A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation

The decrease in consumer trust in the financial sector and the attempts to restore it are receiving a great deal of interest, especially since the financial crisis at the end of 2008. EU legislation is one of the ways that attempts have been made to regain the trust of investors. In Section 2, the concept of ‘trust’ will be subjected to an in-depth yet not exhaustive examination, with the aim of reducing its elusiveness. Section 3 will discuss three recent EU proposals. Examination of these legislative proposals reveals that: 1) the term ‘trust’ is not precisely defined, and 2) without stating further reasons, the restoration of trust in the financial sector is considered a worthy goal. In light of the aforementioned, Section 4 will address the desirability of clarity regarding the term ‘trust’. Section 5 will then assess whether legislation is a suitable means to restore consumer trust, and Section 6 explores whether the restoration of consumer trust in the financial sector is a worthy goal. Indeed, the European legislator and other policymakers seem to consider a low level of consumer trust a bad thing, a high level of consumer trust a good thing, and a higher level of consumer trust an even better thing. This article will argue that it is doubtful whether EU legislation is a suitable means for restoring consumer trust in the financial sector and, moreover, that considering the perverse incentives in the current financial sector, among other things, a realistic degree of trust, implying a certain distrust, appears preferable.