08 Aug 2008 15:48:00.000
Consumer trust in financial services is proving to be remarkably robust according to the Financial Services Research Forum, the influential think tank based at Nottingham University Business School.
The Forum's 2008 Trust Index shows only a marginal fall in consumers' overall rating of how much they trust the financial services sector overall, although the banking sector has experienced a notable decline in trust as a consequence of the Northern Rock crisis and the credit crunch.
A particular feature of this year's study is that notwithstanding recent difficulties consumers appear confident that the overall financial services system can be trusted to protect their interests.
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The Financial Services Trust Index was developed in 2005 against a background of increasing concern about declining levels of consumer trust in financial services, perceived industry malpractice such as the miss-selling of pensions and endowments and the impact stock market difficulties.
The index takes a forensically detailed approach to the study of consumer trust in financial services institutions (FSIs). It goes beyond the typical yes/no answers to give a unique insight into consumer trust in and trustworthiness of financial services providers. The index explores consumer trust on two levels.
Low-level trust — relates to the extent to which an organisation can be relied on to do what it says it will do.
Higher level trust — relates to the extent to which the organisation is concerned about the interests of its customers.
However, whilst the 2008 report reveals that low level trust has held firm, there has been a noticeable drop in higher level trust. Unsurprisingly, banks in particular have seen their score for higher level trust falling back in the wake of the credit crunch.
Building societies, general insurers, and investment companies have also seen some reduction in their scores for higher level trust, at the same time brokers and credit card companies have seen their scores for higher level trust increase. The life assurance sector has seen its trust score hold steady compared with 2007.
Commenting on the findings, Professor Christine Ennew who leads work on the Trust Index says “Although banks have suffered more than other sectors of financial services from the credit crunch, overall the financial services sector is trusted to conduct its business in a sensible fashion. It will be interesting to observe what further changes arise when we collect our next fieldwork data early in 2009.”
The 2008 study also asked about whether consumers had cause to complain about the service they have received from their financial services supplier and explored the effect this had on trust. The results make fascinating reading and show clearly the detrimental effect that complaints have upon trust, this is especially so when the consumer is unhappy with the outcome.
Furthermore, there are significant variations in overall trust scores at the level of individual companies with some suppliers maintaining high levels of overall trust whilst others fare far less well. Commenting again, Professor Ennew says “We can see wide variations in trust not only among individual firms but also among the various segments of a provider’s customers. For example, trust scores are much higher among the over 55’s who are regular users of branches and materially lower among young people who transact their affairs primarily via the internet. The message is that individual companies need to carry out their own trust study if they want to be in a position to properly manage their customers trust in them and, in turn, their corporate reputation.”
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Notes to Editors: The University of Nottingham is ranked in the UK's Top 10 and the World's Top 70 universities by the Shanghai Jiao Tong (SJTU) and Times Higher (THES) World University Rankings.
It provides innovative and top quality teaching, undertakes world-changing research, and attracts talented staff and students from 150 nations. Described by The Times as Britain's "only truly global university", it has invested continuously in award-winning campuses in the United Kingdom, China and Malaysia.
Twice since 2003 its research and teaching academics have won Nobel Prizes. The University has won the Queen's Award for Enterprise in both 2006 (International Trade) and 2007 (Innovation - School of Pharmacy).
Its students are much in demand from 'blue-chip' employers. Winners of Students in Free Enterprise for four years in succession, and current holder of UK Graduate of the Year, they are accomplished artists, scientists, engineers, entrepreneurs, innovators and fundraisers. Nottingham graduates consistently excel in business, the media, the arts and sport. Undergraduate and postgraduate degree completion rates are amongst the highest in the United Kingdom.
The Financial Services Research Forum is an independent, non-profit organisation based at Nottingham University Business School. The Forum brings together leading financial services organisations and academics to engender top-quality, cutting-edge research in the area of financial services strategy and management. The Forum enjoys the support of a wide range of financial services organisations. It is a unique form of university/business collaboration which brings together and actively networks a large sample of the major retailers of financial services, supplier companies and consumer interest groups, including Abbey, Alliance and Leicester, The Financial Services Authority, HM Treasury, HSBC, Joseph Rowntree Foundation, Lloyds TSB and Scottish Equitable.