In the banking and the financial sector ethical operational function is highly essential to gain the trust of common people. The primary purpose of the paper is to discuss regarding the activity of the Royal Commission in Australia in banking and financial sector. The paper will also provide an effective view on the corporate culture along with the responsibilities of the stakeholders, reward and punishment system for the banking officials and the finance sector by the help of corporate governance. The paper will also discuss global awareness and cross-cultural awareness.
Corporate governance is considered as the system of regulation, the procedure as well as a practice within the big business for direction and control. The process help the firm to create the balance for the interest of stakeholders. The primary purpose of the corporate governance is to assist entrepreneurial, effectiveness as well as prudent management which has the ability to deliver long-term success for the company (The Conversation, 2016). In the banking and finance sector in Australia, corporate governance has an enormous impact on the industry. It does not merely help to boost up efficiency of the bank but even more, it is highly effective for the growth of Australian banks along with their shareholders. The involvement of corporate governance principle to the banking industry of Australia has helped in the process of maximizing the firm’s revenue.
Royal Commission is considered to be the official inquiries that are generally governed by the act of the Legislative body. The primary purpose of the Royal Commission is to investigate the misconduct that develops within the financial sector (Beck, and Paton, 2018). In the Australian banking sector, this public inquiry of the legislative body helps to investigate various unethical misconducts that are being performed by the banking sector. The royal commission within the country has the power to send for the witness as well as gather the evidence. It also has the power to assign police for the function of search as well as warrant regarding the unethical issue within the banking and finance sector in Australia.
The Royal Commission in Australia was established in 2017 by the legislative body in accordance with the Royal Commissions Act 1902. This was called in Australia for inquiring as well as providing the report on the ethical misconduct that is performed within the banking and the financial industry. It can be seen that this process of public inquiry is developed within the banking sector of Australia because for over the past decade the Australian bank was plagued with numerous scandal (Matthews, 2016). The financial planning scandal of Commonwealth Bank of Australia plays as the trigger for the Senate inquiry for the recommendation of the Royal Commission.
Malcolm Turnbull, the Prime Minister of Australia developed the resistance regarding the call for Royal Commission to the Australian banking and finance sector. The primary reason that is being provided by the Prime Minister of Australia for the stave of the Royal Commission is that the government at that time was working on the regulatory measures (COOREY, 2018). According to argue of Turnbull the Royal Commission would produce a major threat for the delay of regulatory measures in the country. But in 2017, with the pressure from his government, he realizes it was a wrong decision to create resistance for Royal Commission within the country.
The Royal Commission in Australia till data has to figure out that four big banks of Australia are involved in the unethical activity and the scandal. The interim report is in the continuous process for the royal commission to provide their final report regarding the issue and the various scandal within the country banking system by the year 2019 (Van Hoorn, 2017). For example; the royal commission is in the continuous process regarding the hearing in the 2.6 trillion-dollar superannuation systems within the country with the inspection of IOOF payment as well as commission structure. The commission till date has accepted 385 public submissions where 84% of the case is related with the wrongdoing that did not have any community expectations. In this, it can be seen that 49% are associated with the banking and the finance sector.
The apparent conflict of interest is the one where the reasonable person thinks that the compromise is being performed in the professional judgment. Moreover, the apparent conflict of interest might not be actual or the potential in the mind of parties for the arrangement to represent a conflict. It can be seen from the continuous process that Commonwealth Bank experienced the conflict of interest which was created by the commission payment which the bank made to the mortgage broker with the housing finance market (Huang, and Rundle-Thiele, 2014). In the financial sector, apparent conflict of interest is quite common for the system.
In the banking and finance sector corporate culture is one of the vital activities where the employees have the ability to manage the economic condition of the country. The corporate culture along with the remuneration has the huge impact on the behaviour of the employees (Krimsky, and Schwab, 2017). It can be seen that the organizational culture helps to support the operational activity within the organization. Moreover, the payment structure supplies job satisfaction to the staff members within the banking sector. This helps the employees for providing their best performance within the market and also helps to improve their skill.
Sometime within the country, it can be seen that corporate culture might trigger the huge disturbance in the ethical operational function of the organization. For example; Commonwealth Bank of Australia is known for its corporate culture but at the same time, it can be seen it is associated with the scandal of money laundering and financial issue. It is the fact that sometimes too much pressure or the strict corporate culture creates the negative impact on the workforces’ members in the organization (Green, and Roiphe, 2017). The corporate culture might have the positive as well as the negative impact on the firm but it completely depends on the staff members of the banking and finance sector.
