Governments and Regulators are the least trusted institutions by the general public. Yet, in a stunt of either arrogance or naivety, the regulator shows, once again, his hypocritical side by criticising the lack of trust on the financial sector and forgetting his own. Furthermore, when regulators are less trusted than banks, an attack to the financial sector on the basis of low levels of trust lacks any legitimacy.
Last Friday, Martin Wheatley, current Managing Director of the FSA’s Consumer and Market Business Unit, gave a speech at the Chartered Institute of Bankers in
trust and confidence in banks and bankers”. Mr. Wheatley, who will soon
become CEO of the Financial Conduct Authority (FCA), maintains that “it is only in recent years
that banks, like other financial services, seem to have lost people’s trust and
confidence.” and, as a consequence of this
distrust by the general public (and the occasional misselling scandal), Mr.
Wheatley goes on to argue that the regulator is entitled to continue cracking
down on the sector and watching it even closer.
The idea that Mr. Wheatley intends to transmit in this speech is an old one: that the regulator will use its more 'intrusive supervision' approach in the fighting against practices which put profits before customers. The line of attack will be three-fold: a) product banning and product regulation; b) greater attention on the business model and whether it can deliver good outcomes for consumers; and c) the role and engagement of boards and senior executives.
As a factual basis to his argument that the public trust in banking and financial sector is at record lows, Mr. Wheatley mentions the “annual barometer of trust” put together by the PR firm Edelman. Specifically, Mr. Wheatley explains that “financial services came this year
2) The decline in the trust people have in governments hits record lows and is significantly lower than the trust in businesses:
3) The credibility of government officials and regulators is right at the bottom of the table, being the biggest decline in the barometer’s history.