Broken promises and outright exploitation have led customers to lower their trust in financial services, a new report and the corporate regulator have both warned this week.
Consumers are feeling “uncomfortable and exposed” when it comes to privacy, Deloitte’s national risk advisory experts Tommy Viljoen and David Batch argue in the 2018 Deloitte Privacy Index.
“The danger signs are there”, and it’s time for all sectors to step up.
While the finance sector ranked second out of 10, still ahead of government, media, travel, retail and real estate, this placement marks a toppling from its gold position in 2017 and 2016.
It comes at a time when Open Banking, the royal commission and embarrassing data breaches at the Commonwealth Bank are front of mind.
According to the report, released on Friday, financial services customers generally understand the types of data collected. But they don’t know what their financial service providers are using it for.
Close to a majority of consumers (49 per cent) wouldn’t necessarily jump ship if they were the victim of the data breach. In fact, only 15 per cent definitely would. At the same time, timely notification of breaches could lead 86 per cent of consumers to trust a brand more.
“Today, consumers are providing increasing levels of personal information in return for services and benefits,” Messrs Viljoen and Batch said.
“They have trusted those brands to use this information for the purpose they supplied it.
“Given the increasing awareness of broken promises across multiple sectors, from sport, through social media, to finance, this trust will now need to be earned.”
Finance sector’s job is to help, not hurt consumers: ASIC
The chair of the Australian Securities and Investments Commission, James Shipton, echoed these sentiments in a speech on Thursday.
Speaking to the Australian Council of Superannuation Investors Annual Conference, he said the “trust deficit” and failures of responsibility in the financial services sector is “jarring … to observe”.
“Australia’s corporations, and the finance sector in particular, are suffering from a trust deficit. And this current predicament is of the sector’s own making,” Mr Shipton said.
He said the systemic conflicts of interest have led many people to lose sight of the actual purpose of the financial system.
“They have forgotten that this system is about managing other people’s money,” Mr Shipton said.
Instead of focusing on the payment system, insuring against risks, capital allocation and transfers of wealth, many companies are instead focused on earnings maximisation.
“The first job of the sector is to refocus on these core purposes, instead of exploiting opportunities to make money from its customers often to the consumer’s considerable detriment,” Mr Shipton said.
He called on the sector to recall its purpose, remove the conflicts and begin rebuilding the trust it has lost.
Only then will the business culture revert from one blind to conflicts of interest to one which has the best interests of customers in mind.
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