Fixing Australia’s trust deficit in financial services

William West / Getty Images

James Shipton, the new Chair of ASIC (Australian Securities and Investments Commission), opened the corporate regulator’s annual forum today saying financial services is one of the least trusted industries.

He says trust, and trustworthiness, is at the very heart of the financial system and the relationships that underpin it.

And the trust deficit is one of the key fault lines in the financial system.

“Trust has to be earnt, it cannot magically appear or, importantly for me as a regulator, be legislated for overnight,” he told the ASIC Annual Forum 2018.

He says every cent in the financial system is “other people’s money”.

“Finance is not just numbers on a computer screen or just a means to receive a commission or a bonus,” he says.

“Nor is it just about institutions or companies.

“It always comes back to people: finance is a vital component of real people’s lives.

“And, because we are dealing with other people’s money, we must never forget that financial risks can, and often are, catastrophic to real people. Financial harms can cause real human suffering.

“So we must never forget that, ultimately, the financial system provides vital functions for the economy and for society. And if we get things wrong the result could very well have a devastating impact on real people.”

He asks: How do we re-build trust in finance?

He says trustworthiness is about competence, care, and ethics.

“I am suggesting that we need greater levels of professionalism in finance.

“Since conscientiousness turns on a person’s ability to care about people and the person’s ethics I would suggest that one way of exhibiting trustworthiness, and thus rebuilding trust, is to exhibit professionalism.”