* Heightened competition from non-financial services firms
* Regulation a key driver of operating costs
By Matt Scuffham
LONDON, June 30 Britain's financial services
firms saw an unexpected fall in profit in the three months to
June, after six quarters of strong rises - the result of
increased competition and costs, an industry survey showed on
Profits fell by 5 percent compared with expectations for a
rise of 30 percent, according to the latest quarterly CBI/PwC
financial services survey. Incomes from fees, commissions or
premiums fell by 10 percent, disappointing a previous forecast
for rapid growth of 34 percent.
Kevin Burrowes, PWC's UK financial services leader, said
banks and insurers were seeing a growing competitive threat from
non-financial services companies and new entrants trying to
capitalise on improved economic conditions.
"This suggests that UK financial services will see
increasing pricing pressure. There is now a growing willingness
to partner with technology firms and emerging rivals," he said.
Burrowes added that regulation would remain a major concern
and a key driver of operating costs.
Despite that, firms reported a rise in business activity in
the three months to June and optimism for the future continued
to pick up across the sector.
Some 37 percent of financial services firms said they felt
more optimistic about their business situation, compared to 9
percent who were less optimistic.
(Reporting by Matt Scuffham; Editing by Sophie Walker)