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Which financial services firms do you trust?

A new campaign aims to put the issue of consumer trust at the heart of every financial services company, but who can you really rely on?


by Michelle McGagh on Jul 12, 2012 at 09:41

Which financial services firms do you trust?

Turning financial services’ ‘trust deficit’ into a ‘trust dividend’ is the aim of a new campaign that wants financial institutions to look past the pound signs and do right by their customers.

Doing the right thing by consumers should be a no-brainer for financial companies – after all, customers are the ones that pay the bills and the huge bonuses, and let us not forget that consumers have bailed out some of the high-street banks.

However, numerous scandals – from the mis-selling of payment protection insurance to giving poor advice to the elderly – show financial institutions are not putting consumers at the heart of what they do.  

But now one man is hoping to change all that with his Question of Trust campaign.

Independent financial adviser Shane Mullins, managing director of Nottinghamshire-based Fiscal Engineers, has launched the campaign and aims to get the issue of trust on the agenda of major financial companies.

Mullins believes financial companies are too concerned with short-term rewards, profits and shareholder returns, meaning they are overlooking the needs of consumers.

‘There has been a run on trust over many year and we are now at a crisis point. If we fail to arrest those problems, we are likely to breed a generation of mis-trust,’ Mullins said.

‘If we are to change, we need to build a culture of doing the right thing and built on delivering future promises, this must be on the agenda of every company. The industry is starting to understand this and we are hoping to create a model to tackle this.

‘Shareholder value is the mantra for business but what about consumers? There is a conflict of interest.’

Decline of trust

The campaign to improve trust comes at a crucial time. A study by the Financial Services Research Centre (FSRC) at the University of Nottingham, which is working with Mullins, shows low levels of trust in financial services.

A study by the FSRC, undertaken over three years with 15,000 consumers, shows brokers and advisers are the most trusted people in financial services, but life insurance companies languish at the bottom, followed by general insurance companies and banks.

Active trust by institution type: Click to enlarge

Professor Christine Ennew of the FSRC said: ‘When there is risk and what happens to us is interdependent on someone else, then we are vulnerable. When we are vulnerable trust matters, because it lets us make decisions about people and organisations.

‘Most relationships rely on trust and in financial services it is significant because risk is an inherent part of financial services.’

The trust shown in advisers and brokers could reflect the fact that people tend to trust individuals and organisations more when they have built up a relationship. Also, the closer to the consumer the financial services employee is the more trust the consumer has in them.

This means people have a fairly positive view of the financial services people and organisations they deal with directly.

Trust in FSIs: Click to enlarge

Managers less trusted than staff: Click to enlarge

‘People have a reasonably positive view of their own financial services institutions but do not trust the industry as a whole. Where a relationship is built trust has emerged… the further away from the front line the lower the level of trust,’ Ennew said.

There is also a worrying increase in the levels of ‘forced trust’ versus ‘active trust’, and people feel that they have no choice but to trust financial institutions although they do not chose to trust them.

In the past three years, active trust has declined and forced trust has increased.

Active and forced trust: Click to enlarge

‘Consumer trust is complex, and in many cases they feel they have no choice but to trust,’ Ennew said. ‘There are consumers who have actively trusted and have their own evidence for doing so and then there are those who trust because they have not got a choice.’

Ennew said financial companies know there is a problem with the levels of consumer trust, but no one believes it is their problem – preferring to say increasing trust is the responsibility of the government or regulator.

‘The industry is very clear trust that is fundamental to financial services and that this is a problem… that present real economic importance,’ she said.

‘[Financial institutions] know there is an issue but none of them…review how to manage it. It is someone else’s problem and there is no sense of owning trust.’

Time for change

The Questions of Trust campaign aims to address the issue of trust and push financial institutions to take ownership of consumer attitudes towards the industry.

Through the campaign Mullins is hoping to establish a unified professional standards body, which would define a level of standards that financial services companies should be working to and ensure they are working in the consumers’ best interest.

‘We need a unified approach to standards – companies should be doing the right thing, whatever your business model,’ said Mullins. He added that the development of a standards kitemark or the introduction of a fiduciary duty to put customer first could improve trust in the long term.

Question of Trust also wants to implement a ‘baseline measure of trust’ which companies can use to measure whether consumer trust in their company is moving up or down, and act accordingly.

