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The Actuary The magazine of the Institute & Faculty of Actuaries

Financial services: A fresh vision

The UK financial services industry is still struggling to pick up the pieces from the global financial crisis that hit in 2008. With public perception of the sector still at rock bottom and the threat of ever more invasive regulation, what future can the industry aspire to, and what can it learn from professional bodies like ours?

The Next Generation Vision project brought together 21 young professionals from across UK financial services to create an ambition for the industry in 10 to 15 years, as a new generation become leaders. While lacking the experience and influence of current industry executives, the diverse team — from marketing types to accountants and a lone actuary (me!) — were able to cast off the shackles of employers’ agendas and raise fresh views. We wanted to create a positive aspiration for the industry, moving away from the negativity in the press.

To inform our vision, we heard from a diverse group of nearly 40 speakers, and listened to the views of consumers and small businesses in focus groups. This was a real watershed for us. We realised that people aren’t just angry with ‘big bad bankers’ following the financial crisis — there was an existing dissatisfaction in their day-to-day interactions with financial institutions.

A key issue is lack of trust in the industry, expressed by our focus groups: “We pay in good faith but insurers don’t pay out in good faith.” “Banks lend you an umbrella when it’s sunny but take it back when it rains.”1 Greater public trust in our industry would benefit our relationships with customers and the wider society, as well as easing pressure from government and regulators.

Our industry is integral to a healthy and developed economy. But its benefits are eclipsed by a lack of transparency and excessive complexity, exemplified by the recent OFT super-complaint on the retail foreign exchange market. This has led to too many examples of customers being exploited, PPI mis-selling being the latest. The lack of trust is understandable.

Against this backdrop we created our ambition: “To harness the UK financial services industry, and the talent within it, to society’s interest — so that every individual, every business and the nation as a whole can prosper”. Ultimately, we want to contribute more than we take and be an integral part of society.

To achieve this, we must expand our definition of business success to encompass more than traditional capitalist values. 
Our aims should include the protection and prosperity of our customers and we should measure our contribution to society, both now and in the long term.

Our behaviour needs to reflect these values. As actuaries, we already adhere to a professional code of conduct that sets out the moral compass under which we operate. There is growing momentum towards applying a similar code to the entire industry. In the ongoing tension between the competitive markets of our employers and our broader professional duties to society, this convergence could be widely beneficial.

We must also ensure that our 
products address genuine customer needs. They should be simple and easy to explain, without the need for caveats buried in small print. Apple sets the standard here — you don’t need to read the iPad manual because it’s so easy to use. And every product should be supported by great customer service.

Social responsibility is already on the industry agenda, but we could do more to help with the big societal issues facing our country, such as financial inclusion and financial literacy. With our resources and skills we are well placed to help tackle these issues, alongside government and the third sector, broadening our contribution and gaining public support.

Finally, our sector could be a source of national pride. Financial services underpin economic growth, contributing 14% of 
GDP and employing two million people2. The UK is the world’s biggest exporter 
of financial services and is the location 
of choice for many international firms. 
So it’s important for the whole country 
that we maintain our competitive position as a global financial centre.

How will the vision become reality? Some wheels are already in motion, such as the work being done by the Lord Mayor’s Initiative. Firms are starting to see the benefits of truly putting the customer first. But to make a difference we need engagement from the whole industry. Actuaries have already fought to regain public trust, both as individuals and as a profession, committed to serving the public interest. Let’s help our industry do the same.

1 Focus group run by Harris Interactive

2 ‘Key facts about UK financial and professional services’, TheCityUK, September 2011


Isobel WallaceIsobel Wallace is a general insurance actuary at Aviva. The views expressed here are her own