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O'Donnell Blog July 2012

Trust is something that has recently been sorely missing in the financial services sector and it's timely that a leading Financial Planner called Shane Mullins has launched his Question of Trust campaign to try to restore some consumer faith in financial services.

 

It's no wonder trust has been evaporating. For the past 20 years consumers have been rattled by one mis-selling scandal after another ranging from personal pensions to endowments and precipice bonds to, more recently, payment protection insurance. Few of will not have been pestered by so-called ambulance chasers calling, texting or emailing  to urge us to make a PPI claim.

There are few other consumer sectors which have seen so many problems erode consumer trust in providers and the products they offer. This is all a great shame because people need financial services products. Every widow who has ever claimed on a life policy, every person who has been covered by travel insurance after being robbed while on holiday and anyone who has benefited from income protection cover after losing their job will know the value of protection insurance.

Sadly, these positive stories - where pay-outs from policies or live savings have saved individuals from devastating financial loss - do not make good copy. Even though every year hundreds of millions are paid out by insurers most people take this for granted and yet it is remarkable. In terms of life insurance, depending on age you could be paying something like £10 or £20 a month for a life policy that could pay out £100,000 which is incredible value. The peace of mind alone is worth the premium. And yet the focus is on the bad news.

I've often written in columns in the past that there are relatively few genuinely bad products, just bad sales. Often the product is fine but it is sold to the wrong person. There have been countless cases of people with no dependants being sold life insurance which would benefit no-one or people in their seventies sold high-risk equity based investments which might take 20 years to make a decent return. All of this is very wrong of course and the regulators regularly crack down on advisers who mis-sell but it's no wonder that trust is missing.

So what's to be done? Well, one thing the campaign hopes to encourage providers to sign up to a new code of best practice which will try to ensure that only products in the best interest of the consumer are supplied. This ethical code, and doing what's best for the consumer at all times, regardless of the profit to be made from a sale, is what's needed. The campaign will also seek to measure trust through a 'trust index' and encourage best practice generally throughout the financial services world.

Trust is also an essential part of any corporate media strategy. Clients new and old will not deal with a company where they are either losing faith or have lost faith. Anything that suggests a company is not trustworthy can be the kiss of death. In our experience there are a few things that corporate media clients need to do to build trust and impress clients. One of these is to produce good quality media, such as professional-looking magazines and websites, that emphasise the long term values of the company and a message of values and quality that consumers want to see. Media should also provide a consistent, deliverable message. False or exaggerated promises are a no-no. Good quality, good value and longevity are essential messages.

In terms of the media itself, sending out your company news on poor quality paper or in a poorly designed and poorly produced magazine, newsletter or website can all damage trust in your brand. These days consumers trust companies distributing professional, high quality media which reinforces the strength and quality of a brand.