Introduction
Financial service sector plays a critical in dealing with different types of financial services to meet the individual and commercial requirements. This report covers a detailed assessment of contemporary and emerging productsand services offered by the Financial Services Sector of UK providing uk dissertation help, along with the assessment of different implications. It covers an evaluation of organisational responses of financial sector companies to manage different variables associated with corporate governance and social responsibilities. This report also determines the emergence and responses associated with financial frauds.
Describing contemporary and emerging products and services offered by the Financial Services Sector.
In the context of UK’s financial sector, different companies offer a variety of contemporary and emerging products and services with reference to change in interest and expectations of customers. Therefore, several factors influence the product offering in banking and finance companies such as personalisation of services, digital transformation of business operations, collaboration with Fintech companies, application of AI systems for the development of automated systems and providing a unique experience to consumers (Schoenmaker, 2017). In this regard, a leading financial sector firm of UK named Aviva Group Plc has been emerged as an organisation that offers a variety of financial products and services. The company has paid huge attention on the personised services in the from of car insurance, home insurance, life insurance, health insurance or medical cover, stock & share ISA service, and investment bonds. For facilitation of the best user experiences, consumers would be able to avail the products and services of Aviva over the various online and offline platforms (Aviva, 2021). The management of Aviva is focusing on the digital transformation and application of Fintech technologies for managing the faster payment and settlement of different claims as well as facilitation of real time operating of different investments of customers.
With consideration of growing demand of retirement benefits, the Aviva has enhanced its portfolio for retirement products along with pension products. In development of a variety of insurance and investment products, technology plays a critical role in developing a variety of finance and investment products. In this regard, the Lloyds Banking Group offers different kinds of banking, finance along with the investment products such saving and current accounts, credit cards services, investment in portfolio, wealth management services, and others. In the context of financial services, Lloyds Banking Group manages its service in the context of capital market, private equity and supply chain, commercial financing, risk management, cash and treasury management and others (Lloyd Banking Group, 2021). With consideration of the advancement in technology, the banking firm facilitates the payment APIs solutions through which companies and individuals would be able to accept and send payments for attainment of distinct business requirements (Asante, Owenand Williamson, 2014). The increase in the global trade operations has increased the requirements of international banking services so as Lloyds Banking Group develops a variety of services such as International Current Accounts, International Saving Accounts, Foreign Exchange Management services, along with international money transfer. For supporting a variety of import and export related practices, banking firms within the UK’s finance sector offers different services related to export credit along with hedging services to manage risk factors. It plays a critical role in assessing the needs and expectations of businesses.
Outlining the principle Legal Structures and Regulations affecting organisations in the Financial Services Sector.
The companies working within the finance sector of UK have to follow a wider range of guidelines and regulations that are playing a critical role in developing a variety of financial service offering. In the context of UK’s financial sector, two regulatory bodies are playing a critical role in controlling different practices of financial sector such as Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) (Lagazio, Sherif and Cushman, 2014). The Prudential Regulatory Authority (PRA) is being termed as an important part of Bank of England, and also optimum implementation of different regulations for insurance companies to control the interest of policy holders. On the other hand, Financial Conduct Authority (FCA) is liable to regulate operations of different finance sector companies and could manage the integrity of UK’s financial markets. In this context, the role of ABI Prudential Regulation Team has been enhanced on significant manner in managing a wide range of prudential and financial reporting issues such as solvency management, international prudential regulatory developments, financial reporting standards along with development of an efficient regulatory environment for different institutional investors. These practices and regulations have been found in supporting different practices associated with service and product development (Nawaz, 2018). In similar way, ABI Conduct Regulation Team is having direct impact on the development of different policies along with the terms and conditions for different types of financial products and services. For example, insurance companies have to follow different norms of Insurance Distribution Directive (IDD) as well as General Data Protection Regulation (GDPR). These regulations also control service offering within different financial service companies.
