Executive Summary
We are initiating a global push for transformational reform to help rebuild trust and confidence in financial services.
Regardless of what you think the underlying causes of the trust deficit might be, there is clear consensus that the trust deficit costs the finance industry a fortune in lost revenues.
For example, in the UK we now have the lowest savings ratio since records began in 1963, according to the UK’s Office of National Statistics; and that means a fortune in lost business for the banks, pension companies, asset managers, financial planners and pretty much the whole value chain.
We are confident of its success of our initiative because our clarion call for collaboration is being well-received everywhere we go; there have already been special meetings across Europe and the USA; and others are being held in the Far East and Australia.
The Trust deficit is a problem for government departments and policymakers around the world who want a trustworthy financial services industry; and of course, the sector itself would benefit enormously if it were to be trusted.
It is clear that the trust deficit is a problem for all stakeholders; and that’s why we believe that bringing all stakeholders together to work collaboratively to drive up trust and confidence in the sector makes complete sense.
The Transparency Task Force is working very hard to help deal with these issues, especially given our severe resource constraints. We believe we are “punching well above our weight”.
We are:
- Initiating and facilitating “a global conversation” about the trust deficit
- Bringing togethor all types of stakeholders including:
- Politicians
- Policymakers
- Financial regulators
- Leaders from financial trade bodies
- Leaders from professional associations
- Academics, thought leaders and think tanks
- Pension schemes and their trustees
- Fiduciaries
- Plus, senior representatives from commercial organisations and corporate entities, because for-profits are also key stakeholders in the project. We have people involved from all sectors including banking, insurance, pensions, asset management, investment, private equity, hedge funds, foreign exchange, wealth management, financial planning, Fintech and so on. More and more commercial organisations understand that trust and confidence are commercial virtues.
- Running special meetings around the world in every major financial centre to build a global network of like-minded people who want to be part of the solution
- Harnessing the goodwill amongst progressively-minded people from right around the world who are volunteering to play their part in this major international effort.
- Working in a collaborative, collegiate, consensus-building and coordinated way, internationally
- Creating “A Framework for Finance Reform”
- At the heart of our framework for finance reform are “the 12 Finance Development Goals” each of which deals with an underlying problem that must be addressed before the transformational change that is needed can occur
- Publishing an annual “book that is much more than just a book” – it will be the methodology through which we can collectively drive the change that is needed
- Identifying and engaging with the 1,000 VIPs that, in effect, govern the way the financial system operates
It is widely accepted that the public at large, right around the world, are becoming increasingly distrusting of society’s once-respected institutions. This is a problem on many fronts, including financial services, particularly since the Global Financial Crisis.
In fact, according to The Edelman Trust Barometer, the banking and financial services sectors are routinely ranked as the least trustworthy of all industry sectors.
That’s a huge problem for a sector that has to be trusted to function succesfully. The problem is so bad that many believe that we are in the “last chance saloon” as far as the public’s perception of the financial services sector is concerned.
It is becoming increasingly clear that there is a very real danger that the persistent drip, drip, drip, of adverse publicity caused by the persistent malpractice, malfeasance and miss-conduct by the “mischievous minority” means that the public at large are getting dangerously close to “the point of no return” whereby, regardless of what we subsequently do, the situation may not be salvageable.
Our project is so important because in effect, the trust deficit has been a troubling “elephant in the room” issue; perhaps even a taboo subject.
As a consequence there has never, been, until now, a concerted international effort involving key stakeholders to attack the problem head on.
Project Overview
What is the overall purpose of the project?
The project is about managing out the trust deficit in financial services, in a systematic way, globally.
We wish to play our part in doing this because the trust deficit is a systemic problem that casts a long shadow over the financial services sector and it gets in the way of the sector realising its true potential as a force for good in society.
The trust deficit is also a drag on the commercial success of the sector. That’s because people that do not trust do not engage; and people that do not engage are less likely to understand; and people that do not understand are less likely to buy.
The trust deficit is therefore a problem for everybody including policymakers, regulators and of course financial services companies; so whether you look at the problem from an altruistic or commercial perspective it adds up to the same thing – the trust deficit is a problem that needs taking care of.
What is the project NOT about?
This initiative is NOT about pointing fingers or attributing blame for what has happened in the past. This is not about “banker-bashing” or anything like that.
We are future-focused. Yes, we will be referring to the past to make sure we learn lessons from it because “progress begins with realism.” However, the emphasis is always about creating a safe environment where we can have candid conversations about the action needed to work together to create a better future for the financial services sector and society as a whole.
For this to happen we need to collectively display the honesty, maturity and integrity to recognise where we are on the trust rebuilding journey and to explore how to get to where we all want to get to.
It is an ambitious project that gets to the heart of the trust deficit problem; a problem that is a serious worry for politicians, policymakers, regulators; in fact all stakeholders right around the world.
