Trust and trustworthiness are important in the financial services industry, in market transactions and in a wider economic sense, because their lack results in poor outcomes for the economy. The chapter suggests four steps for developing trustworthiness: defining obligations, identifying those responsible for delivering obligations, identifying mechanisms for encouraging trustworthiness, and holding those responsible to account. The chapter considers a number of case studies on the mechanisms that have been applied in other industries, as these provide useful lessons for financial services. The chapter summarises the key obstacles to trustworthiness and the regulatory responses that have emerged to date. It suggests that the reforms underway are important because they will remove or reduce adverse incentives. However they will do little to strengthen trustworthiness by encouraging other-regarding motivations. The chapter concludes by recommending a number of further actions that could be taken to improve trustworthiness by bringing other-regarding motivations into play.
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