Trusting your money to the financial services sector can be a hazardous business these days.
There’s neither time nor space here to explore the length and breadth of the banking sector’s misdeameanors, though the state of bank reputations was candidly addressed in a speech this week by Financial Services Authority Chairman, Lord Adair Turner, who said:
“Trust in banks and bankers has eroded. Three factors explain that collapse: people have come to doubt the economic benefits of financial liberalisation and of much banking activity; they doubt banks’ values; and they doubt whether banks have their interests at heart.”
And he explained that one of the factors leading to the Economist’s “Banksters” front cover (pictured top) was “Poor values and malpractice able to operate on an increasing scale.”
By contrast, the general insurance industry – to its credit – has not burdened itself with the same level of ignominy as banking; though one can never speak too soon: this week, the Financial Services Authority imposed one of the largest ever fines – nearly £0.5m – on a former commercial insurance broker for paying more than £300k of customer’s insurance premiums into the firm’s own bank account rather than to the relevant insurance company. The affected customers found themselves either uninsured or paying the premium a second time to ensure they were covered.
Either way, it’s a shocking situation to leave customers in; such “serious failings”, according to the FSA, led directly to the severity of the fine.
Ultimately, the broker in question has destroyed his reputation, while doing the reputation of the insurance broking sector no favours either.
Reputation begins with the actions an organisation or business takes; if those decisions are unethical and lead to the “poor values and malpractice” Lord Turner alluded to, then no amount of brand massaging or media spin will salvage reputation. When an organisation is satisfied that its processes, practices and corporate governance will stand up to scrutiny, then communicating its brand values will be founded on more than the corporate equivalent of quicksand.
So, while other parts of the financial services sector may take some pleasure in seeing bank bosses squirm in the wake of a scandalous few years’ behaviour, they should also pay attention closer to home.
The Chartered Insurance Institute (CII – disclosure, a Staniforth client), the professional body for insurance and financial services, recently developed an online ethics toolkit to help firms in the sector implement consistent ethical standards.
In terms of instilling ethical business practices and protecting reputation, prevention has to be better than cure. So, while general insurance may have remained mostly unscathed by the self-flagellation of the financial services sector, it can’t be sure that its own Bob Diamond isn’t about to enter stage left.
Jon Clements is a Chartered PR consultant specialising in B2B PR, corporate and marketing communications and is the founder of Metamorphic PR.