One wonders if Edelman decided to release Trust Barometer findings for the financial services industry after last week's Salz Review castigated Barclays for "cultural shortcomings" in recent years. Because the Barometer findings make a very good accompaniment to the Salz Review's efforts to catalogue the bad behaviour that culminated in Barclays Libor-rigging scandal last year. They also indicate a serious challenge for senior banking executives that believe they can reform via their own initiatives, rather than being forced to accept greater government oversight of their business. The Trust results reveal that trust in banks has plunged to 33 percent in Europe, well below the rest of the world. Given the ongoing Eurozone crisis, much of which is blamed on the region's financial sector, this result will not exactly raise eyebrows. Yet the global findings, showing that just 37 percent trust banks in developed markets, point to the scale of the challenge facing our friends in the financial world. And Barclays' Salz Review helps explain why, highlighting some of the issues that plagued Barclays during the past decade. The Review notes that cultural problems are to blame for Barclays' problems, notably a focus on profits and bonuses rather than the interests of customers. Barclays, under new CEO Antony Jenkins and comms head Stephen Doherty, has undoubtedly done the right thing by commissioning the review, as part of an attempt to reform the bank's practices. As BBC business editor Robert Peston points out, "some will say that only a fundamentally confident and perhaps decent institution would invite such criticism - and publish it." Yet, the review's conclusions should not be viewed in isolation. Instead, they can credibly be read as commentary on the banking industry in general, blighted as it has been by the various scandals with which we have become depressingly familiar. According to Edelman's research, more than half (56 percent) of global respondents said they are familiar with the scandals in the banking industry as a result of information they read, saw or heard. And of that group, more than one in three reported that their trust in banks declined as a result of learning of the scandals. When asked about the causes of the scandals, 59 percent of this group believe that the causes are internal and within business’ control. The Salz Review bears much of this out, explaining why Barclays chairman Sir David Walker called it "uncomfortable reading." It notes:
"We believe that the business practices for which Barclays has rightly been criticised were shaped predominantly by its cultures, which rested on uncertain foundations. There was no sense of common purpose in a group that had grown and diversified significantly in less than two decades."
Respondents to Edelman's Trust Barometer who said they were already familiar with the scandals cited three key reasons for the banking scandals: corporate corruption (25 percent); corporate culture driven by compensation/bonuses (23 percent); lack of regulation (20 percent). The Salz Review focuses specifically on the first and second of these, with the third being out of Barclays' control. The bank has, accordingly, implemented an ambitious effort to transform its internal culture, as detailed by Doherty in the Holmes Report earlier this year. However, the public appears to have a rather different remedy in mind when it comes to banks that have transgressed. According to the Trust Barometer, their favourite approach is more government regulation, despite the belief that these scandals were largely self-inflicted. That conclusion should worry everyone in the banking industry. The Salz Review is undoubtedly a step in the right direction, but unless the entire industry undergoes a genuine transformation of its behaviour, it seems likely that calls for more government regulation will only increase.