The release of the latest annual Ethics Index from the Governance Institute of Australia (GIA) has confirmed that the Australian people are losing faith in the workings of big financial institutions in the wake of several scandals and widespread allegations of misconduct.
With the Royal Commission inquiry still unraveling a web of problematic stories, it is likely that more news is yet to come out, which could erode citizens’ trust even further.
The Ethics Index comes from a piece of research that assesses key expectations and perceptions of ethics from Australians while examining a large range of sectors and industries.
Carried out during May and June of this year, the research surveyed a representative sample size of 1,000 people from around the country. C3 Content conceived the research and Ipsos conducted the poll.
The key finding was that most citizens see Australia as “somewhat ethical”, giving the country an overall ethics score of 35. The importance of ethics among Australians received an overall score of 78.
Compared to last year, most sectors stayed the same in terms of their national perception, with the clear exceptions being the corporate and finance sectors, which dropped 6 and 12 points respectively. This led to a serious drop in the ethics value of business as a whole, with Australian ethics valued at a score of 35, down 6 points from 41 in 2017.
This year’s report gave the lowest ethics score to the banking, finance and insurance sector, which plummeted from -3 to -15. The current inquiry from the Royal Commission into financial misconduct across the sector has revealed a clear negative effect on public image.
There were a couple of positives for some job roles in the sector, with accountants carrying a score of 31 and tax agents receiving a score of 18. This indicates that those inspecting finances have and will retain trust. The findings should also give the banks a fair chance to rebuild the trust of Australians following measures that should begin post-inquiry.
GIA Chief Executive Steven Burrell said that the financial sector’s ethics score decrease is not surprising given all the negative attention attributed to it in the last year.
He said that “Australians expect high standards from their financial institutions” but maintained that at the moment, the expectations of the country “are far from being met”.
Describing the last year as “turbulent” for the financial industry, he added that the news of banks charging deceased customers fees and levying fees without providing any services meant that the “faith” of the nation had been “sorely tested”, and it would take time as well as clear, transparent efforts from the leading banks to put the situation right again.
Attributing the erosion of trust primarily to “numerous high-profile scandals and the alarming corporate breaches being revealed on a daily basis”, Burrell said that it is obvious that the continuing bad news from the inquiry is “undermining confidence in the sector”.
The GIA Ethics Index also showed that the banking, finance and insurance category ranked last in ethics and trust for the third consecutive year. Its net score significantly dropped from last year alone.
As a major contrast, the education and health sectors performed admirably, returning ethics scores of 80 and 70 respectively.