The trust deficit is recognised as a serious and systemic problem that adversely impacts everybody. The trust deficit is a lose/lose for all stakeholders and our international project is an intelligent response to the situation.
It is no exaggeration to suggest that the financial services industry was built on the premise that it could be trusted; in fact, the term ‘credit’ is derived from the Latin ‘credere’, literally meaning ‘belief in.’
However, according to the annual Edelman Trust Barometer, the banking and financial services sector is routinely rated as the least trusted of all sectors, as shown in the slide below. That’s a serious and systemic problem for a sector that needs to be trusted to function succesfully.
See this link:
Trust and confidence in financial services on the part of all stakeholders including politicians, policymakers, regulators, industry and consumer bodies, businesses small and large, and of course consumers themselves, is integral to the prevention of future systemic crises as well as the safe, stable and efficient “business as usual” workings of the financial system on a day-to-day basis.
Therefore, trust is not just the first line of defence in bolstering the resilience of our financial system; it is the very oxygen on which its survival and viability depends.
Furthermore, trust in regulators and policymakers under whose watch the Global Financial Crisis occurred has been severely damaged, despite the best efforts of these public servants to control financial institutions and ramp up consumer protection in recent years. A recent survey conducted by PwC found that 57% of respondents believed that reforms to regulation implemented since the Global Financial Crisis were not enough to guarantee that history would not repeat itself.[1]
Overall, the evidence points to a dangerous disconnect between a sector that depends on trust to function correctly and a sector that behaves in a manner that consistently leads to distrust.
The Transparency Task Force recognises that there is a need for a financial services industry that is transparent, truthful and trustworthy and can be relied upon to deliver fiduciary responsibility for all stakeholders.
We believe it is vital that the lessons of the past are learned and the action necessary to help prevent our collective past becoming our collective future is taken without any further delay – treatment of the trust deficit is long overdue, and the problem will certainly not solve itself.
Despite this, there does not appear to be any masterplan in place to tackle the problem; and that is a troubling void that we believe needs to be filled. In the absence of any other organisation rising to the challenge we have embarked on a major international effort to provide what is missing and help drive the change that is needed.
It is clear that having the right mission-led people with a profound sense of purpose involved is a prerequisite to having any chance of making a worthwhile difference; and there also needs to be a carefully crafted plan that we can all work to.
[1] Stylianides, G. ‘Stand out for the right reasons- How financial services lost its mojo- and how it can get it back.’ PwC. Available at: https://www.pwc.co.uk/assets/pdf/fsrr-consumer-survey-final.pdf. (25 August 2018).
Our White Paper and Supporting Videos
We are very grateful to
for working with us so supportively to produce the special White Paper on “How can we accelerate the rebuilding of trust and confidence in financial services?” which can be downloaded here:
How can we Accelerate the Rebuilding of Trust and Confidence in Financial Services
…and also for producing these videos, filmed at our London 16th May symposium, kindly hosted by Newgate Communications.
Thank you also to all the participants for providing great input through the video interviews.
Video 1: https://youtu.be/Ky0Qg9IpjCA
Video 2: https://youtu.be/Is7N5DqjfXM
We are also very grateful to
for producing this video that so succinctly explains this issue we are dealing with.
Video link: www.mdemo.ch/tfs
EXPECTED OUTPUTS
The outputs that we expect to achieve by the end of 2020 are summarised here:
- A detailed project plan for a well-organised initiative post the initial establishment phase
- A global network of subject-matter experts that have opted in to be part of the project
- A minimum of a further 12 international meetings specifically dedicated to the project
- Identification of and initial engagement with the 1,000 VIPs that, in effect, govern the way the financial system operates
- A global network of Scientific Committee members; world-class academics
- Fully-developed Finance Development Goals
- The first edition of the book
- The beginnings of a transformational change process of immeasurable value, worldwide
- The creation of an opportunity for many spinoff research and activities
CONCLUSION
It is crystal clear that:
- The Trust Deficit in financial services is a serious and systemic problem that adversely effects the wellbeing of society, economic stability and political stability
- Our initiative is the first serious attempt to do something about the Trust Deficit on a coordinated, international basis
- Our approach is wholly inclusive and has the potential to create a motivated movement for change involving all the key stakeholders necessary including politicians, policymakers and regulators; right around the world
- Our approach is purposeful and pragmatic; we are happy to consider any alterations to our approach that would enable us to improve our chances of success
NEXT STEPS
If you like the idea of becoming “part of the solution” and being included in this breakthrough initiative, please connect.
The way that we work is to establish the easiest and best way for people to become part of the global network of like-minded people that we are creating.
We believe that teams work best when people get the chance to play to their strengths and contribute in whichever way they would most like to.
So please reach out and let’s explore what’s best for you:
andy.agathangelou@transparencytaskforce.org
Thank you !
