In this report, the case of ANZ Bank will be analysed to understand that how the organisation has failed to maintain the standard that has resulted in a violation of the banking laws by the bank. Recently in the report of Banking Royal Commission, the conduct of the employees of the ANZ had been revealed. Various employees of the ANZ had been found to be in the breach of their duties that has resulted in providing the improper loans to the customers. The ANZ has been considered among the top financial institutions of Australia. Therefore, the purpose of this report is to evaluate that what are the ethical concerns raised in these incidents and will be evaluated to understand that how ANZ has violated the laws by failing to comply with the corporate governance policies. The report will discuss the other incidents that have been reported in the Banking Royal Commission. The ethical question has been raised by the acts of the ANZ and that will be evaluated in this report. The ethical theories will be applied in the case in that Rawls and liberation view will be considered. Therefore, some recommendations will be provided to the ANZ that may help the company in providing the good governance and for the social values.
The Royal Commission into the banking and superannuation has conducted an enquiry in which various conducts of the banks have been reported to be in question (Royal Commission, 2018) The Banking Royal Commission found in the inquiry that ANZ has breached the banker’s code. The bank has found that the bank has provided overdraft or has allowed the shadow limits to draw out the money more than the money in their accounts (ABC News, 2018). The Commission has found various evidence in which the ANZ has found to be in the breach of the bank code. The fees that were buried in 104 pages of the terms & conditions that were supplied by the ANZ was accrued at up to a $54 a month on the overdrafts above $60. The overdrafts have a penalty that is above 17 per cent (Caldwell, 2018). The commission has found that the ANZ has failed to inform the ASIC and can be liable for the ASIC Penalties. It was alleged by the Commission that the ANZ has deliberately not informed the ASIC. It was also alleged that the ANZ has not worked fairly and responsibly. The listed company of ASX has to follow some principles and recommendation of the ASX that seems by the conduct of the bank has not been followed. The bank had failed to promote it non-fee, basic access account and the pushing of the aboriginal customers to more complex and costly products. The ANZ by analysing the conduct in the Banking Royal Commission has failed to comply with the corporate governance and the ethics. Ethics and governance play an important role in the company so that these types of conduct can be ignored (Janda, 2018).
The corporate governance is the rules and regulations that guide the company to operate efficiently and effectively. The corporate governance is required for every organisation that is to establish the good culture in the organisation. There are some theories of corporate governance from which the culture of the organisation will be analysed. There are some theories that are:
This theory of the corporate governance has given the importance to stakeholders in the company. The company must put their stakeholders in the priority as the stakeholders are an important part of an organisation.
There are primary and secondary stakeholders. The primary stakeholders are those who have the direct stake in the company. The secondary stakeholders are the indirect stakeholding in the company of a public or who has an interest in the stake. The stakeholder is a very wide term that includes customers, public, government, competitors, employees and the stockholders. The ANZ customers, employees are the stakeholders.
In this case the stakeholders who are affected that includes employees, customers, and the governmental bodies. The stakeholder requirement should be fulfilled by the companies. The companies must take their needs on the top priority. Therefore, the companies must take care of their stakeholders need. The shareholders are as important part of the organisation as the shareholders of the company in accordance with this theory. The ANZ has failed to comply with the theory of the stakeholders. The ANZ to earn profits has provided overdrafts to customers that are the breach of the banker’s code of conduct. This theory does not suggest by breaching any laws fulfilling the requirements is not a part of the governance. The ANZ has not shown fairness in their work towards the stakeholders. Thus, it can be concluded that the ANZ has failed to comply with the theory
The opportunities and challenges faced by the stakeholders in the company that the clients wants their money to be secured and the fees they are providing they get services in accordance with that. The management of the company is not working with obligations and responsibly that has affected the company in many ways. The company has affected the shareholders in the company
The ANZ has the ethical responsibility towards the stakeholders to provide better services in a fairly manner. The ANZ if violate any responsibilities towards the stakeholders than will be liable for the violation or the penalties. ANZ has the economic responsibility towards the stakeholders that if they will grow economically than only the company will grow (Letts, 2018).
The company must improve their governance policies in the company so that the management can understand the value of stakeholders in the company (Bridoux and Stoelhorst, 2014).
