Why UK Financial Services Should Prioritise Customer Service – Written by Gary Clapham, Wealth Management Consultant
Background
AheadMG focusses hard on delivering value to our customers. This can lead to some challenging conversations prior to the commencement of any engagement where we work hard to ensure alignment on what success is going to look and feel like. It is through that lens that I have looked at how the UK Financial Services sector delivers customer value.
The opinion set out below may be quite challenging to many within the industry who strive to deliver excellent service. The good news is that I believe success will come to those businesses who determine that excellent customer service is their central strategic ambition.
Introduction
There is a growing concern that the UK Financial Services Sector has drifted away from its primary purpose: serving and protecting customers. Instead of being driven by customer interests, some UKFS businesses continue to prioritise shareholder returns or initiatives that benefit the business, not necessarily the customer directly. Where firms have cut corners, or sought to differentiate for financial gain, this inevitably, albeit slowly, leads to further regulation to reset the focus.
This article argues that protecting customer interests and improving customer value should not be a regulatory requirement enforced by regulators, but the fundamental ethos of every financial services business in the UK.
Regulatory Intervention: A Symptom of Sectoral Failure
In a well-functioning market, UKFS businesses would naturally act in their customers’ best interests. However, the UK regulator has been forced to step in due to failures to genuinely focus on customer care. The introduction of the FCA’s Consumer Duty, requiring firms to “act to deliver good outcomes for retail customers,” reflects a worrying reality: many firms were not doing this voluntarily. Consumer Duty is “just” the latest iteration of a series of interventions by the regulator over a 20-year horizon all reacting to UKFS businesses exploiting rather than protecting customers (The Sandler Review became Unfair Terms and Conditions became Treating Customers Fairly became Consumer Duty).
The regulator intervention isn’t proactive but reactive—regulators are responding to mis-selling, opaque pricing, unethical sales practices and unethical investment practices. When ethical treatment of customers must be mandated, it signals that some commercial incentives are misaligned with good customer outcomes. It would be a positive step forward if Regulation was used to reinforce good practice, not be a substitute for it. The fact that enforcement is now needed to drive good outcomes for customers is a clear indictment of the sector’s current priorities.
The Failure to Protect Vulnerable Customers
One of the most disturbing outcomes of this misalignment is the consistent failure to protect vulnerable customers. The FCA defines vulnerability broadly, including people with low financial capability, health issues, or difficult life circumstances. These individuals often lack the resources or knowledge to challenge poor treatment, making them particularly dependent on ethical business conduct.
Despite this, vulnerable customers continue to suffer disproportionately. Complex product designs, digital-heavy support processes and inflexible policies can leave them exposed. In extreme cases, vulnerable people have been sold inappropriate financial products or excluded from essential services entirely. Too many now find themselves stranded without an adviser, paying money for a product which may no longer meet their needs and not understanding the consequences of having, or not having, the same.
This systemic failure is both unethical and economically short-sighted. Helping vulnerable customers builds trust and loyalty. Ignoring them damages brand reputation and can invite regulatory penalties. A financial system that does not serve the most at-risk members of society is failing in its basic duty.
Start by answering this question – aren’t all customers vulnerable? The fact that a customer happens to be wealthy doesn’t mean that they are financially educated, poor choices can still be made and the wealthiest are arguably at the greatest risk of being exploited.
Prioritising Shareholders Over Customers
One of the root causes of poor customer outcomes is the overwhelming emphasis on shareholder returns. Some firms prioritise short-term profit over long-term trust. This has led to cost-cutting at the expense of service quality and a disregard for customer satisfaction.
This shareholder-first model is deeply embedded in the industry through executive pay structures and investor expectations. Yet, it stands in direct conflict with the sector’s social license to operate. I’d argue that UK Financial Services differ from other industries; they are built on trust, long-term relationships, and stewardship of other people’s money. When customer welfare is sacrificed the social contract breaks down.
Customer trust, once lost, is hard to regain. Most customers are not actually that demanding. Broadly they have minimum expectations: honesty/safety, responsibility, transparency and fair value. The “I am going to give you my money, because I believe you can look after it for me, better than I can myself” outlook prevails for many customers.
Toward a Customer-Centric Future
I believe the future “winners” in the market will be those businesses who redefine their strategies. Those that pivot to serving and then protecting customer interests as their de facto strategic goal; which will encompass shifting corporate culture, redefining success metrics and adopting a long-term view of profitability have the best opportunity to thrive.
By offering transparent products, intuitive platforms, responsive service, ethical investment practice and innovation are not mutually exclusive.
Businesses that lead in customer service often enjoy stronger customer retention and lower reputational risk. Ethical businesses can thrive—not in spite of doing the right thing, but because of it.
Recommendations for Change
1. Embed Customer Interests in Corporate Strategy: Boards should prioritise customer welfare as a key performance indicator, not a compliance box-tick. Customer ought to be the first quadrant of a balanced scorecard of measures, not a consequence.
2. Proactive Support for Vulnerable Customers: Firms should design inclusive products and services. This means staff training, flexible communication channels and use of clear language. Treat all customers as “vulnerable” and the solutions are actually easier to determine (rather than getting bogged down in definitions around what does or does not get included)
3. Align Executive Incentives with Customer Outcomes: Compensation packages ought to be driven by customer satisfaction, customer retention, complaints made and upheld and ethical performance.
4. Encourage Responsible Shareholder Engagement: Investors should support long-term value creation over short-term gains, holding companies accountable for poor treatment of customers.
Conclusion
Those UK Financial Services businesses who take action to operate to a core purpose: serving and protecting customers, can excel. Regulatory action, while necessary, should not be the primary force driving ethical behaviour. Financial firms must take responsibility for their role in society and place customer welfare at the heart of their business models.
This shift will not only rebuild customer trust but also create a more resilient, inclusive and sustainable financial system. Profitability and ethics are not opposites—they are complementary when aligned correctly. It is time for UK Financial Services to prioritise customers over profits and make protecting customers their guiding purpose.
