Kiwis confidence in finance sector plummets

By Susie Nordqvist

Photo / Thinkstock
Photo / Thinkstock

Public confidence in New Zealand financial service has dipped sharply, according to the latest RaboDirect Financial Confidence Index (FCI).

The index, the only one to measure public rather than business confidence, shows that public confidence in the financial sector is at its lowest level since the index was launched in August 2009.

"In August 2009 at the height of the recession, the overall confidence Index score was 18 per cent.

"In 2010, confidence levels increased to 22 per cent, but last month they had dropped to just 10 per cent," RaboDirect general manager Mike Heath said.

Despite this, an increased number of people said their investment were worth more now than six months ago.

Heath said confidence had fallen for every type of financial service surveyed, with banks, credit unions and building societies declining the least, and insurers suffering the biggest drop.

The findings reflected consumer behaviour in times of economic pressure, he said.

"With this index we have seen consumers increasingly focused on perceptions of fairness, greater demand for good information, products and services, and, not surprisingly, the safety of their investments."

Hard times could often become 'moments of truth' for organisations, with increased public skepticism and scrutiny of marketing offers, as well as higher expectations of the services being provided, Heath said.

In terms of general confidence, the effect of the second earthquake in Christchurch had a severe impact, with 50 per cent of New Zealanders saying they felt less confident in the economy overall.

"Major challenges facing the economy as a result of the Christchurch earthquake were identified as funding the rebuild, the job of rebuilding itself, how to repay the debt and increased unemployment," Heath said.

On the plus side, half of those surveyed have some form of managed fund - largely due to KiwiSaver - and a third said they had no debt.

Also, 44 per cent of people said they were taking active steps to reduce their debt levels.

"Among New Zealanders as a whole, half of the monthly income is spent, with 28 per cent allocated to reducing debt, and 18 per cent put towards savings," Heath said.

Confidence in home ownership as an investment vehicle remained strong, with 74 per cent saying it was a way to grow wealth.

However while 23 per cent said their housing investments were worth more now than six months ago, 32 per cent said they were worth less.

Seven per cent of New Zealanders said they were likely to invest in purchasing their own home in the next six months, while four per cent were likely to invest in property.

"This latest FCI seems to show in some cases a contrast between perception and reality, particularly for those with investments," Heath said.

"General confidence can be knocked by major events, but when it comes to personal circumstances, the responses can paint a different picture."

Heath said despite some negative sentiment about the financial sector, of those people with investments, 30 per cent thought they were worth more now than six months ago, with 42 per cent saying they remained unchanged, and 28 per cent saying they were worth less.

While New Zealanders said they increasingly felt that house, contents and car insurers didn't act fairly or with integrity, just over four out of five continue to have this type of insurance.

Of those surveyed, 14 per cent of customers rated their relationship as excellent and just three per cent as poor.

Heath said the index highlighted that as economic conditions eased, businesses that were customer-centric, provided good information and were values-driven would do best.

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