The Corporate Social Responsibility is the main aim to encourage and aware the companies about the impact of the business the company are engaged in on the society that includes their own stakeholders and the environment. The corporate social responsibility means to do overall development of the society through the business. The company by providing social, economic and the environmental benefits that only the company can provide proper governance in the company. Therefore, it applies to the ANZ to do overall development of the social, economic and the environmental benefits but in actual the company has totally failed to comply with corporate social responsibility. The ANZ has misled everyone, worked for the self-motive, and not worked for the society (Tai and Chuang, 2014).
Creating Shared Value means to how to do business by creating a long-term value both for the shareholders and for the society. Porter and Karmer’s view of Creating Shared Value that the shared value is not the social responsibility, sustainability but a new way of companies of achieving the economic success. It is an opportunity that the companies find the business opportunities in the problems of the business that has the following circumstances. The ANZ has failed to create the long-term value as the conduct of the bank has created a negative impact on the company. Thus, the company has failed to comply to create a corporate social value (Gibbert, Leibold and Probst, 2002).
There are the principles and the recommendation of the ASX that every listed company in the ASX has to follow these principles.
The principle is to lay a strong composition for the company and to establish the duties and responsibilities of the board members and the management. The ANZ has failed to comply with this principle as it has not created a solid-foundations as the management of the company has misused the laws of the banking code (Safari, 2017).
The principles state that the directors so that it can add value to the company profits. The ANZ has totally failed to obey this principle (Safari, 2017).
The company must implement the policies for the management to work with obligations and with to follow the duties. The ANZ has totally failed to follow this principle as the management of the company had been a breach of many laws for the personal benefits.
The board must implement the structure to provide the safeguards from both internal and external risks. The ANZ internally and externally both have failed to provide safeguards.
The company has failed to disclose the performance as per the ASX principle. The company has not also disclosed to the ASIC and for that, the company may be penalized (Safari, 2017). .
The company must show respect for the security holders so that the transparency must be maintained and it becomes easy for the shareholders to access the information on the timely basis by the company website. The management of the ANZ has not made disclosures about the scandals as they have shown less than the loan they provided.
The company must implement the sound risk management system but the ANZ can be said that there is a lack in their sound management that has a result in the poor governance of the ANZ (Safari, 2017).
The company must remunerate fairly and responsibly as if any company failed to meet the criteria can be liable for the breach of the Fair Work ACT 2009.
While operating their businesses, the corporations have to comply with various ethical principles to ensure that they perform their business morally. Ethical theories assist in evaluating the ethical dilemmas faced by an enterprise along with finding relevant solutions to address those issues. The Utilitarianism ethics theory is a popular ethical approach which is a part of the normative ethical theories; it is also called consequentialism. This theory focuses on the consequences of actions or situation while determining whether it is ethical or not. The main element of this theory provides that the actions must achieve greater happiness for a larger number of people. It means that as long as certain actions will have positive consequences that affect a significant number of people, they will be considered ethical. This theory enables parties to judge whether the actions taken by them are ethical or not based on their positive or negative consequences. The Deontology ethics theory is also the part of normative ethical theories which is also called non-consequentialism. The central moral concept of this theory is the ‘duty’ of parties. The rightness or wrongness of the decisions taken by an individual is determined by evaluating whether the person has violated any duties or not. This theory is opposed to the consequentialism perspective since it did not focus on the consequences of a situation while determining whether it is ethical or not (Xiong, and Wu, 2015).
In the present case, the bankers’ code is violated by ANZ due to which the company has given more money to its customers above their overdraft limit. Due to this action, negative consequences are suffered by the clients of the company since they have to return such amount with an interest of 17 per cent. The corporation has failed to provide suitable accounts to its customers due to which the risk of high dishonour and overdrawn fees have increased. These actions have adversely affected a large number customer of ANZ who mistakenly or intentionally collected more money since they have to pay it back with the heavy interest rate. Since the consequences of this action are negative, it is considered as unethical as per the provision of the Utilitarianism ethics theory. On the other hand, the bankers’ codes define significant regulations that banks have to comply with while offering their services. These responsibilities are imposed by the government to ensure that the banking corporations are acting ethically. Therefore, ANZ has violated its duties by failing to comply with the bankers’ code based on which the actions of the company are unethical as per the Deontology ethics theory (Mandal, Ponnambath, and Parija, 2016).
