Asking too much of financial services?

Research from MCA member and transformation experts, Moorhouse, shines a light on what’s happening in financial services. 

Since the banking collapse in 2008 the media has been dominated by bad news about banks; every time one story dies down a new scandal seems to come to the fore.  The effect of the collapse on the global economy has been huge, and unsurprisingly governments around the world have responded by looking at the regulation that surrounds the banking system to stop this happening again.

But in the UK, financial services have been at the heart of our economic success and even since 2008 have continued to generate wealth and jobs in the UK.  Thriving financial services institutions, both banks and insurance companies, are good for our economy and there is a fine line between regulation that will protect the economy and regulation that affects their regulation. After two banking reviews, the Basel III requirements and the UK governments financial services bill, have we now reached the tipping point? 

Research by Moorhouse – Too much change? – puts this topic in the spotlight with a survey of more than 130 board members and their direct reports from a cross section of financial services organisations.

While few would argue that, in light of recent revelations, the banks do not require at least some additional regulation, the fact is that 88% of those surveyed from both Banks and Insurers feel that regulatory change is stopping them from addressing other priorities.Much of the legislation that has been passed is wide-reaching, unprecedented and potentially contradictory. Laws that have been passed in different countries, in response to different emerging problems place conflicting requirements onto financial institutions and are often more challenging to implement in practice than was envisioned.  With new regulations being passed before previous legislation is enacted,  it is also hard to pin point the results of any individual change, and many  financial services organisations feel that they will see yet more regulation come into place in the next three years.

According to Moorhouse’s research, 41% of these organisation’s investment is going into regulatory change programmes. This is a huge percentage of budgets that could be being used to drive growth and ensure that our banking system is on top of the technological and customer demands that most modern businesses also face.

The research gives an interesting insight into the challenges faced in our financial services sector as a result of regulatory change. Moorhouse’s Too much change? report can be downloaded for free at: