7.4m people have unsuccessfully attempted to contact the financial services sector

A new Financial Lives survey from the Financial Conduct Authority (FCA) has found that 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers in the 12 months before May 2022, while less than half of adults said they had confidence in the UK financial services industry in general.

With the FCA’s previous research finding number of people struggling to meet bills and credit repayments has risen by 3.1 million since May 2022 to over 10m people, StepChange is urging firms to use the upcoming Consumer Duty as an opportunity to be more pro-active in getting better help to people in financial difficulty as quickly as possible.

Less than half of UK adults, or 21.9 million people, had confidence in the UK financial services industry and just 36% agreed that most financial firms are honest and transparent in the way they treat them. Although a more positive picture emerged when people were asked to rate their own provider rather than the sector in general.

The regulator’s findings come only days away from the introduction of the Consumer Duty. The Duty will require firms to act to deliver good outcomes for consumers and, in turn, help to improve trust and confidence in the financial services sector.

Sheldon Mills, Executive Director, Consumers and Competition said “Times like this show why it’s important people get the support they need as more people are likely turning to their financial services providers for help. Our Consumer Duty will guide our ongoing work to improve the way firms provide customer support – getting through to your provider is the starting point for receiving help, so we will be working with them to improve in this area.”

In response, Richard Lane, StepChange Director of External Affairs, said “The FCA’s survey reinforces why firms should see the forthcoming Consumer Duty as opportunity to improve how their customers are treated. While firms have stepped up to help millions of people navigate the cost of living crisis, we know that people showing signs of financial difficulty need help as early as possible to prevent them from becoming trapped in a spiral of harmful, unaffordable borrowing. So we urge firms to embrace the Consumer Duty and to develop appropriate support for their customers. They can do this by identifying financial difficulty at the earliest possible stage, ensuring support is tailored to individual needs, communicating in a way that encourages people to seek help, and by making effective referrals to free debt and money advice.”

Conor D’Arcy, Interim Chief Executive of the Money and Mental Health Policy Institute, said “These disappointing findings highlight there’s still a huge gap between the help people need and what they’re getting from firms, despite recent efforts to encourage struggling customers to reach out. As the cost of living crisis rumbles on, banks have to turn words into action and make sure that customers who are struggling – particularly those with mental health problems and other vulnerabilities – can get the support they need. That includes making it as easy as possible to get in touch through a variety of channels – such as over the phone, online or face-to-face – and making sure that customers who get in touch are met with tangible offers of support.”

“The Consumer Duty is a massive opportunity to improve outcomes for consumers, and if firms meet these new standards they could be transformative for customers living with mental health problems. While we hope the new Duty triggers the seismic shift that’s needed to crack down on bad practice, whether that’s hard-to-access support or aggressive debt collection tactics, it’s vital that the regulator is on stand-by to enforce these new rules if firms don’t raise their game.”

Neil Kadagathur, Co-Founder and CEO of Creditspring said “Clearly, much of the UK still distrusts  lenders and other financial services firms – this isn’t surprising when millions have found it almost impossible to contact their providers for support.”

“UK households are in desperate need of added protections in the cost of living crisis so the incoming Consumer Duty is hugely welcome news. There remains a stark lack of transparency across the sector, with many FS firms persisting with misleading information about charges, hidden fees and repayment terms, borrowers are in a hugely challenging position to make educated decisions about their finances.”

“Our research also shows that over half of people believe that lenders don’t care about their financial wellbeing whilst 70% say lenders are purely out to make a profit. More need to be done to improve transparency and support for the millions of people across the UK who are reliant on credit to survive.”