Moreover, the companies working in the financial sector have to manage their services or development of new services with reference to uphold information rights in the public interest determined by the Information Commissioner’s Office. The importance of these regulations have been enhanced when companies like Aviva and Lloyd Banking Group are transforming their businesses along with services with consideration of different digital technologies. In this context, organisations have to ensure the safety of consumer’s personal and professional information under the new General Data Protection Regulation (GDPR) in the UK (How our industry is regulated, 2021). Moreover, the financial sector companies in UK have to follow different rules and regulations associated with Financial Ombudsman Service (FOS) to manage the complaints between consumers and organisations. In addition to that, the Financial Services Compensation Scheme (FSCS) is the compensation scheme that is termed as the last resort for customers of financial services firms and companies consider different regulations to manage the payment of compensation for the non-compliance of different services (Buckle and Thompson, 2020). Moreover, different directives such as Capital Requirements Regulation and Directive, Markets in Financial Instruments Regulations and Directive, Short Selling Regulations, Market Abuse Regulations, European Market Infrastructure Regulations and others are playing a critical role in developing contemporary and future financial services. Moreover, finance service firms have to manage different guidelines of PRA and FCA to manage different disruption such as cyber attacks, upgradation of IT systems, data breach management, and others. In this context, the guidelines of EU’s and UK’s regulators are playing a critical in managing service offering in the form of quality, efficiency and safety (Herzig and Moon, 2013).
Discussing the interaction of emerging products and services in the Financial Services Sector with principle Legal Structures and Regulations.
In the context of insurance products, the management of Aviva covers different guidelines associated with the corporate or insurance laws and regulations. In this regard, the regulations associated with Financial Conduct Authority and Prudential Regulatory Authority has been found very effective manner. The business entity has established the Data Charter to manage the protection of information while offering different products and services. Moreover, company has adopted different approaches of ethical investment through which the minimisation of risk factors and identification of new opportunities will influence the management to facilitate the high quality services in terms of different insurance and investment products such as home insurance, car insurance and life insurance (Pugh, 2017). Moreover, the Financial Instruments Regulations and Directive are playing a critical role in developing a variety of investment options and insurance services with consideration of needs and expectations of consumers. For the application of different legal guideline, the Aviva’s the business model is worked as the Composite Insure in which organisation develops and offers a variety of specialised serviced in the field of banking and insurance(Aviva, 2021). In the context of a variety of emerging products and services, the business entity has adopted FCA guidelines to manage the integrity, transparency, openness along with the alignment with the company’s value so as the business entity would be able to meet interest of customers, government agencies and others. Moreover, the company adopts various systems to support general insurance, life insurance and others practices toattain the corporate objectives in an efficient manner (Jayasuriya, 2015).
In similar way, the Lloyd Banking Group has adopted different operational strategies to improve the quality of services and compliance of different government regulation. In this context, the company has increased the usage of technologies for managing different service in an efficient manner. The investment in technology has been emerged as key strategic priority to improve the operational efficiency of banking(Lloyd Banking Group, 2021). In this context, the role of fintech companies has been enhanced in developing of a variety of financial services. In managing the data safety and security related risk factors, the Lloyd Banking Group has applied the General Data Protectionprogramme for delivering the necessaryinfrastructure for achieving the compliance withthe new regulations. The group has implemented the open banking system for managing frauds and other issues (Tran, 2014). For managing different governance, the company has formulated the Group Financial Risk Committee. In this context, the Data Risk is being governed through division risk committee. Moreover, the cyber security is being termed as the most critical issues identified in the contemporary business operations. In addition to that, the credit risk is being measured with consideration of different modelling and scoring techniques to manage different risk in financing service.
Outlining the contemporary governance and corporate responsibility issues faced by the Financial Services Sector and the governance codes applicable to the sector.
The corporate governance and corporate responsibility is concerned with holding the balance between economic, social along with communal goals. In this context, an appropriate governance framework is to encourage the efficient use of resource and equality to maintain appropriate level of business accountability. This aim is aligned with possible the interest of individuals, corporations as well as societies. In the context of finance sector of UK, companies face several issues in dealing with customer and society in ethical manner and compliance of different legal norms and other guidelines within the business planning. In this regard, the business ethics theory determines that an organisation has a wider social obligation and moral duty towards the society. It focuses on the changing and emerging social responsiveness along with the social expectations towards the particular social problems, consideration of eternal or intrinsic ethical value for assessing the social justice, and establishment of corporate citizen ship (Beck, Frost and Jones, 2018). Companies like Aviva and Lloyd banking group offers a variety of financial products and services so as companies are facing several issues associated with corporate governance and corporate social responsibility that include fair dealing with customer, protection of data and other information, consideration of social benefits elements, compliance of all legal guidelines, and others. In this context, companies working in financial sector follow different codes of conducts of corporate governance. In this context, triple bottom line theory focuses on two ideas such as determining three columns of social responsibility and obtaining sustainable results three critical areas It includes the economic sustainability, social sustainability, and environmental sustainability (Weber, Diaz and Schwegler, 2014). In the context of UK’s financial service sector, a revised “Internal Audit Financial Services Code” has been published in 2021 that support companies working financial services in dealing with different issues of internal reporting along with development of different codes of corporate governance.
