The financial services sector has been urged to win back consumer trust before their brands are eroded by customers taking action into their own hands.
Financial brands are being harmed by “quick” customer action prompted by lobby groups, online social networking activity and the media, according to Clive Briault, Financial Services Authority (FSA) managing director of retail markets. He warns the financial services industry that reputations “can be damaged very quickly”, affecting brand and shareholder value.
Briault points to the Facebook campaign launched by students to persuade HSBC not to change overdraft fees as soon as they graduate, and the crisis engulfing Northern Rock, which saw a run on the Newcastle-based building society following news of an emergency government loan.
Briault says financial services companies must learn about the “power of the consumer” from other sectors, such as food companies, which have been forced to introduce healthier products following growing concerns over obesity and the successful internet campaign to bring back Cadbury’s chocolate bar brand Wispa.
He says that brands in financial services face an “uphill struggle” because they operate in a context of consumer distrust, adding: “Trust will not increase by itself: it needs firms to act.”
Briault was speaking at the FSA Treating Customers Fairly conference yesterday (Tuesday), which looked at the changing social contexts around “fairness”.
Briault warns that “informal advice” from family and friends has a greater influence than materials printed by companies or regulators when consumers come to choose a product or service.