A recent study has uncovered significant regulatory compliance challenges within the UK financial services sector. Surveying over 500 senior decision-makers, the poll found that 36% of these businesses have been penalised at least once in the last 12 months due to regulatory breaches.
Commissioned by Davies’ specialist financial services consultancy division Consulting at Davies, the research also found that 62% of respondents believe that maintaining regulatory compliance has become increasingly difficult over the past five years, while 63% reported that the introduction of the Financial Conduct Authority’s (FCA) Consumer Duty has changed their customer service approach.
The Consumer Duty, under which companies should aim to continuously address issues that risk causing consumer harm, came into force for open products and services on July 31, 2023.
“Firms are required to comply with the Duty’s cross-cutting rules by acting in good faith towards customers, avoiding causing foreseeable harm to customers, and enabling and supporting customers to pursue their financial objectives,” the FCA said previously.
“This requires firms to be proactive in delivering good customer outcomes – rather than waiting for us to intervene – and firms need the right culture and governance to enable this.”
Meanwhile, the independent survey revealed that regulatory compliance was the second most significant challenge faced by financial services businesses in the UK, with 43% of respondents citing it, just behind economic turbulence at 44%.
“The regulatory compliance landscape is constantly evolving, and our research shows just how many businesses in the UK’s financial services industry are struggling to keep pace with the changes taking place,” declared banking & markets EMEA practice co-lead Silvia Amoros. “Failure to do so is not only likely to incur significant penalties but can also bring huge damage to a company’s reputation.”
Amoros further emphasised the importance of regulatory compliance in maintaining customer trust and delivering positive outcomes.
“For a challenge that is so significant, complex, and time-consuming, seeking the support of external experts can be an effective method to ensure the business meets obligations while also freeing up time to allow its team to focus on other core business activities,” she added.
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