Discussing how the Financial Services Sector approaches governance and responsibility issues.
In the responses of governance and responsibility issues, different companies adopt different policies and procedures. In the context of Aviva, company has developed different codes and approaches for attainment of sustainable business operation. Aviva’s business operations are influenced by ECG approach because the Environmental, Social and Governance (ESG) have been considered as a central pillar of firm’s investment process. Moreover, the company has adopted the support from Global Responsible Investment (GRI) Team to develop an appropriate control environment for supporting the sustainable business operations(Aviva, 2021). In dealing with different stakeholders, the business entity supports consumer for making sustainable investment in which the Aviva is developing new standards for sustainable business operations with consideration of guidelines of British Standard Institute and Investment Association’s of sustainable framework. Moreover, World Benchmarking Alliance has been found very effective in development of a variety of codes of corporate governance. In dealing with climate change related issues, Aviva was being emerged as a key driver of the global Carbon Disclosure Project. In addition to that, the business entity provided its active support in establishment of Sustainable Stock Exchanges (SSE) Initiative in 2009. Moreover, Aviva has gained a significant success in controlling the green house gas emission. In this regards, Aviva carried out a systematic research from the Economist Intelligence Unit in 2015 to examine different variables of the value-at-risk factors in dealing with different issues related to climate change for supporting the investment, pensions and long-term savings(Aviva, 2021). In addition to that, Aviva adopted different guidelines of UN Sustainable Development Goals (SDGs) for developing an appropriate business model that could meet the needs and expectations of different stakeholders. In similar way, the UN guidelines for creation of World Benchmarking Alliance (WBA) have found very effective to support sustainable business operations in financial service sectors. In dealing with financial crimes, the business entity has adopted the zero tolerance approach (Steurer, Martinuzzi and Margula, 2012).
In similar way, the Lloyd Banking Group has adopted the enterprise risk management framework (ERMF) through ‘three lines of defence’ that clarifies responsibility and accountability of different business operations. In this context, the Helping Britain Recover Plan of Lloyd Banking Group has been found very effective in managing the social and economic effects associated with pandemic of Covid-19. This plan covers different elements such as household’s financial health, affordability of quality homes, acceleration of low carbon economy, and others. Moreover, the Lloyd Banking Group provides a great support in developing digital skills of small or emerging companies in dealing with different business issues. The company has also adopted the UK Corporate Governance Code in managing the business operation to meet corporate governance and CSR goals (Lloyd Banking Group, 2021). It is considered as a founding member of the Net Zero Banking Alliance (NZBA). It is an UN-convened organisation or industry-led alliance of 43 banks in all over the world which that is aimed to accelerate the transition of global finance sector along with the global economy to achieve different goals ofnet zero emissions by 2050. Moreover, the business entity offers different project related to green infrastructure. In the context of corporate governance, company has adopted different policies to avoid racism so as an appropriate work culture could be established that offer inclusion and diversity (Button and Tunley, 2014).
Outlining the contemporary fraud issues affecting the Financial Services Sector
Financial fraud has been incorporated when someone deprives an individual in unethical manner to harms the financial health through misleading, deceptive and other legal practices. It could be emerged in the form of identity theft or investment frauds (Lagazio, Sherif and Cushman, 2014). Button, Lewisand Shepherd (2015) stated that frauds within finance sector have become sophisticated in year by year because criminals are focusing on the adapting new tools and evolving, faster than financial service providers. Therefore, the financial service companies should have to restructure the business operations to accelerate and innovate different tactics and approaches to prevent, detect and mitigate the fraudulent activities. In the context of UK’s financial sectors, the frauds associated with cards has been emerged as the most popular fraud. The value of card-based fraud in UK was being reached to £574.2 million in 2020. This type of fraud is emerged when criminals are using the stolen card details that have been considered during online payments. In addition to that, the card-based fraud is also occurred when the criminal creates the fake card and obtained the information from the magnetic strip (Hollow, 2014). Furthermore, the cheque-based fraud has been found as an important type of fraud that is identified in the UK’s finance sector. In this context, the total value of counterfeit cheque fraud is reached to £7.2 million. In addition to that, the remote baking fraud losses has been organised into three categories that are mainly managed through internet banking, telephone banking and mobile banking (FRAUD - THE FACTS 2021, 2021). These types of frauds are mainly occurred when criminals’ gains access to bank accounts of people and unauthorised access of internet-based transactions. Moreover, Authorised Push Payment Frauds or also bank transfer scam has been termed as the most critical fraud type identified within the UK’s banking system.
