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Customer Services in Financial Organisations Market Report 2007
Key Note Publications Ltd, March 2007
The financial services industry is a customer-focused one: without the customer, financial services providers have no purpose, and good customer service is the goal to which most of these providers aspire.
Documents such as the Banking Code, issued by the British Bankers' Association (BBA), and the Mortgage Code, issued by the Council of Mortgage Lenders (CML), present principles to which providers in the financial services industry have agreed and to which they have committed themselves to comply.
However, the Financial Services Authority (FSA) and the Financial Ombudsman have been set up by the Government to police the industry, and to protect the retail customer, in particular. Notorious failures in selling insurance and investments in the 1990s precipitated the formation of the FSA and, by 2007, it covers almost all of the industry, with the exception of Christmas savings clubs. Although the FSA has been largely accepted by the industry and is seen by consumers as working for their benefit, there are still (in 2007) frequent complaints that customer service is imperfect.
Many customers still believe that financial services providers do not put the customer first. Despite this, a number of consumers believe that the industry has improved in the past 5 years (to 2007), but these tend to be young people: large proportions of older customers have a less sanguine view of their financial services provider.
This Market Assessment report investigates how far customer services have improved, and how far regulation has gone, as well as the extent to which the Codes have been implemented between 2001 and 2006. The report focuses on the retail sectors, and explores consumer attitudes towards the financial services industry at the end of 2006.
In this report, banks, building societies, insurers and independent financial advisers (IFAs) are dealt with separately, and the effects and future of call centres and the use of the Internet are explored. There is currently a tension between customer preference for face-to-face contact and the adoption of new distribution channels. This has strong implications for the quality of customer service, where customer preferences conflict with the pressure to reduce costs.
Customer-service quality is best gauged by examining consumer perceptions. Exclusive consumer research for this report revealed that 76.4% of respondents like to discuss their financial affairs with trained staff face-to-face. Interestingly, a higher proportion of respondents said that they value friendly staff more than accuracy of service (45.2%) than those who placed speed and accuracy of service above friendly staff (42.4%). Almost half of respondents (48.7%) agreed that customer services have improved over the past 5 years.
We believe that significant progress is being made in promoting customer service to consumers, as a result of the pressure exerted by the FSA on the financial services providers, and because the focus on customer-centred services matches the expressed aims of financial services providers. A delicate balance appears to have been achieved between the interests of shareholders and customers, which may be sustained over the next 5 years. However, financial services providers must continue to focus on training staff, and the financial education of consumers (requiring funds and moral support from the Government as well as from industry groups) is a necessity if the fair market is to achieve long-term strength.
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