very similar in their delivery model:

The employer promotes the services of the third party supplier, which would allow an employee via a companion app on the mobile or PC to request an advance of wages.  These companies appear to be investment companies who supply the advance of cash to the employee at no cost to the employer. They claim their rates are far better than any pay day loan or credit card charge.  They also say it will help employees save and manage household budgets, which will lead to sustainable financial well-being.

I have spoken with colleagues here at Armstrong Watson, and while the payroll service can take the deduction from pay and pay monies back to the third party, we believe it is far better to use technology to help employees manage their income so they don’t ever need this type of service. I appreciate not everyone earns lots of money that requires a financial advisor to help them manage their funds, but there are dashboard apps that can help employees manage their budgets.  Employers can also assist their employees by offering facilities such as saving schemes, reduced rate or zero rate loans (up to £10,000 is permitted before it is deemed a benefit for tax purposes) or deductions for savings to third parties, for example local Credit Unions.  All it requires is a scheme to be set up and for payroll to make the deduction. Is this not better than encouraging people to use money, before they have received it and find they have no way of paying it back, or worse having to keep getting advances to survive the next pay period?

Many employers or their agents such as Armstrong Watson can get deals for gym memberships or better rates within the mortgage industry.  Armstrong Watson’s Financial Planning & Wealth management team until recently offered mortgage advice to employees here at the firm and to clients, but have now teamed up with London & Country to provide mortgage advice. The benefit of using a third party such as this is the potential preferential rates that can be found. The government is continuing to make use of technology where it can, helping to inform or to assist with compliance. My colleagues have been discussing Making Tax Digital in issues of this magazine and this digital journey I believe, will continue to progress through to all business platforms in the future.  Payroll had major changes some years ago with real time information reporting and this provides HMRC an engine for payroll to report anything to do with pay to them.  This, whilst viewed very much as a burden at the time by the industry has become business as usual and now the payroll industry wants more.  

Here at Armstrong Watson we continually look at new products and if it has an Application Programming Interface (API) then information can flow back and forth to provide benefits without the need to manually provide information.  A fantastic example of this is when automatic enrolment came into force, we teamed up with a third party to help us submit information to the many pension providers.  Now whilst we cannot use this technology for all pension providers, for those we can it means we don’t have to keep creating bespoke reports to send client pension contribution data, instead it allows us to spend time checking that the data is accurate without exceptions and submit it via a one click approach, making the computer do all the transactional work.

Whilst I fully support technology, I think we need to be careful what we use it for; just because something looks whizzy and easy to use, doesn’t always mean it is in the best interest for the consumer or the business.