This year is a pivotal one for the financial services industry. The new regulators ‘got to work’ last month and we are starting to see a real change of emphasis, in both the tone of voice and in action. Lansons has been involved in financial services for well over two decades now so it felt right for us to mark the change in regulator by hosting an event which focused on taking a good, hard look at the future of this industry. Our aim was to try to raise the level of debate around how it can serve consumers better.
We kicked the debate off by getting the two most influential people in financial services in a room – Martin Wheatley and Andrew Bailey. Our ‘Future of Financial Services Conference’ proved to be a successful and enlightening event. Not only did we hear about a new regulatory approach focused on good outcomes for real people rather than regulation by ‘wrote’, focused on systems and processes, but we debated the need to restore trust and credibility in what is a crucial industry for the future of this country. In my own speech I challenged the industry to stand up and be counted. With only one financial company in Britain’s top 20 most trusted brands, there is room to do so much more.
“We need a new model that is less narrowly focused on whether a process is compliant with a set of rules and more focused on whether it achieved an appropriate outcome…” Martin Wheatley, Chief Executive, FCA, at ‘The Future of Financial Services Conference’.
No-one needs reminding of the scale of the financial crisis nor of its profound economic and social impact on the world. Most financial services professionals would probably have hoped that we would be returning to something close to normal by now, learning some lessons and then moving on to better things. Unfortunately, that is clearly not the case. There is a risk that with the daily grind of headlines, from the constant feed of bad news about banks to latest chapters in the fraught Eurozone story, financial services companies may retreat and retrench when they really need to be reaching out to customers and leading the debate. The financial services industry is an essential part of the UK economy. It provides services of huge value to businesses, borrowers, savers and investors, but all is not well. The new “twin peaks” regulators are setting out their respective agendas to clamp down on customer detriment and ensure that we never see a repeat of the crisis. The regulators are setting out some eminently sensible ideas, yet it remains difficult to define what a successful marketplace for retail financial services looks like. That was the motivation behind the Lansons Future of Financial Services Conference.
The conference aims to play a part in revitalising the debate about how to create a sustainable, profitable and customer-centric financial services sector. The conference brought together industry leaders with the Financial Conduct Authority’s Martin Wheatley and the Prudential Regulatory Authority’s Andrew Bailey together with a range of experts to thrash out some of some vital issues about business models and business practices and what it means for customers and the economy. The conference attracted nearly 200 delegates to central London and marks the first step in defining some of the challenges still to be overcome, while also giving a sense of direction and purpose for the future. There was some tough talking from the regulator in particular. The FCA chief executive Martin Wheatley suggested that previous regulation had been a lawyers’ fest but did not meet consumer needs. “Disclosure and box ticking are not the protection for firms that firms thought they were and not the solution for consumers because they don’t lead to good outcomes. We have low confidence in many big financial services firms and a big clean-up bill. We need more a model that says was a good outcome delivered rather than just was compliance followed,” he said. The PRA chief executive Andrew Bailey set out how the regulator needs to work closely with Parliament, an important point given the past mutual incomprehension between Westminster and the City. He said: “The challenge we have is in getting a clear public policy objective to stick. The only way we can do that successfully is if we have very clear objectives from parliament and we have very clear accountability to parliament.” The conference also heard J.P. Morgan Asset Management’s, Head of UK FundsJasper Berens warn that whilst adviser numbers might fall to below 20,000 it is also a good time for graduates to enter the new client oriented sector. Meanwhile Prudential UK’s deputy chief executive Barry O’Dwyer said the threat of being accused of mis-selling was holding back simplified advice. The Financial Inclusion Centre’s Mick McAteer suggested that many established industry players will struggle with unwinding legacy business models to allow them to compete in future. The conference also heard excoriating remarks about not meeting the consumer interest from Moneysavingexpert founder Martin Lewis. The conference fulfilled an important role – airing issues that often get lost amid the grim headlines and the regulatory consultations. The aim now is to build on this momentum or to put it another way having set the ball rolling to keep the ball rolling. In particular, it is important to consider what the implications are for different sectors – both incumbents and the challenger firms across banking, insurance, asset management, wraps and advisers and to consider how each of these fit into the wider economic, political and social context. The UK financial services sector is an essential component of the British economy. When it is working well, it provides much needed financial underpinning for people, families and businesses. Yet the industry can’t take this for granted. Rebuilding trust and re-establishing the credibility of the full range of products and services surely represents the best way to reach a profitable sustainable future. There is a long way to go. The temptation may be to simply adhere to the latest set of rules and regulations and retreat to the various silos. Yet if we keep talking and debating these issues, surely such an innovative and significant sector can do much better than that. Hopefully this conference marks an important step in doing considerably more. Click HERE to read further articles about the Future of Financial Services Conference. This article was written by John Lappin, Editor, Mindful Money. For more information about our Financial Events offering please contact email@example.com