The Financial Services Compensation Scheme says greater awareness should be raised of compensation for poor advice.
A report by the lifeboat scheme says it should work with the industry to raise awareness of compensation for poor advice in order to improve confidence in the sector.
In a report on consumer trust in financial services published today, the FSCS identifies four “trust gaps” which it says need to be addressed.
These are: paying staff fairly, telling consumers when they would be better off switching products, rewarding loyal customers by offering the same deals to new and long-term customers, and raising awareness of compensation for advice.
The report says: “The largest trust gap of all relates to receiving compensation for losses incurred because of poor financial advice.
“Many consumers do not think that financial services firms are willing or able to compensate them, and are unaware that the FSCS already offers them protection in this area for failed firms.
“Raising awareness of the protection offered by the FSCS, what it covers, and how it can be accessed, would be an effective way to build trust and confidence, as demonstrated by trust in the safety of deposits.”
The FSCS says its research shows that 62 per cent of consumers are aware of the FSCS’s deposit protection scheme, but only 45 per cent are aware of the compensation the FSCS can pay for poor advice.
The trust gaps were identified through a survey of 2,500 consumers on their level of trust in financial services providers.
The research found that consumers typically believe financial services firms can deliver what they promise, but would only do something for consumers’ benefit if it was also in the firm’s interest.
The report says the four trust gaps are the areas where trust is lowest relative to the importance of that issue to consumers.