Awareness levels of the FCA’s flagship piece of customer-focused regulation, the Consumer Duty, are exceptionally high, according to a consumer perception study conducted by Edelman Smithfield, the specialist financial services and financial communications arm of PR firm Edelman.
Three in five (59%) UK adults are familiar with the Duty, up from 34% in a poll conducted by Edelman Smithfield last July, just ahead of Duty’s introduction.
Awareness is skewed towards the younger age groups, with 64% of 18–24-year-olds, 69% of 25–34-year-olds and 61% of 35–44-year-olds knowing about the Duty. The younger age groups appear to be using their knowledge of the Duty to their benefit; two-thirds of 18-24- and 25–34-year-olds admit to holding financial providers to a higher standard since the Duty’s introduction. Positively, people have noticed some improvements since it came into force, particularly in the fields of communication and customer service, with 38% and 37% selecting these areas respectively as where they have seen noticeable improvements.
Strong backing for regulator and government intervention
Two thirds (65%) of UK adults polled feel there is enough competition between financial services providers in the market. However, whilst there may be a consensus that markets are functioning as they should do, there is a strong appetite for governmental and regulatory intervention to protect consumers with financial products.
Three quarters (75%) believe that “the [UK] government should do more to ensure financial services companies demonstrate more value and provide better deals”. Even more (80%) expect financial regulators to do more to push companies to do better by their customers.
Unexplained pricing or high costs creating questions around value
Negative perceptions of financial services across the UK are being driven by poor price transparency, lack of customer care and concerns about losing money. 36% of people said that “their [financial services companies] pricing is often not transparent, so it’s hard to know whether what you’re getting is worth it”. A further 29% find it difficult to choose a provider “because they seem expensive for what they offer”, and 28% think “they make too much money”.
These findings demonstrate a high level of dissatisfaction amongst consumers in these major developed markets and support data highlighted in Edelman’s 2024 Trust Barometer, which found that the financial services sector is distrusted in Europe’s five largest economies (Germany, UK, France, Italy and Spain) and only neutrally trusted in the US.
A further challenge for financial services is the feeling of sameness. 30% say that “it’s really hard to choose a provider because they all appear to offer the same thing”. This lack of differentiation suggests a dearth of product innovation in the industry.
Customer care-less?
Edelman Smithfield’s research illustrates a pervasive belief that financial services companies don’t care about their customers. 36% of those polled said that “financial services companies tend not to care about their customers, they just want to make money”, the second most frequently cited reason that financial services companies have poor reputations.
This is borne out by additional findings that speak to an impersonal, numbers-game approach to customer care. One in five (21%) say that providers “do not appreciate loyal / existing customers”, whilst 20% say that their “customer service is poor. I find it very difficult to speak to anyone on the phone”.
Despite the proliferation of digital customer communications, such as chatbots, live chat with team members and email, 43% of UK adults are “concerned about the pace of digitisation in financial services”.
Commenting on the findings, Aidan Holloway, Senior Director, Edelman Smithfield, said: “Our research suggests that distrust of financial businesses in the UK is entrenched. The industry’s perception problem cannot be considered just a legacy of the global financial crisis. A lot of the negativity is about perceived profiteering from recent macroeconomic events that has seen prices soar. It is also about wariness over the rapid digitisation of financial services, which is driving distrust, and the feeling that they are being taken for granted by large providers and are benefitting from their loyalty whilst giving little in return.
“We can see a more determined, even activist, consumer response to these perceived issues in the form of a strong appetite for further regulatory intervention and the use of the Consumer Duty to hold providers to account. The exceptionally high levels of awareness of the FCA’s Consumer Duty, especially amongst the younger cohorts, indicates a direction of travel. Customer service, user experience, high value products and great communications are key to changing perceptions and assuaging a customer base expecting higher standards from providers. For those financial providers that get this right, the rewards are formidable. For those that get it wrong, the penalties could be severe.”
