It will take years to restore trust in the finance industry says the boss of New Zealand's investment regulator.
Rob Everett, chief executive of the Financial Markets Authority, yesterday told attendees of the NZ-OECD Symposium on financial education that global failures and local ones including New Zealand's finance company collapses had left their mark on consumers.
"Everyone in this room will know globally it is not a pretty picture in terms of trust in the financial sector."
Everett said recent research in the United States had shown people under the age of 50 were more likely to trust Google and Apple than their bank.
"That is not something that can be changed in a matter of months....and it's not something regulation can fix by chucking people in jail."
"Restoring trust is not going to be easy and it is not going to be quick."
Everett said the FMA was set up five years ago to raise the standards and was working towards a new regime which involved licensing across the sector.
Managed funds, including KiwiSaver, are the last cabs off the rank and must licensed by December in sweeping changes made under the Financial Markets Conduct Act.
Everett said the changes meant financial service providers needed to ensure their products and services met customers' needs.
The fact that a person was willing to buy a product or service was no longer enough.
It had to be suitable for them as well, he said.
Everyone in this room will know globally it is not a pretty picture in terms of trust in the financial sector.
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Everett said the financial service industry was different to other industries.
Some of the sale processes that were used elsewhere were not okay because the choices people made with their finances could be lifelong decisions with major financial implications.
He also said the financial services sector needed to set other success measures and goals than just being focused on profits and the share price.
At the same time Everett said it was working with consumers to encourage them to do more research before buying a product or service and to get advice.
He said investors needed to understand the decisions they made today would have an impact on their future.
"It's getting people to acknowledge there are decisions to be made and if you make them at 25 it's better than making them at 55."
But he admitted it was a challenge.
"People's willingness to make quite difficult decisions about their future are still limited."
Research undertaken by the FMA and the Commission for Financial Capability earlier this year showed many people had still not thought about how much they needed in retirement and what their KiwiSaver and NZ Super would add up to in the future.
"We have to get people to spend more time on the really boring financial stuff. It's about encouraging people to make the effort while acknowledging it is hard."