Ethical Issues In Financial Services

Abstract

Discuss about the Ethical Issues in the Financial Services.

This paper will highlights on the Ethical concerns in the financial services industry that influence everybody. The reason being even though you do not work in the financial sector and is still a consumer of the services offered. The public people has the perception that the economic service industry is extremely unethical compared to other aspects of the business. The misperception continues to be persists for several purpose, initially it the all business is significant. It usually consist of the banks, the investments companies, the firms in insurance policy, mutual fund organization as well since any business in the financial sector. Due to the extensive size, the business normally garner numerous headlines, which may tout its ethical lapses. The business continues to be regulated highly, it is consequently much more likely that the greater proportion of the bad deals might be identified as well as reported; perhaps it may be a lot more than in the much less controlled industries. You will discover ethical negligence, which can take place, and a few of the causes of these types of bad behavior why they may take place may be due to the self-interest, which sometimes can morphs into greed as well as selfishness.  In the event that these could remain unchecked, the self-interest could remain at the expense of another person. The greed could become some form of accumulation fever. Another challenge could be from the fact that some individuals responsibility could wither under the demands of the client. Sometime it may happen that the push to act unethically could come from the clients. Other reasons could be from the fact that the professional duty could conflict with the demands of the company. An example of this is the faulty reward system, which could induce the unethical behavior. A purely self-interested agent could choose the course of action that contain a high return to themselves.

The financial intermediaries should keep to the rules of the law, industry standards as well as the act ethically. It must be pointed out from the beginning there is need not be intrinsically unethical regarding the financial industry. The business has provided necessary services that is crucial that you cater to the better technology along with the society since preserving on the money as well as offer domestic lending. Provided the important part , which the financial industry provides , the moral hazards might be a lot more acute thereby it can be therefore reasonable that the industry might be the subject to the higher ethical standards as evaluation to the commercial enterprises ( Chalmers , 2016 ) . The issue of what the ethical standards should be precisely how we might judge them, as well as whatever they are ultimately focusing on is the central to the debate. When the facet of the regulation should be performed, there is normally a mechanism for dealing exactly what the result could be. By emphasizing on the end picture, the fundamental principles, which any ethical financial service industry ought to comprise, are the ethical code of conduct as well as searching for the consistent application of the positive moral conduct across the business (Crane & Matten, 2016). This paper will certainly try to look at the ethical facets of the financial service business. This will be achieved through the findings that were done through the research, a discussion will highlight what the research found out and a recommendation will be made in order to improve on the ethical issues in the financial service industry.

Findings

Based on the study shows that the ethical issues in the services industries is becoming more important with the growth as well as globalization of the sector in the economies that are developed. Further, many of the organization have devoted their resources to the development of the management tools for the services, which are essentially in form of the advanced model for the delivery of the services as well as customer relationship developing as well as the human resource management ( Ferrell & Fraedrich , 2015 ) . The studies have also revealed that with the latest incidents of the improper use , fraudulence , as well as other economical questionable deal most of the service institutions face numerous ethical challenges and problem with the potential of harmful effects for the services businesses . Based on the analysis of other scholars along with business ethicists very few have addressed on the moral issues in the financial industry mainly because there are numerous shortcoming that occurs in the sector. Many have highlighted the ethical theory and investigation on possibly new or perhaps the in the past disregarded ethical themes as well as issues in relation issues in the financial sector (Pérez, Martínez & Del Bosque, 2013). On the findings it has found, the code of ethics for the financial services industry is the public popularity by the financial services industry that is often crucial along with privileged role, which it performs in the society, as well as the acceptance by the FSI of the responsibility upon the business and people across the business. The study was conducted to understand the nature and the extent of the ethical challenges, which are faced by the financial industry. Further, to provide the guiding principles of the ethical code of conduct in the financial service industry (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014). From the research, I understand on the roles as well as the responsibilities of the financial institution to be able to strive more effectively as well as efficiently against the current issues. According to the empirical research that has been undertaken in the financial institution are not interested in their own environmental situation or perhaps their clients. There were various changes as well as growing awareness in the financial sector. It was also found that many of the financial sector have bad reputation for the unethical behavior because of the aspect of ignorance and the prejudice. Many individuals have little understanding of finance.

