Industry trust improving, but still low

The institute’s 2020 Ethics Index saw the banking, finance and insurance industry improve its ethical standing from minus 11 in 2019 to 18 in 2020.

However, the industry was still the lowest ranked for ethical behaviour out of all sectors included in the report, including the corporate sector with a score of 19, media which scored 22, and public service and government with a score of 56.

Life insurance companies were ranked the least ethical of organisations in financial services, with a score of one, although this had improved from minus 19 in 2019.

Retail banks also improved their score from minus 15 in 2019 to five in 2020, and investment banks went up from minus 10 in 2019 to six in 2020.

The financial services industry more broadly also had one of the largest ‘expectation gaps’ between how important consumers said ethical behaviour was in the industry, and how ethical they were perceived as being.

Consumers rated the importance of ethical behaviour in the industry as a 79 out of 100, while the perceived ethical behaviour of people in the industry was rated a two. Only one sector – media – had a larger expectation gap.

However, the ethical behaviour score of two for financial services was significantly higher than 2019, when behaviour in the industry had been rated a minus 19.

Governance Institute chief executive Megan Motto said the results of the research revealed financial services was staging a slow recovery in its reputation following the fallout of the royal commission.

“Ethics matter, in business and in society. Our survey shows that the perception of the finance industry in Australia is still recovering from the banking royal commission and other scandals, and the media is suffering the same crisis of legitimacy here as overseas,” Ms Motto said. 

“These perceptions have consequences, and our leaders need to get to work addressing them.”