ICQ Log - Ethics:

Trust and Ethics

Last Updated: 09 September 2021

Ed McDonald , MA in Ethics & Corporate Responsibility & Member of Compliance Institute’s Ethics Committee, analyses trust and ethics; what trust is; why trust matters and why we need it.

Why does Trust Matter?

Have you ever wondered how your understanding of Trust, and what it is, and why it is important, developed? How did you learn that it somehow is an important characteristic in a person, or an organisation? Who told you, how were you told and in what context? For most of us, we probably didn’t “learn” about it in a formal way such as it being a school subject, or going on a course, or being trained in it. And yet it somehow seems so important, and in recent years, has become a topic of intense discussion in many areas of life – politics, governance, business, financial services, and of course, in all kinds of personal relationships.

Indeed, the highly-respected Edelman Trust Barometer says in its 2021 Report; “After a year of unprecedented disaster and turbulence — the COVID-19 pandemic and economic crisis, the global outcry over systemic racism and political instability — the 2021 Edelman Trust Barometer reveals an epidemic of misinformation and widespread mistrust of societal institutions and

leaders around the world 1 .”

Being Trusted, Giving Trust

Trust is an interesting word and even more interesting as an activity and characteristic of all of us as individuals and the organisations we work in or are involved in. It’s even somewhat astonishing just how readily we presume on it, and how frequently it is broken. And yet it seems to be a fundamental requirement of us all (even if not always practised or respected) in working out how to get along with one another on a daily basis. We talk extensively about the importance of trust in our societies, in our institutions, in our businesses and in our relationships. We presume on it, even in our dealings with people or organisations that we don’t know or have never had dealings with. We often give it without much knowledge of a party to whom we give it so readily, to total strangers, without them having done anything for us or to us on which we could estimate whether we should trust them or not. That said, there are also occasions when we may feel wary about someone, that we’re unsure about how reliable they may be. Noting neuroscience research of how our brains work, Paul Zak says “To trust someone, especially someone unfamiliar to us, our brains build a model of what the person is likely to do and why. In other words, we use both theory of mind and empathy during every collaborative endeavour. And the other person intuitively does this about us too. That means that humans are constantly involved in a two-sided trust game 2 ”.

So, What do we Mean by “Trust”?

It’s a straight-forward word but what do we mean by it? Is it an instinct that we have? It seems that we presume it until shown otherwise that our trust is being broken. We use it regularly, but it seems that it can be sometimes forgotten, overlooked, ignored, or even discarded. And who should we be trusting? Is it me or you personally? Or is it the organisation or company I work for or am involved with? Organisations talk a good deal about being trusted and trustworthy, but the reality is that in themselves they can’t and don’t make choices or decisions.

Choices and decisions are made by people, acting in their own right or on behalf of their organisation. So maybe a good starting point is to define it. Trust is a two-way feature – it’s something that one gives to another, so the other party presumes it is being given and acted on. When it is found to be missing by either party, what is the implication of that?

The Oxford English Dictionary describes “trust” as “a firm belief in the reliability, truth, or ability of someone or something” or as “the acceptance of the truth of a statement without evidence or investigation” or “to have faith or confidence”. The Cambridge Dictionary says it is “to believe that someone is good and honest and will not harm you, or that something is safe and reliable”. The US Merriam-Webster Dictionary says that trust is an “assured reliance on the character, ability, strength, or truth of someone or something” or a “dependence on something future or contingent”.

Those definitions all sound like they could apply to the role of financial service providers in their relationship with their clients and other related stakeholders. Financial service providers are organisations, who, through the people in them, have expertise and knowledge that many of us need and can rely on. But there’s a dilemma in this. As noted earlier, organisations and institutions in themselves can’t make decisions or choices; decisions and choices and the consequential actions and behaviours are made by the people within those organisations, making the decisions in the name of their organisations. While organisations may present as being trustworthy or putting an emphasis on being trusted and reliable, the fact is that the actual bearers and creators of that sense of trust are the decision-making people.

The Need for Trust

The renowned philosopher and ethicist, Baroness Onora O’Neill, very presciently said in 2002, well before the financial crisis, “Each of us and every profession and every institution needs trust. We need it because we have to be able to rely on others acting as they say they will and because we need others to accept that we will act as we say we will” adding that “We may need trust but trusting often seems hard and risky” 3 . We rely on others for so much, that we must give them our trust, and frequently unconditionally. Every time I walk along or drive on a road, I have to trust all the drivers to drive safely so that I am not injured. When I buy a car, I have to trust that it is fit to drive, that the steering wheel is going to function as it is supposed to – imagine if I couldn’t feel a sense of reliance on that.

When I buy a food product or a medicine or a tablet, I must trust that the product is safe. And when I avail of banking or other financial services, provided by someone who is more experienced in them than I am, I must presume that the service is fit and proper. But as Baroness Onora O’Neill also noted, “Every day we read of untrustworthy actions by politicians and officials, by hospitals and exam boards, by companies and schools”……(and) “every day we also read of aspirations and attempts to make business and professionals, public servants and politicians more accountable in more ways to more stakeholders. But can a revolution in accountability remedy our crisis of trust?” An interesting question in 2002 about where we stand today.

Trust, and Confidence in it

That leads to the comment by Andrew Bailey, CEO of the UK FCA, about trust, when he said “do we trust people or institutions, or both? As the philosopher Katherine Hawley has set out, our confidence in the honesty of certain professions and their members is based on our confidence in the institutional structures, motives and risks which surround them. Behind this is a system of credentials, qualifications and monitoring of standards. The effect of this is to limit the degree to which we have to make case-by-case judgments on individuals. So, on the whole, we don’t ask, “should I trust my doctor? 4 ”.

He concluded “That depends on a well- defined and disciplined institutional framework in which the objective is expressed in terms of the patient or the client, even accepting that the monetary returns can be good… Remember that Milton Friedman put it in terms of making as much money as possible while conforming with the basic rules of society. In contrast, the Hippocratic Oath does not mention making money.”

If a customer, client, or patient is to feel confident about their service provider, then they have to give them their trust to do what is best for them. And trust, while initially given, must be earned on an ongoing basis if that confidence is to be justified or survive.


  1. https:// edelman.com/trust/2021-trust-barometer
  2. How our brains decide when to trust, Harvard Business Review, 18 July 2019
  3. Reith Lectures on Trust and Trusting – Lecture 1 in a 5-part series, BBC, 2002
  4. Trust and ethics – a regulator’s perspective, Andrew Bailey, Financial Conduct Authority, UK, Speech at the launch of St Mary’s University School of Business and Society, London, 16 Oct. 2018

Author: Ed McDonald

Member of the Compliance Institute's Ethics Committee and lecturer at Institute of Technology Tallaght


ICQWinter Edition 2021

This article was taken from the Compliance Institute's ICQ Winter Edition 2021