A complete dissolution of confidence: how it's not just Britain's banks that are no longer considered trustworthy

The past five years has been a reputational nightmare for financial services. High profile issues in the banking sector have stuck to other financial services industries, and now everyone is suffering the consequences of an increasingly suspicious public. Trust, and how to regain it, has been a hot topic for a few years, and it is important. The public want to be able to trust financial services to make sure they can pay its bills and withdraw its money, but also that the industry is not ripping-off its customers and over-rewarding its staff. The industry itself relies on the public trusting them with its money, and that Government trust it to be fit for purpose. Ipsos tracks sentiment amongst a range of key stakeholders and influencers, at both a brand and sector level, and financial services currently has a reputation problem unlike anything we have measured in the past twenty years.

Banking is at the centre of the storm, and has been since the beginning of the financial crisis over five years ago. Even amongst audiences we would traditionally deem to be the most ‘pro-business’, banking is considered as a persona non grata. For instance, business journalists tend to focus on the financial bottom line when making judgements about companies and sectors. They can take wider social and customer issues into account, but these tend to be trumped by a healthy balance sheet, clear company strategy and strong growth when deciding which companies they are most positive towards. Despite this financial focus, eight out of ten business journalists (including broadcast, wire and national print media) said they felt unfavourably towards the banking sector in Summer 2012. The impact of ongoing crisis over the past year (e.g. PPI mis-selling, the Libor scandal, UBS rogue-trader fraud, money-laundering allegations) on media perception have caused unfavourability levels to return to a peak last seen between 2008 – 2009.

Due to their influence on industry regulation, the opinions of senior politicians in Government and Opposition are also important to understand.  It will come as little surprise to many that the views of MPs have a tendency to split out along party lines with Conservative MPs tending to be weighted more towards the business agenda, and Labour MPs placing more emphasis on issues that have an impact on the wider society. Even so, 71% of all MPs surveyed claimed they are unfavourable towards the banking sector. Some of this will be due to the impact that a MPs post bag will have on their perspective. If they receive nothing but complaints about poor service and product mis-selling, as well increasing unemployment figures in their constituency, financial services companies are going to be automatically marked down.

The impact of these influencers’ opinions on the general public should not be underestimated. In November 2007 the average favourability score for financial services amongst Great British consumers was 39% favourable. Since then, favourability has halved to just 20% (November 2011) due to the impact of the crisis and the recession. The underlying point is that continual press coverage of the financial crisis, and the banks’ role in that, has created an atmosphere where the public do not feel financial companies have made any progress rebuilding trust with the public.

But the view that it is the banks and business on one side, with the public, press and political class on the other is inaccurate. As part of our regular polling, Ipsos also asks to what degree the public trust different professions to tell the truth. Doctors and teachers tend to be seen as the most honest, and perhaps unsurprisingly, business leaders are not as trusted to tell the truth. In fact the only people that are trusted to tell the truth less than the high-flying business elite are journalists, Government Ministers and politicians in general.[1] Mistrust amongst the general public has now become so endemic that they now do not trust the countries’ most influential public figures and commentators to tell them the truth. The current mindset seems to be “trust no one that has any contact or influence on British business.”

Some of this is down to the weak economy, incoming budget cuts and their impact on consumers. As the public feel the pinch financially they want to hold people accountable, and those that have the most influence are an obvious target. There also seems a degree of cultural pessimism and wariness when consumers consider their future. When asked about their current financial situation 26% of the public felt that it was strong. This ranks Britain 12th out of 24 countries where we asked the question in September this year. However, when asked what they expected to happen in six months time 18% thought that their position would be stronger. This places Britain 19th out of 24 countries, which includes a good number of suffering European nations. From an international perspective, British consumers do not have much faith in their future financial security, nor in the wider economic prospects of the country. 

The public’s lack of confidence in the future may partly stem from the messages they receive from the media. We have found that the business press feel that current Government policy will probably have a greater positive long-term impact on the financial services industry, than on the economy as a whole. It is not surprising the public feel antagonised by the financial services industry, if paradoxically they blame it for the recession, but also hear through the press that it is being given preferential treatment over getting the wider economy back on track.

So, how does the financial services industry start to rebuild its credibility and trustworthiness amongst its key stakeholders? Recently there has been research looking at how to improve levels of trust amongst consumers. Suggestions have included encouraging more entrants to the market in order to increase competition, developing a system of kite marks (such as the Fair Banking marks) to identify financial products that will benefit the consumer, and encouraging transparent financial charging structures through implementation of the Retail Distribution Review. These tactical changes should help consumers feel more confident about the value and fairness of the products that they buy, and hopefully restore confidence in the intermediated supply chain. However, there still appears to be  a disconnect between these progressive steps in the retail markets and the short-termism that Professor Kay describes as the prevalent culture in his recent report on financial services and the equity markets.

Trust is still the issue, and consumers, journalists and MPs are not going to start trusting financial services again if they feel they are acting inconsistently. No one is going to believe in the trustworthiness of a company if they hear that areas of its business are acting in an unethical manner, no matter how much lobbying and advertising the company invests in.  Financial services organisations need to display consistent and positive behaviour across all their business units if they expect to create any positive impact on public perception; and whichever company is able unify an ethical corporate culture with a service-driven consumer focus will be considered an authentically commendable part of British business. Until all the industry’s skeletons are out of the closet and dealt with, relationships with its stakeholders will remain stilted, suspicious and uncertain.

[1] Ipsos Veracity Index.:% of the general public that do not trust these professions to tell the truth

• Politicians generally – 80%
• Government Ministers – 74%
• Journalists – 70%
• Business leaders – 55%