A long-term education and engagement programme for consumers is also part of the campaign’s plan, believing that if consumers have a better understanding of financial products, they will be more empowered in the relationships they have with companies – leading to greater levels of trust.

But the main change which the campaign wants to implement may be the biggest hurdle – aligning the industry’s activity with the consumers’ needs.

‘We need a humble response and root-cause action right across the industry, coupled with strength of leadership and a commitment to take the long-view to change things for the better,’ Mullins said.

Click below to watch an interview with Shane Mullins

12 comments so far. Why not have your say?

alan thorburn

Jul 12, 2012 at 12:49

I cannot fault Hargreaves Lansdown. I have used since 1994.

I have also used Redmayne Bentley when I have wished to hold actual paper share certificates. I trust and can recommend both of these companies.

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peter hart

Jul 12, 2012 at 12:53

Hargreaves Lansdown better than anyone I have dealt with before.

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alan higham

Jul 12, 2012 at 14:32

Annuity Direct supports the idea of standards where good consumer outcomes are at their core. Putting the customer interest' first matters. Delivering the best outcome possible matters.

Our benchmark is the "Mrs Higham Test". If we can't offer the service to our Mum then we don't offer it to anyone.

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Andrew S

Jul 12, 2012 at 16:18

Agree with H-L comments

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Jeremy Bosk

Jul 12, 2012 at 16:38

Up to a point, the Co-operative Bank and Insurance companies.

Trusting advisers and brokers (insurance and mortgage, I take it?) just shows that the consumers in question have not yet realised they are being ripped off and badly advised.

Aside from the commission system, or perhaps an extension of that problem, is that most consumers are so ill informed on the basics of finance that, even when something is in their best interest, they have to be soft soaped, bribed (free pen anyone) and emotionally manipulated before they will act sensibly. Advisers start by oversimplifying for the customer's benefit and finish by lying for their own.

Everyone should have to pass a financial literacy test. Don't understand X,Y and Z? You are not allowed to buy without the co-signature of someone who does. This is already applied with complex financial products such as covered warrants and traded options.

The principle of passing a test before earning a right could be extended to all major life decisions, especially those where other people are likely to suffer from poor choices. Voting and breeding would be good places to start.

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Jul 12, 2012 at 20:09

I can certainly tell you which broker I will most definitely NOT be trusting: Interactive Investor. Apart from a horrible customer service / mistakes in divi distributions / delays in tax certificates, their 'free transfer out' as a result of their new pricing policy has been a total shambles. I naiively sold 6 shares about a month ago in the hope that they will honour their commission-free promise and let me close the account. After about a month and dozens of secure messages / phone calls begging them to refund the commissions, all I have is an inbox full of messages telling me they have just arranged for the money to be credited to my account (the last one is for 7 days ago). Top prize for the least trustworthy broker should definitely go to Interactive Investor!

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Jul 12, 2012 at 23:20

Afte being riped off twice with my pension investment my motto is clear.

Neve but Never trust an IFA

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lester gunn

Jul 13, 2012 at 09:34

Hargreaves Lansdown.

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alec hargreaves

Jul 13, 2012 at 11:34

This column is read mainly by investors who take an active interest in investments and accordingly are usually self select discount investors. In other words those who do not seek or wish to pay for advice. Consequently, HL has good references as for the do it yourself investor it provide a good service. This has nothing to do with trust and is more to do with efficiency. Thus, the question is being answered incorrectly as thos investors who need to trust their adviser probably do not know about this site.

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lester gunn

Jul 13, 2012 at 11:46

Alec H - I think the question at the top of the page (in bold, first line of the page, large font, intended to shape the direction of the entire article and its responses is "Which financial services firms do you trust? ".

For me, if I had to choose only one, it would be Hargreaves Lansdown.

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alec hargreaves

Jul 13, 2012 at 12:01

LS - Trust to do what?

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Jeremy Bosk

Jul 13, 2012 at 13:25

Good question, Alec.

Trust to follow instructions promptly, accurately and economically or trust to give advice?

Most of them do as they are told most of the time, prices can vary wildly for apparently identical service.

As for taking their advice, I had a good stock broker forty years ago, inherited from my mother. I think she met him through bridge playing friends. Generally, even financial services people don't defecate on their own doorstep. He retired and I was silly enough to buy a house and miss the biggest stock market boom in decades.

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