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Consumers Don’t Feel Their Financial Interests Are Being Well Protected and Are Dissatisfied With Many Areas in Financial Services

November 11, 2010 Featured News, Finance No Comments

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Consumers Don't Feel Their Financial Interests Are Being Well Protected and Are Dissatisfied With Many Areas in Financial Services

A new survey on regulatory reform by TNS, the world’s leading custom research firm, finds that only 46% of American consumers feel  their financial interests are being appropriately protected by laws and regulations.  For consumers who are over-indebted this is even worse: only 29% of this group feel their financial interests are being well protected.

With regulatory reform and consumer financial protection high on the political agenda, TNS asked consumers about their financial services “pain points” to help inform the agendas of regulators. The TNS Regulatory Reform Survey was developed in collaboration with Professor Peter Tufano, the Sylvan C. Coleman Professor of Financial Management at Harvard Business School.  A nationally representative sample of 2,300 American consumers 18 years or older was surveyed between October 8-14 2010.

Consumers remain uncertain of the economy and how their interests are being protected

While overall consumer confidence shows some stability of late, there remains some underlying uncertainty among US consumers regarding the future.  Specifically, only 14% of US consumers see the US stock market and the value of their household investments improving over the next six months.  Moreover – regardless of political leaning — fewer than half of US consumers (46%) feel their financial interests are adequately protected by today’s laws and regulations. While regulatory reform promises to provide some of this protection for consumers and has garnered a lot of attention in the media, 46% of American consumers say they are not familiar with how this legislation will benefit them.  Further, those who are familiar have doubts that reform will benefit them; only a third agree that it will be “good” for the average US consumer (the same number who disagree).

Even routine matters scores low

In an attempt to inform the efforts of the new consumer financial protection bureau and other regulators, TNS surveyed US consumers and found that they were not satisfied with even the most basic of their financial services activities, such as “routine matters with your bank” (only 43% extremely/very satisfied) and “understanding how overdraft protection on your checking account works” (only 42% extremely/very satisfied).  ”It was most remarkable to us that consumers experience ‘pain’ on even the most basic of tasks,” says Trish Dorsey, Senior Vice President and head of the North American Financial Services sector at TNS.

Credit cards still number one consumer pain point

The area within financial services with which US consumers are most dissatisfied is credit cards, with 61% of consumers saying that they are very or extremely dissatisfied with the fees charged on credit cards; 61% saying they are very or extremely dissatisfied with interest rates charged on credit cards; and 49% saying they are very or extremely dissatisfied with the terms on credit cards.  ”While dissatisfaction with fees and rates is hardly surprising, the level of discontent with more everyday elements of financial services life is striking,” says Peter Tufano.  Other areas of strong consumer dissatisfaction identified in the survey include personal loans, especially dealing with fraudulent lenders (42%), fees on payday lending (32%), fraudulent investments and their promoters (42%), and the trust in investment markets in general (37%).

So what does all of this mean for US financial institutions?  ”Uncertainty creates opportunity,” says Dorsey.  ”And today’s environment creates plenty of opportunity – for financial institutions to avoid the temptation to efficiently follow but rather to actively lead.  If we learned anything during the most recent financial crisis, it was that being ‘present’ with the consumer was critical in terms of allaying uncertainty and managing expectations.  It will be important to participate in this debate with regulators and to actively engage with consumers about their fears and frustrations.”

The TNS Regulatory Reform survey was conducted using Light Speed Research and was conducted from October 8 through October 14, 2010.  Results of the TNS Regulatory Reform survey were presented on Friday November 5, at the Financial Services Marketing Symposium in Orlando, FL.

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