Rawls’s theory provides that the individuals should be allowed to select between the principles of justice that are governed by existing political or social arrangement. The theory provides that an individual should remove the biases in order to take a decision in which the principles of justice are established (Brennan, 2018). As per this theory, the justice required that economic and social consequence of arbitrarily distributed assets are minimised. In the case of ANZ, the principle of justice is missing since the actions of the company were not justifiable for its customers. The justice would be considered if ANZ would have complied with the provision of the bankers’ code to ensure that it did not charge heavy interest rates on its employees (Uszkai, 2015).
Following are various recommendations that can assist ANZ in addressing the issues, which it faces, and address them based on ethical principles.
Conclusion
In conclusion, it can be analysed from the report of the Banking Royal Commission that the Banking Code has been breached by the ANZ. The ANZ management has also breached various duties that result in the failure to comply with corporate governance. The company has also failed to apply many of the principles and the recommendations of the ASX and can be liable for the penalties. The ANZ is also liable for the ASIC penalties, as the disclosures have not been made by the company. The company is also failed in the view of the Porter and Kramer’s view of Creating Shared Value. The ANZ has also failed in the view of that Rawls and liberation. The ANZ, in the end, has been recommended to implement many policies that are required for the company to provide good governance. The ANZ has to implement some good governance policies.
References
ABC News (2018) Banking royal Commission: ANZ chief says many employees dehumanise work as they don’t see a customer. [Online] Available from: https://www.abc.net.au/news/2018-06-30/anz-chief-says-bank-employees-dehumanise-work-dont-see-customer/9927340 [Accessed 2nd October 2018]
Brennan, J. (2018) Libertarianism after Nozick. Philosophy Compass, 13(2), p.e12485.
Bridoux, F. and Stoelhorst, J.W. (2014) Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), pp.107-125.
Caldwell, F. (2018) ANZ admits treatment of some farming clients breached bank code. [Online] Available from: https://www.smh.com.au/business/banking-and-finance/anz-admits-treatment-of-some-farming-clients-breached-bank-code-20180625-p4znja.html [Accessed 2nd October 2018]
Gibbert, M., Leibold, M. and Probst, G. (2002) Five styles of customer knowledge management, and how smart companies use them to create value. European management journal, 20(5), pp.459-469.
Hurchens, G. (2018) Banking royal commission: all you need to know – so far. [Online] Available from: https://www.theguardian.com/australia-news/2018/apr/20/banking-royal-commission-all-you-need-to-know-so-far [Accessed 2nd October 2018]
Janda, M. (2018) Banking Royal Commission key findings from Kenneth Hayne’s interim report. [Online] Available from: https://www.abc.net.au/news/2018-09-28/bank-royal-commission-kenneth-hayne-key-findings/10317752 [Accessed 2nd October 2018]
Letts, S. (2018) Banking royal commission: ANZ’s treatment of indigenous people may have broken law. [Online] Available from: https://www.abc.net.au/news/2018-07-06/funeral-insurance-suppliers-to-indigenous-communities-face-char/9950944 [Accessed 2nd October 2018]
Madison, K., Holt, D.T., Kellermanns, F.W. and Ranft, A.L. (2016) Viewing family firm behaviour and governance through the lens of agency and stewardship theories. Family Business Review, 29(1), pp.65-93.
Mandal, J., Ponnambath, D.K. and Parija, S.C. (2016) Utilitarian and deontological ethics in medicine. Tropical parasitology, 6(1), p.5.
Royal Commission (2018) Misconduct in the banking, superannuation and Financial Services Industry.[Online] Available from: https://financialservices.royalcommission.gov.au/Pages/default.aspx [Accessed 2nd October 2018]
Safari, M. (2017) Board and audit committee effectiveness in the post-ASX Corporate Governance Principles and Recommendations era. Managerial Finance, 43(10), pp.1137-1151.
Tai, F.M. and Chuang, S.H. (2014) Corporate social responsibility. Ibusiness, 6(03), p.117.
Uszkai, R. (2015) A Critique of Intellectual Property Globalization: Libertarian and Rawlsian Arguments. Re-thinking the Political in Contemporary Society: Globalization, Consumerism, Economic Efficiency, pp.183-203.
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Xiong, J. and Wu, L. (2015) Ethical analysis on application of massive open online courses (MOOC): Concept, necessity and methodology. In International Conference on Education, Management, Commerce and Society (EMCS-15)(pp. 831-835). USA: Congress Press.
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