Westminster has been turned upside down by the people’s anger: The City could be next
Most years I remember for a particular theme. The Olympics and the Diamond Jubilee in 2012 made the UK the happiest place in the world to be. After the crash in 2008, life was scary and solidarity was the theme; no one knew what was coming next but we stood side by side.
This year is turning out to be the most surreal and unpredictable of all years. I honestly don’t know what’s going to happen next. In sport, Leicester won the Premiership, England’s rugby team are unbeaten, and the undaunted journey of the Welsh football team gave the most ardent of English, Scottish and Irish fans goose-bumps. The odds were long on those events, but I bet they were longer on some of the political surprises of the last 12 months.
Think back to this time last year. To refresh your memory, it was baking hot and we were coming to work with extra water, not umbrellas. Then came the shock of Jeremy Corbyn’s election, and in June a whole Parliament’s worth of news crammed into a single month: a momentous verdict on the EU, the resignation of a Prime Minister, a tumultuous Tory leadership campaign, Labour in crisis, and Nigel Farage resigning.
Read more: Theresa May to be installed as prime minister on Wednesday
With hindsight, I think we could have heard the rumble of public discontent approaching.
The nub is: we had been ignoring people, and these people became angry. It is too late for politics (as we know it) to recover from this uprising: we need some serious change and new leadership to sweep the slate clean. Even then our leaders will be – and should be – grovelling for some time.
But in our day jobs, and I’m thinking particularly of financial services, it’s not too late to avoid a similar catastrophe. We are also ignoring the people.
As an investment banking friend said to me recently: “colleagues are finally realising: nothing is for the customer, it’s all to make money. And it’s hard to alter behaviour when there will be [perceived] short-term financial pain [for staff]. People left are… unable… to develop any sort of empathy for the customer.”
I happen to disagree. Having met many of the leaders of financial services firms, I think they are generally trying to steer their ships to be more customer-orientated and it’s not mission impossible. The trouble is that these are massive ships with many mutinous crew members.
No change is going to result in battered share prices and the loss of many great institutions. Unfortunately for shareholders who will lose their shirt, and that’s pretty much anyone in the UK with a pension, customers have had enough of hitting the snooze button and are finally waking up. They now have more choice in all aspects of financial services. They now have the option to choose companies that are focused truly on customers.
Read more: Financial services chiefs expect the shareholder rebellions to continue
Brexit has established a new confidence that people can affect change, that there is no need to bow down to a louder and wealthier minority.
Alongside this new confidence, though, consumers also need regulatory support. The EU’s flagship piece of financial regulation, MiFID II, promised a range of consumer protections, including transparent pricing of investment products.
But the future of this regulation is now in doubt, and we in financial services can think of MiFID II’s future as symbolic of our wider choice – a choice for or against consumers.
One path is to acknowledge that consumers want and need to understand how much they pay for the investment services we provide. We in the UK can lead the financial services world in making this happen. The other path is to fail to recognise the societal sub-text of revolt in last month’s Brexit surprise, and to use the vote to retrench into the unacceptable ways of the past and abandon valuable consumer protections promised by the EU.
If we fail to make the right choice, we are surrendering ourselves to a shock far bigger than either the global financial crisis or Brexit. It will brew and stew, perhaps for years, but when it explodes it will be a popular uprising with consequences far worse for the economy than anything we can imagine.
Politicians left it too late to recognise they had ignored their constituents – and they have been battered for their negligence. We in finance have a chance to act – but we must do so now.