Discussion

The ethical problems in the financial services industry typically influence everyone, although they cannot operate in the field you can be constantly the customer of the services (Beauchamp, Bowie & Arnold, 2004). The public normally have the insight that the financial services industry is more unethical compared to other areas of the business. In a real business situation, there are numerous positions in which people behave regardless of the ethical implication. Sometime we can consider it had been ethical that could not be an ethical case in the world of the finance (Ferrell & Fraedrich, 2015). Many of the institution have implemented their personal code of ethics which offers standard professional guidelines for inspiring the employees to act much more ethically and the responsible ( Ferrell & Fraedrich , 2015 ) . There is certainly a thin line, which exists between ethical as well as the unethical behavior this might consequently offer the staff false notion anything that could be not in particular prohibited might be approved. Furthermore, to the business precise codes of ethics, the professional are bound by those ethical codes of conducts for various professionalin the service sector especially the financial institution. It is important for the organization to train their employees on these organizational code of ethics in order to enable them to be more effective as employees could think it is the global financial society standard (Ennew, Waite & Waite, 2013). As the global financial market, which is more combined with many transactions on a daily basis the chances of the business as well as the professions having unethical conduct today, these acts have been on rise as comparison to the past decades where unethical acts were much less in organization. In the current business condition, there are many resulting trouble and more complex situation (Valentine, Hollingworth & Schultz, 2016). The people rather than the environment usually govern the ethical behaviors more.  In the event that one might establish a norm in the financial industry that it is certainly not merely unscrupulous to embark on unethical action however it is also immoral to  not inform other individual’s unethical action , in that case there may be more report on the violations ( Crane & Matten , 2016 ) . Based upon the analysis of other scholars the following have been recognized as the code of ethics principles for the financial service industry. Among the principle was the competence .The individuals all across the financial services should develop as well as maintain on the relevant knowledge, skills as well as the behavior in order to ensure that all the activities are undertaken professionally as well as proficiently (Ennew, Waite & Waite, 2013). The second principle based from the literature review on the research is that of integrity. The organization as well as the individuals all across the financial services industry should be always honest and open in all their dealings (Chalmers, 2016). They should practice ethical standards, which include accountability as well as trustworthy manner in order to prevent any act, which could damage on their reputation. The principle of fairness is another code, which is very significant.  Both the individuals and the organization all across the financial service industry should always acts more responsibly and also embrace on a culture, which is fair and transparent (McGillivary & Fung, 2013). This may include treating of other people whom they are in the same professional with respect and they should ensure that they are considering on the impact of the decisions and the actions (McGillivary & Fung, 2013). Other codes are they should be confidentiality and objectivity where the financial organization will not allow any conflict of interest and they should always protect and keep confident information, which is provided to them.

It was noted that the financial service industry to some extent are facing ethical challenges. Some of these challenges are those of the fraudsters and the untrustworthy employees. The characteristic of the ethical lapse in the financial service industry is not intentional, but rather the unintentional wrongdoing (Hudon & Sandberg, 2013). The root because which makes the employees to cheat or perhaps steal is the finance itself, which is the norms as well as the values inherent in the financial practices and the way, in which these affects individual’s behaviors. The society is usually interworking of individual, which is built in the pillar of trust. The trust is usually based on the molarity and the ethical behavior.  For the financial service, industry ethics is essentially the key pillar, and the ladder for the success (Beauchamp, Bowie & Arnold, 2004). If the organization lose the trust from the employees, who cheat or steal it would go downhill. The financial service industry should keep the code of ethics to help promote their self-regulation.

Recommendations and Conclusion

Based on the research it has been found out that the code of ethics for the financial service industry is essentially important for the public recognition of the most critical and the privileged role, and the acceptance of the responsibility on the organization and the individuals. It can be recommended that all the financial service industry organization should adopt on the code in their entities, through implementation of their system in order to integrate their principles through the organization. Through the research, it has been found that many are lacking the principles code of ethics therefore some of their shortcoming or downfall may have been associated with the practices, which were not monitored using their system that do not adhere to the spirit of the code. The companies could use steps such as adoption, commitment and the implementation. The organization should always embed on the principles in the code in their governance, policies as well as their everyday conduct. Moreover, it is important to have policies as well as procedures, which enhance the adherence to the guidelines of the code, and they evidently outline as well as illustrate on all the inference and repercussions on any kind of violation.

This research has provided an extensive awareness on the ethical problems in the financial services industry. The ethics in the service industries has dealt with such themes as the general ethical theory and the services, professional ethics in the service industries. These types of themes have linked to the function of the service in the modern society. The research has highlighted the ethical code such as competency, integrity, fairness, objectivity and the confidentiality, which should be applied to the organization.

References

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Chalmers, S. (2016). Ethical fairness in financial services complaint handling. International  Journal of Bank Marketing, 34(4), 570-586.

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Ennew, C., Waite, N., & Waite, R. (2013). Financial services marketing: An international guide to principles and practice. Routledge.

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