An estimated 7.4 million people tried – but failed – to get hold of their financial services providers in the year to May 2022, according to the City regulator.
The Financial Conduct Authority (FCA) took the estimate from its financial lives survey of more than 19,000 people across the UK.
The research found that one in seven (14%) adults who held one or more financial products – or 7.4 million people if the findings were projected across the UK – had unsuccessfully attempted to contact one or more of their financial services providers in the 12 months to May last year.
The FCA’s findings also indicate that, in the year to May 2022, an estimated 3.6 million people (7%) were able to contact one of their financial services providers but could not get the information or support they wanted.
The report said: “Many of the problems experienced by consumers relate to customer services, such as poor customer service, IT system failures or service disruption, sales pressure, (the) provider making errors or not following instructions, delays when making changes to an account or when arranging an account, or having unsuitable channels to contact the provider.”
More than two-thirds (68%) of people said they always or usually shop around for insurance products.
Far fewer (44%) reported doing the same for other financial products, such as current accounts, savings accounts and Isas.
A new consumer duty, coming into force on July 31, is designed to tackle products and services that do not achieve fair value outcomes for consumers.
In May 2022, one in 10 (10%) people reported having been offered in the previous two years a financial product or service by a provider at a price, or with terms and conditions, they felt were completely unreasonable.
The report continued: “Good communications from and with financial services providers are important to help consumers make informed and timely decisions about their financial products.
“Just over half (51%) of adults said they did not receive any communication in the 12 months to May 2022 to help them make a decision.”
In May 2022, only 41% of adults – 21.9 million people – had confidence in the UK financial services industry, and just 36% – 19 million – agreed that most financial firms are honest and transparent in the way they treat them.
Adults with characteristics of vulnerability were more likely to report that customer support services did not help them at all to achieve what they wanted to do.
For example, 20% of those with low financial resilience and 20% of those with low capability reported that provider communications did not help at all, compared with 12% of those with no characteristics of vulnerability.
The new consumer 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, the FCA said.
Under the duty, firms will have to provide helpful and responsive customer service, equip their customers to make good decisions through timely communications that people can understand, and provide products and services that meet consumers’ needs and work as expected.
Sheldon Mills, executive director, consumers and competition at the FCA, 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.”
Following conversations with firms and new guidance set by the FCA, lenders have supported more than two million mortgage customers to manage their finances in the past year, including through budgeting tools, access to debt advice, and tailored mortgage forbearance.
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 10 adults (88% or 42.9 million) banking online or using a mobile app in 2022, up from 77% when research was carried out in 2017.
But the FCA said it recognises that many people are still heavy users of cash (6% or 3.1 million) and reliant on face-to-face services.
Through the Financial Services and Markets Act, the FCA will take on powers on access to cash and will expect firms to ensure that they meet all their customers’ needs.
Richard Lane, director of external affairs at debt help charity StepChange, 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: “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.”
