Goodbye Financial Services Authority; hello Financial Conduct Authority – but how much does this really mean for reputation improvement in financial services?
It’s a hot topic this week, as the FT reports the promise of the FCA to be “tougher…bolder” and to “intervene earlier”, unlike its infamously “light tough” predecessor, which failed to prevent the financial crisis in the UK banking system.
The FSA’s Margaret Cole, director of enforcement and financial crime, summed up the stark reality for financial serviceswith the analogy: “If a supermarket sold rotten food to its customers, how long would it stay in business?”
And, just today, a Reputation in Financial Services conference is focusing on ways the sector can “rebuild the relationship of trust with the public”.
A tweet from the conference, via Tony Langham of Lansons Communications – quoting Stephen Hammond MP – asserts that “regulation is a tool of international business performance and therefore reputation”. By that, you would assume that regulation was the panacea for the financial sector’s reputation sickness.
But, as reported by Insurance Age, Kay Blair, vice chair of the Financial Services Consumer Panel, has described the required shift in regulatory effectiveness to be a “quantum leap”. She said: “…the causes [of misconduct in financial services] are systemic, built in to business models, rather than random events. By addressing suspect business models and potentially toxic products, a more effective regulator will nip problems such as any future PPI in the bud well before consumer detriment escalates and certainly before consumers have lost millions of pounds.”
So, in between the hill the regulator needs to climb and the public’s trust in financial services floundering, what are firms in the sector to do?
As long as there is a disproportionate emphasis on brand building (think Meerkats), this is a manifestation of external image, which may not necessarily equate to establishing a sound reputation, which is the more compelling and enduring reason customers choose to do business with you or not. Building – or rebuilding – reputation begins at the core of what an organisation does, hence Kay Blair’s apposite reference to “business models” being fundamentally at fault.
Investing in corporate reputation may involve a business sticking its neck out and standing up for what’s right for its stakeholders. This is crucial as stakeholders – defined in another tweet from today’s reputation conference – are “anyone who can bugger up your company”.