The changing tide of regulation is having the opposite effect to what the FSA is attempting to achieve, research suggests.
Financial services support firm Focus Solutions says 58% of providers questioned believe consumer confidence is actually falling as a result of regulator meddling.
Of these providers, 57% stated this is due to the amount of documentation and information consumers are given within a sale, and 43% because changing regulation is not understood by consumers.
Richard Stevenson, chief executive officer at Focus Solutions, says: “Regulation is a constant in the financial services industry and as we have heard from providers unsurprisingly it is having an impact on working practices, affecting consumer’s confidence in the marketplace.
“The FSA publishes up to ten consultation pieces a year and to keep up with demand, insurers require smarter technological solutions that enable them to future proof their sales systems against changes in legislation.”
Focus says regulations have been brought in to standardise products and improve the service providers offer, but yet are lowering consumer confidence - the opposite reaction the FSA is working towards.
According to the research, a key challenge facing providers due to changing legislation is maintaining a cost effective business model with the added cost of supporting the legislation.
Focus says many organisations have had to increase their IT budgets or delay impending IT projects to ensure that they are compliant and future proof.
It adds reviewing and understanding the impact of legislation on the organisation was the next key obstacle for insurers, as this also impacts time and resource.
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