UK Financial Services essay sample

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UK Financial Services

Table of Contents


The key reasons of the UK financial services crisis

Risk-Friendly Lending

Breakdown of Collective Action

Ethical Considerations

Factors involved in reduced consumer trust

Evaluation of implementation measures




Appendix A. The UK Banks Liquidity (Source: Yan, 2013)

Appendix B. Household disposable income in the UK (Source:


Financial services industry is the lifeblood of the UK economy. 70% of the British GDP is comprised of household consumption; therefore, it is crucial to ensure proper functioning of the financial system. The financial crisis of 2008 adversely affected the trust of UK customer.Even seven years after the banking crisis, consumer confidence is weak and needs years to be rebuilt, according to the chairman of the Treasury Committee, Andrew Tyrie (BBC News, 2014).

If the lessons are not thoroughly learnt, the history is likely to repeat itself. Therefore, exploring the root causes that led to the recent financial crisis is imperative to prevent or mitigate future financial turmoil. Notwithstanding an extensive research in this area, no universally accepted reasons for the global financial crisis have been found so far. One of the most widely debated issues is the association between consumer trust and proper functioning of the financial system.

Whereas some studies indicate that the financial turmoil was rooted in the broken trust and confidence (Tonkiss, 2009; Springford, 2011; Argandona, 2012), other research yielded quite opposing results that customers’ distrust was caused by the collapse of the financial system (PWC, 2014). In this regard, the main purpose of this study is to explore the key reasons that led to the financial crisis of 2008 in the UK to prevent or mitigate consequences of a possible financial turmoil in future. More specifically, the following research questions are developed: What were the key reasons behind the financial services crisis of 2008 in the UK? Drawing on the results from question 1, what are the factors that contributed to eroded consumer trust and confidence? Based upon the insights from question 1 and 2, was the response policy of the British Government effective in dealing with the financial meltdown of 2008?

This study extends the previous cohort of studies in the sense that it explores the causes of the financial services crisis of 2008 in the UK. By gaining a holistic understanding of the association between the customer trust and the credit crunch in the UK, the researcher will be able to critically evaluate the effectiveness of the British Government response policy and distil the main lessons learnt to prevent the repeat. Furthermore, this study is essential for increasing transparency and reducing uncertainty in the UK banking industry. Finally, the results of this study may assist regulators in their efforts to further regain customer trust in the British financial system, break apathy, and promote …

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