An estimated 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers in the 12 months before May 2022, the Financial Conduct Authority (FCA) has found.

The regulator also highlighted that the most vulnerable members of society have been most likely to struggle with this.

According to the FCA’s latest Financial Lives survey, which quizzed over 19,000 respondents, 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. However, a more positive picture did emerge when people were asked to rate their own provider, rather than the entire sector in general.

The regulator has published its findings just days before the introduction of its Consumer Duty rules. The duty will require firms to act to “deliver good outcomes” for consumers, which the FCA is hoping that, in turn, can help to improve trust in the financial services sector.

“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,” said executive director, consumers and competition at the FCA, Sheldon Mills.

“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.”

FCA action since the start of the cost of living squeeze has led to an increase in the amount of engagement lenders are having with their customers. Following conversations with firms and new guidance set by the regulator, lenders have supported over two million mortgage customers to manage their finances in the past year, including through budgeting tools, access to debt advice, and tailored mortgage forbearance.

While it suggested positive steps have been taken, the FCA stated there is still “work to do”, with 4.9 million people who used firm communications to help them make a decision in the 12 months before May 2022 found it did not help at all.

The FCA’s survey also found that an increasing number of people are choosing to use digital banking, payments and other online services, with almost nine in ten adults (88%), a figure that would equate to 42.9 million people in the UK, banking online or using a mobile app in 2022. This was up from 77% in 2017.

Reacting to the latest findings from the FCA, head of market engagement at independent consultancy Broadstone, Simon Kew, commented: “Gaining and keeping consumer’s confidence is integral to a well-functioning financial services industry.

“Firms need to invest in a culture of positive customer experience, excellent service levels and outstanding administration. The inbound Consumer Duty seeks to embed these values across the industry but financial services firms should proactively be looking at ways they can support their customers in tricky economic times.

“We expect the treatment of customers to be a huge reputational issue for firms over the next few years. Those that get it wrong should prepare for the commercial consequences of consumers draining away in search of more respectful alternatives.”

Commercial proposition director at Quilter, Jenny Davidson, added that financial services firms can play a “key role in helping those with additional requirements manage their finances”.

“Vulnerability can be a deeply personal issue,” Davidson said. “Customers are unlikely to shout about it or may be unwilling to discuss it, so a crucial challenge for all companies is to identify customers on this spectrum of risk.

“All employees of financial services firms must have the skills and capability to recognise and deal with customers who display signs of vulnerability, and the FCA has previously provided guidance on embedding fair treatment of vulnerable customers across businesses.”

She added: “Not all customers with characteristics of vulnerability will be vulnerable. There are incidents of transient vulnerable people who, because of specific circumstances at a certain time, may not be able to make a complex decision. Navigating financial choices whilst displaying a characteristic of vulnerability may at times feel like an unsurmountable challenge, and it is vital that firms do all they can to help people easily navigate their money choices.”

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