Commenting on Gordon Brown’s comment piece in today's FT, looking at how trust can be restored in financial services, Chris Cummings, director general, AIFA said: "Global economic events have shredded much of the trust we had in our largest financial services institutions. The crisis has put a huge strain on the social and economic contract that exists between industry and society. Many people now question who, if anyone, is really acting on their behalf.
"But, as Brown points out, some financial institutions have managed their risks and maintained trust throughout the crisis. Independent Financial Advisers sit firmly in this camp. Unlike many other parts of the sector, the public's trust and confidence in IFAs goes from strength to strength. Independent research from the University of Nottingham confirms that consumers show higher level of trust towards independent advisers than they do tied advisers.
"We call on the regulator and government to build on this trust. The Financial Services Authority must use the Retail Distribution Review (RDR) to increase access to the people that consumers trust the most. The RDR provides a unique opportunity to begin the tough job of restoring faith in the financial services industry, by supporting one of the few parts of the sector where high levels of consumer trust still exist."
AIFA released a policy paper earlier this year entitled: "Restoring Trust in Financial Services: Building on that which works". The paper is available to view at: www.aifa.net/news/publications.php
Key findings include:
- IFAs are consistently the most trusted of all Financial Services Institutions (FSIs), both in terms of low level trust (the extent to which an organisation can be relied on to do what it says it will do) as well as high level trust (the extent to which the organisation is concerned about the interests of its customers).
- This trust in IFAs has increased over the past 5 years, despite the economic turmoil and challenges of recent times.
- However, the same cannot be said for other FSIs who have seen their levels of trust not only remain low, but in some cases decline even further.
- An increasing number of people from across the socio-economic groups are now turning to IFAs for advice to guide them through these difficult times, and these numbers are set to increase should the conditions continue or get worse.
- The regulatory structure should therefore build on that which already works. This means having a clear and simple market which is easy for consumers to understand and navigate.
- Current regulatory reviews present an opportunity to restore consumer trust and significantly improve financial outcomes for consumers, providing it makes absolutely clear to them the difference between independent advice and all other FSI models.
