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Trust in financial services is in short supply

by Lewis Panther | 13 Jun 2019
Trust in financial services is clearly in short supply with one in three consumers claiming they had been given bad financial advice, according to FINSIA’s latest survey.

A quarter of respondents to our Consumer Trust Survey said the Big 4 were the worst offenders - with one in 10 saying mutuals and regional banks were guilty of giving out sub-standard advice.

But the fact that the study also shows an alarming disparity between what consumers believe they understand about their money management skills and a lack of even the basics of financial literacy shows they need to entrust their financial well-being to the banks. 

The wide-ranging survey also shows trust works both ways - as an alarming number of under 35s were happy to make misleading statements to have a loan application approved.

Almost a third of that age group felt they did not have to put “too much effort” into providing accurate information.

The common consensus from respondents was that all lenders and financial advisors were more concerned with selling products and services and not giving tailored advice. A quarter of those who felt this way thought the banks and advisors “did a bad job of justifying their recommendations”.

Chris Whitehead, FINSIA CEO, said: “The findings of the survey are alarming. We’ve seen there is a significant gap in customers’ financial literacy. The survey also shows the amount of work we need to do as an industry.

“That the vast majority of consumers do not have a grasp of even basic financial concepts proves the need for professional bankers who will look out for their best interests."

“The reality is that consumers overestimate their ability to understand their own finances. Given that they also lack trust in banks, they’re stuck between a rock and a hard place."

“It shows us that now more than ever, it is crucial for bankers to prove they are trustworthy."

“But the business case is clear. The survey is yet more evidence that banks will win customers with better behaved staff."

“As we’ve seen before, consumers are likely to trust a bank with high professional standards, particularly younger consumers."

“The fact that three quarters of those new customers aged under 24 say they want their bank to have professional standards for all staff proves the business case." 
 
“Further proof is that the percentage of millennials who would swap banks to deal with more professionally qualified staff has risen from 19% to 24% in the past 12 months."
 
“The same sentiment is felt by the majority of customers up to the age of 44 whose spending and investing is at its peak.  The number of consumers who said they would swap (30%) was an even more significant increase from last year.”

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