In the context of financial sector of UK, the motor insurance frauds are being termed as the most critical problems. In 2018, 6% or 58000 claims contained fraudulent elements because these claims also considered the element of personal injury. In addition to that, money laundering is being termed as an important type of banking fraud. In this regards, The Financial Conduct Authority (FCA) issued the second-largest fine against the Standard Chartered Bank in April 2019of £102,163,200 for the breaches of different regulations of anti-money laundering (AML) (Ten of the biggest fraud and money laundering scandals from the past decade, 2020). In similar way, one of the largest insurance sellers of UK named Aviva detected £80 million insurance claims fraud in 2018. In the context of Motor insurance, 66% of transactions are being termed in suspicious category. Furthermore, there is a significant increment identified in the liability frauds (Value of detected claims fraud falls as fraudulent applications rise sharply, 2021). In similar way, the customers of Lloyd Bank have been targeted with sophisticated email scam for carrying out phishing attacks for performing the financial frauds. Moreover, banking firm addressed several types of card, internet payment and cheque related frauds that may leave direct impact on the efficiency and sustainability of companies.
Describing the role of IT in the detection of fraud in the Financial Services Sector.
In the detection of a variety of frauds, the role of IT has been enhanced within the financial service sector. In this context, the management of Aviva has focused to develop an efficient infrastructure to detect different type of frauds in which data science capabilities of insurance company assists management in performing customer profiling and other patterns. Moreover, the extra attention on the data creation as well as the usage of Big Data along with through artificial intelligence would support insurance company for performing an appropriate regulatory scrutiny of consumer (Lagazio, Sherif and Cushman, 2014). It helps the business entity in assessment of different risk factors within the fraud identification and detection. Moreover, the Aviva has managed a significant investment in cyber security with additional automated control that helps the organisation in identifying, detecting and preventing the cyber-attacks (Aviva, 2021). In similar way, the Lloyd Banking Group is continuing its digital transforming strategy that supports companies in detecting different types of financial frauds. In this regards, the banking firm adopts different technologies to protect personal data consumer and to manage an appropriate defence mechanism for detecting and controlling cyber attacks (Lloyd Banking Group, 2021).
The technology offers a great support to financial sector companies in managing different types of frauds. This is because a number of new innovations are helping firms in achieving the global compliance associated with the fraud management. In this regard, the blockchain and distributed ledger technologies (DLT) are being termed as a great example that have been found very effective in the form of the potential applications around data sharing so as companies would be able to manage the KYC, AML and other related fraud prevention. In addition to that, technology alone will not be enough for dealing with a variety of financial crime within the insurance sector and financial service sector. Therefore, an effective and management-led commitment to compliance is being termed as key tool to detect frauds (Hollow, 2014). This commitment requires management to refocus efforts and budgetary discipline on compliance which, in turn, will better facilitate the successful integration of new technological solutions. In addition, insurance providers must have to develop an appropriate understanding of different regulations along with should have to develop a reliable systems and frameworks for supporting different functions associated with fraud detections (Lloyd Banking Group, 2021).
The usage of technology in the form of robotic process automation (RPA) along with the artificial intelligence (AI) has become popular in dealing with a variety of financial services. RPA allows companies or organisation to automate processes at a fraction of the cost of traditional solutions, without implementing any significant change in the current IT systems. In this context, the Bank of Ireland uses high tech systems for keeping customers' accounts within appropriate security and it is also important for protection the organisation or consumers from fraudsters.Therefore, IT Systems are offering a great support in detecting a variety of frauds within the financial service companies (Comparison of banking providers’ fraud controls, 2021).
Conclusion
As per the above assessment, this investigation concludes that financial service sector of UK offers a variety of products to meet distinct requirement of consumers such as banking, investment, finance, and insurance. In this context, companies have to different legal guidelines and regulations in development of a variety of products and services. Furthermore, this report concludes that corporate governance and social responsibility are being termed as key element of corporate codes of financial service companies to attain different goals of sustainable business operations. Furthermore, the above assessment concludes that financial service sector companies face a variety of frauds i.e. insurance frauds, data theft, card duplications and others. In this context, IT plays an important role in controlling different frauds.
Reference
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