The Royal Commission is the activity which provides legislative inquiry to the various sectors. Due to their activity, it also creates the huge impact on the responsibilities of the professional with relation to the interest of the stakeholders. The ethical responsibility of the key stakeholders mostly in the banking and finance sector is vital (Baptista, and Oliveira, 2015). This is due to the fact that the stakeholder’s interest clearly depends on their activity within the organization. Royal commission causes the enormous impact on the interest of the stakeholders in both the positive and negative way. For some of the stakeholders, it is one of the best ways to implement professional responsibility in the banking and finance sector. The legislative inquiry within the country constantly produces the huge impact on the stakeholders of the banking and finance sector.
The reward system is containing an effective link with the punishment that is being utilized in the banking and finance sector. The reward system helps the employees to improve their skill and their operational activity in the field. On the other hand, penalizing also helps to improve the member of the workforce and their behaviour within the organization. Both the methods are obligatory to make positive changes within the business which clearly show the link between the two processes. The penalizing is considered the action taken by ASIC, APRA on board level as well as the CEO level (Aguilera, Judge, and Terjesen, 2018). The penalty has been raised to 10 million dollars or more than three times for breaking the violation of rules.
The scandal and unethical activity of the banking sector in Australia were huge and for that, it became essential for Royal Commission to provide effective recommendations regarding the condition of the country (Brown, 2018). The suggestion for the banks is to improve the corporate culture and also implement penalties for the wrongdoing within the country. It can be also suggested that the financial advice should be provided in the strict way where the information would be written in a file which cannot be altered by any person without the consent of banking officials.
The improvement in the condition of the banking and finance sector in Australia will create both the positive as well as the negative impact. For the time being, it can be said the professionals and the government agencies will have the direct impact regarding the development and improvement process within the country. The present state in the finance sector clearly describes the lack of corporate governance or the strict governance system within the country (Breakey, and Sampford, 2017). By analyzing the facts from the royal commission regarding the country which effectively creates the impact on the development process for the professionals in banking as well as the financial sector of Australia.
Ethics, in general, is the study of morality that examines the objectives as well as the significance of the moral norms (Dietz, Bowen, Dixon, and Gradwell, 2016). Ethics and level of professionalism are almost the same for the various countries in the world. But the banking ethics are generally the different level of professionalism that creates two level of manifestation; one is the corporate banking ethics and the other one is bank etiquette. The basic principle of banking and financial system is quite similar all over the world. Bankers in their operational field generally follow then international ethics of banking system (Lentner, Szegedi, and Tatay, 2015). The issue that was faced by the banking system of Australia is not the unique issue. This is because in most of the country regardless of culture or nationality or ethical background might face this problem in the banking system. The primary issue is related to the unethical behaviour and working function of bankers which can be seen in any people all over the world. Nature of human being does not have any impact on the corporate culture of around the world. Scandal and financial issue within the banking sector are very common as people blindly trust the bankers and they have the change to fake them.
The financial and the banking standard of Australia is the uniquely open forum that is eventually delivering as well as the exchange of effective information and the ideas in the country (Winecoff, 2015). The standard is almost the same all over the world as the primary function of the banking and financial sector is to provide financial help and effective information to the consumers. The banking system of the overseas country is also facing some of the major issues regarding the financial scandal. For example; the commercial bank of the UK is the Royal Bank of Scotland which is associated with financial issues where the banking crisis can be visualized. The problem is being faced all over the world where people have the huge chance to deal with the trust of other people (Dalwai, Basiruddin, and Abdul Rasid, 2015). The fact is quite clear that making scam is one of the most common things within the banking and financial organization as all the people in the world have a blind trust in them. The standard and the ethical condition needs to be modified within the process for the development of an effective banking system within the country.
Conclusion
The paper eventually concludes the fact that the banking and finance system all over the world is having almost the same ethics. The issue that is being faced by Australian bank is quite common in the financial sector. The paper also concludes the fact that royal commission is highly effective for controlling the scandal as well as the standard in the finance sector to maintain their operational function. It is one of the effective processes to uphold the ethical value within the organization and this is almost the same for the global banking system where people have trust in the financial sector.
References
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Brown, S.S., 2018. The role of the United Nations Global Compact in helping to drive corporate social responsibility-related practices in the Australian banking sector (Doctoral dissertation).
COOREY, P., 2018. Malcolm Turnbull admits trying to stave off the banking Royal Commission was wrong. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/malcolm-turnbull-royal-commission-wrong-to-resist-2018-4 [Accessed 10 Aug. 2018].
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