A recent survey by financial services marketing agency, Yell Creative, and market research company YouGov, found that according to consumers, super fund providers were “the most trusted by a considerable margin”.
This could have something to do with fund providers’ lack of engagement with their consumer base, the agencies explained.
“Customers often have little contact with their super provider other than their half-yearly statement.
“This lack of engagement, often cited as an ongoing issue for super providers, may actually work in their favour in this case”, they continued.
“With employee contributions also creating a perception of intangibility in terms of direct financial impact, it seems that if super firms can find ways of better engaging their customers, there’s an opportunity to build on their trust.”
On a scale of most to least trusted, super fund providers were most trusted followed by banks, financial advisers, mortgage providers, insurers, brokers and at the other end of the spectrum, credit card lenders.
Contrasting sentiments towards super fund providers and credit card lenders could come down to lenders' and insurers' “nature of business” and customers being hit with surprise penalty charges.
“Credit cards especially provide a regular reminder of debt with every statement, likely driving resentment and distrust.”
Additionally: “Most interesting to us was banks being ranked in second place on the scale.
“Clearly the most visible, tangible and widely used sector, banking has taken a beating in recent years with apparent customer sentiment being negatively influenced by issues over rate rises, bank levies and mis-selling.”
Trust among different age groups
The survey of 1,500 people between June and August 2017 also revealed the impact of reputation on trust among different age groups.
When trying out new products, the two most important factors for those aged 18-34 were, firstly, price or potential returns followed by the reputation of the organisation.
In the next age bracket - those aged 35-64 - the most important factor was the reputation of the organisation followed by the price or potential returns.
Australians aged 65 and older rank the reputation of the organisation as the most important factor but many respondents answered that nothing could convince them to try a new service or product.
“Baby Boomers especially are reluctant to explore new opportunities, with a significant proportion answering that nothing would convince them to try a financial product from a new provider. You’re not teaching these dogs any new tricks!” the agency said.
As to why consumers don’t trust the financial services industry, 73 per cent said it was because they believe financial services prioritise profit over the best interests of the client.
Sixty per cent had an issue with transparency around fees and charges and 44 per cent thought the code of conduct inside financial services firms could do with some improvement.
As a whole, 33 per cent of those surveyed had negative feelings about the industry and financial services placed last on a list of most to least trusted industries. That’s behind pharmaceuticals, tech companies, federal government and telecoms.
“It doesn’t get any better when you look at the portion of the population who has had the most experience of interaction with fin services,” the agencies continued.
“The survey suggested that just under 50 per cent of respondents aged 55 and older ranked fin services as least or next to least trusted of the industries listed.”
Further, only 4 per cent of respondents ranked financial services as the industry they trust the most.
This consumer discontent isn't falling on deaf ears. The Australian federal government in July announced it would investigate how an open banking framework could help deliver better results for consumers.
The government argued that if customers had greater access to their own banking data and data on banking products, they would seek out more suitable products.
"It will also create further opportunities for innovative business models to drive greater competition in banking and contribute to productivity growth," the government statement added.