FSCS report highlights need for trust in the industry

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FSCS report highlights need for trust in the industry

Trust in financial services continues to be low with an underlying belief that firms were choosing to act in their own interests and not the consumers, an FSCS report has claimed.

Mark Neale, chief executive of FSCS said it was imperative for the sector to restore trust and public confidence.

“Eight years on from the financial crisis, media coverage of financial services still focuses on a lack of consumer trust. Consumer surveys consistently find that the financial services industry is one of the least trusted sectors,” he said in the report’s Foreword.

The 18-page report, Mind the Gap: Restoring Consumer Trust in Financial Services, showed that only 36 per cent of UK consumers have trust in financial services firms, according to the Edelman Trust Barometer.

Financial services and banks were the second least trusted industries, only just ahead of media, the barometer, which looks at trust in industries of 27 countries, showed.

Globally it is the second least trusted industry, placing it 19th out of the 27 countries surveyed.

Although the UK outperformed Germany, where only 25 per cent trust financial services, it underperformed compared to its competitors - 51 per cent in the US and 61 per cent in Hong Kong had trust in financial services.

India leads the way, with 77 per cent expressing trust in financial services, while Spain only 22 per cent had trust.

The report said that in some areas firms were highly trusted, particularly around safety and security, but gaps needed to be addressed to elevate the sector and raise confidence.

It called on the industry to tackle distrust, particularly with fair pay and excessive rewards to senior staff.

Firms also need to act transparently and in customers’ best interests by offering the same deals to both new and long-term clients and informing when better off with another product.

The industry must also collaborate with FSCS to raise awareness of existing protections. While 62 per cent of consumers were aware of the scheme, according to the report, only 45 per cent were aware of compensation for poor advice.