The interventions during the prize-giving ceremony in Paris in January revealed that there were two ways of understanding the title of the prize:
1. /Ethics & trust/ in finance, i.e. how the pair ‘ethics & trust’ functions or ought to function in the context of the finance sector
2. Ethics and /trust in finance/, i.e. the bearing of ethical behaviour on the degree of trust which the finance sector enjoys.
Both are valid concerns which raise a host of challenging questions. The organisers of the prize need however to consider whether to run both horses at once or only one at a time.
What does trust involve?
One of the speakers remarked that while ethics raises a wide range of challenges, trust was an easy matter. In this he was at odds with Jacques Ellul who described trust as the most demanding of virtues.
Trust is essentially a corollary of predictability: one can trust someone or something to behave in a specific way in particular circumstances in so far as experience shows that that is how they normally behave. One can thus trust a a particular person “to foul it up”. Trust grows out of experience and observation. The dictum attributed to Lenin (and many other personalities) “trust is good, checking is better” is no more than common sense.
One does not simply trust someone or something: one must specify what one trusts them for. I may trust my banker with my money, but that has nothing to do with whether I trust him to boil an egg.
Anyone can fail to come up to expectations, especially if they are pushed beyond the limits of their averred competence. Trust becomes an ethical issue only when the trusted person intentionally betrays it.
Ethics & Trust
Trustworthiness and a sense of ethics make a complementary pair of respected virtues. Trustworthiness is as important to a banker as to, say, an electrician: both engage in intricate technical operations where defective work can do serious damage.
Ethics are a matter of individual choice and conscience (as opposed to morals, which are a matter of groupthink). Clients therefore look for bankers who share their own ethics or who can at least be relied on to respect them. Hence a survey of Geneva bankers revealed that their professional ethics boiled down to ensuring that they held their customers’ trust. that sort of combination of ethics and trust makes a peculiar pair.
Trust in finance
This phrase conjures up the issue of public trust in the finance sector. It has taken a battering in recent years. In so far as its customers distrust it, they will seek different ways of meeting their needs for financial services, which may stimulate innovation in the sector. In so far as the public distrusts it, there will be political pressure for increased regulation and control. This may cramp not only the style but the lucrativeness of the sector. The normal responses to such pressures lie in spin (alias public relations) and lobbying. In any event the industry handles it as a straightforward business problem.
Whether keener ethics can help improve public trust in the industry and thus its profitability is only one among the many factors worth considering from this business angle.
Since trust concerns particular activities, it is quite conceivable that a bank’s customers trust it because they can count on it to hide their assets from the tax authorities or their ill-gotten gains from view, while the public distrusts it for those very reasons.
In finance, ethics and trust are both issues that deserve constant scrutiny. The degree to which people trust the finance sector on the other hand is essentially a business and political matter, with ancillary extensions into the ways in which ethics can further this profitable cause.