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Accruing trust
Wednesday, 12 August 2009
It seems the issue of trust just won’t go away. It is such a huge consideration for users and consumers of all kinds of products and services that no business can afford to ignore it.
A couple of months ago this column highlighted how Rotorua’s Leo Gao became a poster boy for the banking industry’s poor reputation when he skipped the country with $10 million wrongly credited to his Westpac account. I asked then: How would you feel if 20% of your customers had so much antipathy toward you and the sector your business operates in that, given the chance, they would abandon their usual honesty and ethics just to get back at you? Would you feel you, your business, and the rest of the sector had failed miserably to establish and maintain a good name in the marketplace?
That drew an angry letter to the Editor accusing me of encouraging theft and misappropriation. I refuted that and reiterated the column’s main point — the fact one-in-five people said in a NZ Herald poll they would also take the money, showed a huge reputation deficit for the banking sector.
Now the issue of trust has surfaced again in a Sunday Star-Times survey revealing rock bottom ratings for almost all occupations dealing with money. Most distrusted were fund managers — rated only one or two on a five-point trust scale by 75% of respondents.
That’s not surprising given the actions of fund managers such as ANZ-owned ING. ANZ marketed ING’s Diversified Yield and Regular Income funds as safe when they were in fact invested in risky collateralised debt obligations.
The Banking Ombudsman also has little trust in ANZ/ING, upholding 80% of the complaints she has investigated so far. More damage to the reputation of the bank and its fund manager subsidiary may be on the way. If a belated Commerce Commission investigation results in a successful case against ING or ANZ, investors may be unable to accept compensation — thanks to a waiver the bank insisted they sign to get 60 per cent of their frozen funds returned.
While fund managers were at the bottom of the Star-Times survey, financial advisers and insurance people did not fare much better, rated one or two by 71% and 70% respectively. These figures represent a grim picture not just for the sectors concerned, but for New Zealand as a whole. We have low rates of retirement investment and high rates of non-insurance and under-insurance.
The funds management, investment advisory and insurance industries will need to address the trust issue if those rates are to be reversed.If proof was needed of the connection between trust and the bottom line, it came earlier this year in a survey for Auckland company Sustainable Advantage. It reported 55% of consumers had stopped buying in the last six months from businesses they did not trust. Of those who took their business elsewhere, 61% then urged family and friends to do the same.
People do business with those they know and trust. All business people, not just those in financial services, should remember that.
