Trust Deficit



Trust is classified as a firm belief in reliability; the principle of doing the right things for the right reasons. A trust deficit implies doubtful, unreliable misgivings. Trust is very important to all of us – but it’s getting much more difficult to discern truth from lies; and yet we constantly make judgements about who to trust. Trust in the medical profession has remained relatively high; while politicians and journalists have always had difficulties engendering trust. Bankers and financiers are a special case altogether.

At a fundamental level, everything we do is based on trust. However, it does not have an absolute value, and in many cases, we experience trust by simply having high levels of confidence in each other. Legal case law demands that financiers owe a special duty of care to their clients – so-called fiduciary duty. Consumers place their trust in advisers.

Colloquially, people say they don’t trust banks, but they continue to operate bank accounts. It’s more likely that people nowadays have a healthy suspicion rather than a lack of trust. And, of course, trust and duty are not exclusive to one party. Both parties to any deliberations must exhibit trust and both must honour their respective duties. Knowing, or certainly believing, that trust and duty are not present results in a culture of scepticism. Consumers who become suspicious of some expert advisers (and before tarring all with one brush) should check for three high-level attributes: honesty; integrity and competence.

In an effort to tackle dishonesty and incompetence, lawmakers and regulators have imposed rules on transparency and fitness to trade. Such regulation falls well short of what is needed. For example, transparency cannot be overcome by providing consumers with more and more information – they simply won’t read it or properly absorb it. Fitness to trade cannot be ensured by merely insisting on advisers attaining academic qualifications and knowledge top-ups.

Consumers have a duty to impose their own disciplines. They should insist on receiving expert advice face-to-face. It is very hard to measure honesty and integrity in a letter or by e-mail. Consumers should come prepared with tough probing questions in order to check the competence of the answers. Although regulators are, for the most part, trying to be supportive of consumers it is impossible to ensure positive consumer outcomes by imposing more rules on expert advisers.

We should all do more to generate mutual trust. A trust deficit is a dangerous place. Increasingly, it is very difficult to verify integrity and evaluate honesty. In addition, more and more interventions by machines make it difficult to distinguish the emotional intent of any communication. Witness the content of e-mails written by humans; the tone and tenor can be misjudged. Just think what a machine-driven e-mail can do!

GPT-3 is a new language-generation computer model. It has been trained to produce text, but it has no intuitive grasp of what it is doing. It can respond faithfully to your enquiries with no human intervention, but can you trust it?