Excessive bureaucracy is making super funds risk being perceived as negatively as other financial services providers, which engender some of the lowest levels of public trust of any type of institution.
Public trust in institutions is plummeting across the globe. This threatens economic prosperity and societal cohesion, warned professor Deirdre O’Neill, from the Monash University Business School Department of Management.
She pointed to the findings of the 2017 Edelman Trust Barometer, a major annual global study of public trust in institutions, which showed the largest recorded drop in public trust in major institutions since the survey began five years ago. Levels of public trust fell across all four main categories of institutions: government, non-government organisations, businesses and media.
The online survey sampled more than 33,000 respondents.
It showed that while the type of institution Australians are most likely to trust is the NGO, still nearly half of the people don’t trust them.
Among Australian respondents to the Edelman study, 52 per cent of people trusted NGOs, 48 per cent trusted businesses, and 37 per cent trusted government, while media organisations came off worst, winning the trust of only 32 per cent of participants.
“Nearly 60 per cent of respondents in Australia just don’t think the system is working,” O’Neill said. “This is alarming because trust is incredibly important to society as a whole. If trust declines, it has real consequences on the economy, it has consequences for how people act and for the state of different sectors.”
According to the Edelman study, financial services organisations are the least trusted type of business institution.
O’Neill spoke to Investment Magazine ahead of the Conference of Major Superannuation Funds on the Gold Coast 22-24 March, 2017, where she participated in a panel discussion titled Risk, Culture and Ethics – Do They Naturally Co-exist?
A global threat
“The decline in trust in financial services institutions, in particular, is a real threat to the industry,” she said.
One of the factors contributing to declining trust in financial services institutions was a lack of understanding of how their systems work.
O’Neill warned that rising complexity is an issue from which the profit-to-member superannuation sector is not exempt. While a few super funds have eight-page product disclosure statements, too many have more than 200 pages of disclosures, she noted.
“There is a sense that the more information out there, the better understood it is, but people don’t necessarily feel that is the case. People just can’t digest…that quantum of information.”
She urged super funds to be aware of the threat to all businesses of losing their ‘social licence to operate’.
“The key issue is that businesses will lose what is termed the ‘social licence to operate’, which is the concept that they are able to participate in the market only because citizens agree that it is OK,” O’Neill said. “Product and service providers have to better reflect society, so focus not purely on profit, but [apply] a focus that engages with communities – that looks at how products can support citizens and communities better.”
To read all our coverage from Day Two of CMSF 2017, click here.