Consumer Duty and the Great British Financial Farce

Ah, the financial services sector in the UK—a true marvel of modern capitalism. Despite the much-touted Consumer Duty regulation, which supposedly heralds a new era of customer-centric banking, most Brits would argue it's more of the same old circus, just with a shinier tent.

According to a recent study by Edelman Smithfield, awareness of the Consumer Duty has soared to 59% among UK adults, a hefty jump from 34% last July. That’s right, the marketing teams can pat themselves on the back for making sure more people know about a regulation that, in practice, seems about as effective as a chocolate teapot.

Younger people are particularly clued-in, with 64% of 18–24-year-olds, 69% of 25–34-year-olds, and 61% of 35–44-year-olds familiar with the Consumer Duty. These numbers might give the impression that the financial services industry is on the right track. But ask the average customer if they feel valued or treated like a human being by their bank, and you'll likely get an eye roll and a snort of derision.

While the study does note some improvements in communication and customer service—38% and 37% of respondents, respectively—this feels more like putting lipstick on a pig. A third of people still believe that financial services firms care more about money than their customers, and with good reason.

Take the loyalty scam, for instance. Long-standing customers are treated like unwanted house guests, while new clients get the red carpet. Ever tried calling a call center about your renewal rates? The magic word is “discount” but only if you're willing to sit on hold, navigating the labyrinthine menus, often connecting to a distant call center where suddenly, miraculously, they find a deal that was apparently hidden in a vault.

And then there's the interest rate conundrum. When the Bank of England shifts rates, it’s a one-way street for most financial institutions. Savings rates remain in the gutter while loan rates skyrocket. Banks are quick to capitalize on these changes, but God forbid they pass any benefits onto the consumer. This dance of profiteering is enough to make anyone cynical.

Credit card holders, who’ve carried balances for years, are now being labeled "persistent debtors" and, once they clear their debt, find their cards summarily closed. It’s almost like the banks want to remind you who’s really in charge. Need cash? Good luck finding an ATM in small towns and villages. The march towards a cashless society feels more like a forced march towards digital dependence.

Of course, the Financial Conduct Authority (FCA) is supposed to keep these companies in check. But let’s be honest, the FCA's bark is worse than its bite. The Treasury’s directive not to upset the City means the watchdog is more of a lapdog, reluctant to gnaw at the hand that feeds a significant chunk of the UK's GDP. We’re all for being the world's financial capital, but maybe not at the expense of treating the public like sheep to be fleeced.

A staggering 80% of people expect regulators to push harder for better treatment from financial companies, and three-quarters believe the government should enforce more value for customers. Yet, here we are, with pricing opacity, poor customer care, and a general feeling of exploitation being the norm. The pervasive distrust isn't just a hangover from the global financial crisis; it's fueled by everyday experiences of corporate greed and digital disenfranchisement.

The Edelman Trust Barometer paints a bleak picture: financial services are distrusted across Europe’s five largest economies, and only neutrally trusted in the US. As Aidan Holloway of Edelman Smithfield aptly puts it, “A lot of the negativity is about perceived profiteering from recent macroeconomic events that has seen prices soar.” No kidding.

For those few companies that manage to navigate this landscape with integrity, the rewards could be immense. But for the rest, the penalties from an increasingly savvy and skeptical public could be severe.

In the end, the rise in Consumer Duty awareness may signal a shift, but until these financial behemoths start walking the walk, it’s all just talk. And we Brits, well, we know how to see through a charade.