Financial services firms in the UK want the newly elected government to make cutting the cost of regulatory compliance a priority, according to a CBI/PwC survey.
The latest CBI/PwC Financial Services Survey for the three months to June 2015 found firms’ number-one concern was reducing the cost of complying with regulations.
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Tax stability was also ranked highly and was the number one concern for general insurers and investment managers, the report says.
The study also found that business volumes and optimism among financial services firms continued to grow at an above-average pace, but more slowly than in the previous quarter.
There was a pointed increase in total costs, but non-performing loans continued to fall and firms managed to keep average costs under control. These factors, combined with decent growth in business volumes, meant that profits increased at their fastest pace since March 2011, and rose across all sectors.
Employment in financial services edged up a little. Headcount in banking was stable, with most other sectors reporting a healthy increase and only securities traders reporting a fall. Overall numbers employed are expected to increase at a similar rate next quarter, the study report says.
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By GlobalDataIn the next 12 months financial services firms plan to increase spending on marketing as they try to reach new customers. But capital spending plans have been scaled back, with expected growth in IT investment the weakest in a year and a half and firms reporting falling capital budgets in other areas.
Intensifying competition was seen as the most significant factor likely to constrain business activity in the next 12 months. Competition is increasingly seen as coming from outside firms’ own sectors.
Dealing with statutory legislation and regulation was seen as another important factor likely to constrain business activity in the next 12 months.
Kevin Burrowes, UK financial services leader at PwC, said: "Levels of optimism amongst banks remains broadly unchanged this quarter which is a little surprising as we had expected to see a bounce from the election result and the greater encouragement for financial services from the new government. However, ongoing regulatory uncertainty, the EU referendum and other macro-economic factors have dampened the outlook at least in the short term.
"In recent years, banks have enhanced many of their customer-facing operations with digital solutions, most notably through the introduction of mobile apps. The next wave of innovation lies in the digitalisation of the back-end processes, many of which still rely on a high degree of manual processing. Ensuring a continued spend on core IT is critical to the success of banks."
