How firms win trust in tougher regulatory times

Written by Managing Partner Head of UK Corporate, Kim Polley.

On Tuesday 12 November, we’ll be joined by award-winning journalists, campaigners and consumer champions from The Times, Fairer Finance and Citizens Advice to explore how brands can respond when reputation meets regulation, and the evolving relationship between corporate brands and regulatory action.

Corporate accountability in the UK is facing unprecedented scrutiny, driven by ever-evolving regulations and the increasing expectations of consumers, regulators and myriad other stakeholders. The Age of Accountability is upon us and has far-reaching implications for reputation management and relationship building. 

With established bodies such as the Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA) focusing on consumer protection and sustainability, businesses are under pressure to ensure their operations not only meet legal requirements but also reflect genuine ethical practices.

Customer welfare is non-negotiable

One of the biggest shifts in recent years has been the sharpening focus on consumer vulnerability, particularly in financial services, and firms’ duty of care to their customer base. The introduction of Consumer Duty regulations by the FCA demands that firms place customer welfare at the heart of their business. 

This is particularly important in sectors where customers might face financial difficulties or where products are complex, like banking and insurance. Recent enforcement actions, such as HSBC’s fine for failing to adequately support customers in financial distress, highlight how organisations that fail to meet these expectations face significant reputational risks, with potential damage far exceeding the direct cost of financial penalties.

Climate scepticism reimagined

Sustainability is another area where businesses are feeling the heat. The CMA’s ongoing efforts to combat greenwashing have targeted companies that are alleged to have made misleading environmental claims. Investigations into brands like ASOS and Boohoo have exposed the risks of overstating environmental credentials – whether intentional or not – in this age of increased scrutiny and accountability​.

Consumers are increasingly sceptical of vague claims, and regulators are stepping in to ensure that companies back up their sustainability promises with hard evidence. As a result, businesses need to be far more rigorous in how they communicate their environmental impact, ensuring that their claims are specific, measurable, and transparent.

Coping with 360 degree scrutiny

Preparing for public or regulatory scrutiny is increasing crucial when it comes to crisis management, particularly in sectors like energy, where compliance failures can escalate quickly. Criticism can come from multiple directions at once, with consumers increasingly empowered by social media and mechanisms like subject access requests to take the fight to corporates.

In 2023, the North Sea Transition Authority (NSTA) fined Repsol £160,000 for breaching flaring and venting regulations, emitting over 73 tons of greenhouse gases without proper consents. This violation undermined public trust and raised questions about the company’s commitment to regulatory compliance in an industry already under intense scrutiny for environmental impact.

The speed and transparency with which a company responds to such events can significantly influence how the public and regulators perceive the organisation. Repsol cooperated fully with the regulator and took steps to prevent similar incidents in the future. This case highlights the importance of proactive compliance, particularly in the energy sector, where regulatory breaches can rapidly escalate into reputational crises

Proactivity and transparency

The lessons from the Repsol case emphasise the need for businesses to have well-developed crisis strategies, enabling them to respond swiftly and minimise long-term damage to their reputation. However, tightening up crisis management processes mustn’t be the only approach to this Age of Accountability – proactive strategies are essential for building trust, maintaining positive brand recognition and forming external relationships. 

This means consistently demonstrating ethical business practices, being transparent about challenges, and showing a genuine commitment to combatting issues like consumer protection and sustainability. For instance, organisations that openly create context about – and share their progress on – regulatory compliance or environmental goals are better positioned to maintain consumer trust, even if they encounter setbacks along the way.

Heightened expectations 

The UK’s regulatory environment is evolving rapidly, and with this comes heightened expectations. Companies that prioritise transparency, accountability, and proactive engagement with both consumers and regulators will not only avoid the pitfalls of non-compliance but will also stand out as trusted leaders in their industries. 

The reputational stakes are as high as ever, and businesses must recognise that trust is no longer built solely on products or services Trust is built on values, ethics, and a proven commitment to doing the right thing (especially when no one may be looking).

Sign up here to join the Age of Accountability panel debate on 12 November, featuring The Times, Fairer Finance, Citizens Advice and Instinctif Partners.