The Royal Commission into the Misconduct in the Banking, Superannuation and Financial Services Industry exposed inexcusable behaviour which included the selling of products that weren’t fit for purpose, falsifying records, stealing and much more. Much of the behaviour was self-serving and many people within the industry were victims of systems with processes left unattended or developed to create profit.
In response 76 recommendations were made and billions of dollars are being spent compensating the customers, addressing the systemic issues, and preparing for the recommendations by upgrading IT systems and processes.
There is now an opportunity to strengthen ethical foundations for the future. Let's not call on ethics when things have gone wrong or at crisis point, let’s embed ethics now when systems and processes are being made fit for purpose, and business, including financial services, are supporting their staff to provide products and services to benefit all stakeholders including customers and shareholders.
This behaviour has not been specific to financial services, it has been prevalent in other sectors too. With the changing expectations of the community experienced over the last 5 years and COVID-19 exposing both the weaknesses and strengths in society, I think there is now an opportunity to strengthen ethical foundations for the future. Let's not call on ethics when things have gone wrong or at crisis point, let’s embed ethics now when systems and processes are being made fit for purpose, and business, including financial services, are supporting their staff to provide products and services to benefit all stakeholders including customers and shareholders.
We’re beginning to see a shift where businesses are thinking not only of the final outcome but of how they are achieving that outcome and the consequences of changes being made.
We’re beginning to see a shift where businesses are thinking not only of the final outcome, but of how they are achieving that outcome and the consequences of changes being made. From a business case perspective, it's expensive when things go wrong, and wrong doing reverberates everywhere. It speaks to big businesses, their shareholders, people and their morale and organisational reputation.
The Ethics Centre asked the Deloitte Access Economics team to determine the cost of being ethical. Although one shouldn’t be encouraged to do the right thing because it pays, the financial figures are compelling from a business perspective.
Doing the right thing doesn’t mean we can’t make mistakes, we are human - it’s how we respond when we do.
Deliotte used three different types of economic modelling, data and research with sources including the HILDA, RepTrak and the Governance Institute’s Ethics Index. They found that if you increase ethics by 10% and that positively impacts trust, perception of trust and trustworthiness within the organisation, that can increase wages by 6.6% cent and return on assets by 7%. Ultimately, it ends up being about $1800 per person per year more, which ends up being about 45 billion dollars. It's quite remarkable and we're only talking 10 per cent, we are not talking perfection. And importantly, doing the right thing doesn’t mean we can’t make mistakes, we are human - it’s how we respond when we do.
Much of the unsavoury behaviour we have seen over the years was committed by good people who have had to admit they have made some truly terrible decisions.
Much of the unsavoury behaviour we have seen over the years was committed by good people who have had to admit they have made some truly terrible decisions. Decisions which were underpinned by unthinking practices, incentivised to be profit focused and little reflection was had on the outcomes of those choices. The growing understanding of the role business has in society has encouraged people to reflect on the impact they as individuals can have to deliver on their organisation’s purpose.
Within the finance sector The Banking and Financial Oath (BFO) holds strength. It provides a framework for individuals which can inform decision making and was founded on a shared belief in the inherent ‘good’ of the industry.
So, what is The BFO?
The BFO is an initiative of The Ethics Centre and an implicit demonstration of one’s integrity. The BFO can be considered a Hippocratic-type oath for those working in banking and finance. Importantly, it encourages self-reflection and can strengthen the ethical foundation of the industry by developing a supportive environment which encourages people, through their commitment to hold themselves and others accountable.
Signatories are affirming they respect the position of trust accorded to them by society and are registered with their names published on The BFO website
The BFO provides an opportunity to have conversations about the more prominent role ethics will play in areas such as artificial intelligence (AI) and consider the consequences of the systems being developed and the decisions being made.
Today BFO signatories range from board directors, executive leaders and regulators to front line staff and graduates, with several organisations being 100% committed, whereby every employee is a signatory. Overall, over 4000 individuals have taken the oath since its inception.
Learn more about the The Banking and Finance Oath and I would encourage those in financial services to take the oath!
