Fairer Finance's 10th anniversary

Good evening Ladies and Gentlemen. Thank you so much for joining us this evening to celebrate Fairer Finance’s 10^th anniversary. It’s a milestone that I’m incredibly proud of - and it’s an honour to have so many brilliant individuals in the room tonight to mark the occasion with us, not least the executive director of the FCA, Sheldon Mills, who we’ll be hearing from in a moment.

As it’s our 10^th anniversary – and the 10^th of the 10^th no less -  it seems a fitting moment to tell you a little about the history of Fairer Finance, and share some reflections on how the financial services industry has changed over the past decade. 

In fact, if you’ll indulge me, I might start back ever further at the turn of the millennium – when I first started working in this sector as a financial journalist. It’s a time that the history books might yet come to refer to as the era of mis-selling. From pensions to mortgage endowments and precipice bonds to PPI – it was definitely an exciting time to be a financial journalist. Perhaps a less exciting time to be a financial consumer.

But at the end of 2001, the Financial Services Authority was set up – heralding a new era of modern day regulation, which soon began to have an impact. At the same time, the growth of the internet was beginning to change the way that consumers bought financial services products.  

From mis-selling to mis-buying

By the mid 2000s, comparison sites were beginning to catch on, providing easy ways for people to compare prices of hundreds of products at the click of a button. And while consumers benefited from the price competition this stimulated, it also created new challenges – more choices and complex decisions for individuals to make. So, as I like characterise it, we drew a line under the era of mis-selling, but waved in a new era of mis-buying.

This was the context in which I set up Fairer Finance in 2014. I wanted to create an organisation that both supported consumers to make better decisions – but which also supported and incentivised firms to play their part in helping drive good outcomes.

To that end, our original customer experience ratings include three main elements – customer polling to determine both how happy customers are with a brand, and how much they trust it, Ombudsman uphold rates – and finally, an assessment of how transparent firms are with their customers – how clear they are about the benefits and limitations of their products and how clear their terms and conditions are.

Back in 2014, most firms saw this as a bit of a niche pursuit. It was pointed out to us on more than one occasion that few customers were likely choose which product to buy based on which firms were most transparent. But my hunch had been that those firms who were clearest with their customers at the outset – were likely to be the ones that treated them well throughout their customer lifecycle. 

And this theory was increasingly supported by the data we gathered. As firms made improvements to the clarity of information that they gave their customers, we would see improvements in levels of customer trust and customer satisfaction in our subsequent polls.

This became the bedrock of our consulting business – working with firms to help them communicate more clearly with their customers – and more than that, to help their customers achieve good outcomes.

It's fair to say, however, that until a couple of years ago, it was hard to persuade firms to prioritise this work. While most were willing to admit they could do much more to help their customers, there were always more pressing projects competing for budget – projects which would be more likely to have a positive impact on the bottom line.

I always believed that making these investments in better customer outcomes would pay for themselves in the long run. Greater levels of trust lead to higher levels of retention. And retention is much cheaper than acquisition. But the pressure of quarterly reporting cycles made it hard for a lot of firms to take the  long term view that was required.

Consumer Duty, the gamechanger

But then Consumer Duty came along – which I genuinely believe is a gamechanger in regulation. To my mind, almost all bad practice in the history of financial services has been driven by the tension between delivering good customer outcomes and good shareholder outcomes.  During the course of my first two decades in the industry, shareholders appeared to win almost every time.

But consumer duty forces those two interests to align. It’s no longer ok to simply tell the world that customer-centricity is at the heart of your business, you have to prove it. Importantly, boards are accountable for those attestations – and they risk harming their shareholders if they don’t take that responsibility seriously.

In just 15 months, Consumer Duty has already had an enormous impact. It’s no exaggeration to say that thousands of emails, letters and terms and conditions have been rewritten, hundreds of customer journeys have been reconfigured, thousands of new text messages and app notifications have been created, hundreds of fees and charges have been cut. In some cases products have even been entirely redesigned or pulled from the market.

Of course, Consumer Duty has not solved every problem in financial services overnight. There are still plenty of firms that have done the bare minimum – and in some corners of the market there’s little evidence of any action at all.

And even where it is being taken seriously – many firms have yet to get past the initial haze of new MI and consumer duty workstreams – let alone get round to contemplating some of the more existential questions that these new regulations ask of their business models. Even now, too many parts of the market still rely on the inertia and ignorance of customers to maximise profitability.

We’ve been fortunate to work with most of the UK’s largest banks and insurers over the last 10 years – as well as many smaller and medium sized firms. But I don’t think I’ve enjoyed any of the work I’ve done over the past decade, as much as I’ve enjoyed working with firms to help them think through Consumer Duty. It’s nuanced and often uncomfortable. It requires firms to ask difficult questions of processes and business models that may have been in place long before any of the current leaders worked for the organisation. And even where firms may want to do the right thing, there are often technical and logistical challenges in getting from A to B as quick as they want.

In many cases, firms simply aren’t able to make the necessary changes unilaterally. They may need action from government and regulators to create the conditions for all companies in their sector to be able to deliver good outcomes. Our consumer research and work with companies gives us a unique perspective – and we are grateful to increasingly get the chance to participate in and occasionally lead the policy debate to help deliver workable and pragmatic solutions.

So to conclude - what I’ve seen in just 15 months of Consumer Duty fills me with real optimism about what can be achieved in the long run if the regulator sticks to its course. 

Banking, insurance, and the rest of the financial services industry plays a vital role in everyone’s lives – and I hope that as the impact of Consumer Duty embeds, we will start to see firms compete on service and quality – helping to rebuild trust in our industry.