Discuss about the Business Ethics-AMP Banking Scandal.
There are certain issues that are regarded to be potentially controversial in regards to business practices and policies. Such issues could include; fiduciary responsibilities, corporate social responsibilities, corporate governance, discrimination, bribery and insider trading. Proper study of these issues that directly affect the practices and policies of the business is called business ethics. It is a kind of professional ethics or applied ethics that puts under scrutiny ethical challenges or ethical principles and morals that could possibly arise in a business environment.
One of Australian main banks, AMP has been under scrutiny of the public and the global eye at large after it found itself entangled in scandal whereby, it’s being alleged of confiscating money from its clients whereas there are no services that have been offered at all. This was after the royal commission got to the ground focusing on Australia’s financial service firms and banks (Duran, 2018). All this was in attempt to understand why such institutions had been charging fees to their customers for services not provided. Mr. Regan Anthony who is the former group executive of advice prompted Kenneth Hayne, the head of the royal commission to a frustrating edge through his responses after using euphemistic language when he was making his concession.
Chief executive of the company, Craig Meller however resigned following the wake of all the shocking and disturbing revelations at the royal commission on banking (Anon., n.d.). He has however apologized severally. He acted responsibly and in good faith when he said that he never knew about the behavior but again admitted that he was responsible for the same. He said, “I do not condone them or the misleading statements made to ASIC. However, as they occurred during my tenure as CEO, I believe that stepping down as CEO is an appropriate measure to begin the work that needs to be done to restore public and regulatory trust in AMP.” Nevertheless, it is Mike Wilkins who is a former Chief executive of IAG and who joined the AMP’s board room in 2016 to take the position of Craig Meller but on interim basis however.
The royal commission heard that the financial institution had been continuously charging fees to “orphan” clients unlawfully and deliberately for three months (Bickers, 2018). There is a high possibility therefore that the company is mostly likely to face all the criminal charges that are associated with such undertakings following the hearing by the commission. Last year, an independent report was presented to ASIC as a follow up to the case. The report is however said to have gone through numerous versions of draft, 25 to be specific and several changes. This was done by AMPs senior executive officers and members of its board who are again are said to have altered significant evidence in attempt to cover up (Verrender, 2018).
More than three hundred and ten thousand customers who are financial advice seekers, and who had already been charged for no services received have already received compensation from AMP and the country’s four big banks. The amount that has been paid out to the victims of the scandal amounts to two hundred and nineteen dollars. AMP began its cooperation with ASIC in may the previous year and has since then refunded more than fifteen thousand, seven hundred customers with an amount exceeding 4.7 dollars. AMP however still carries the blame on its shoulders after it emerged out clearly that its attempts to mislead ASIC were intentional. AMP executives are shown lying to ASIC officials that the step to charge fees for no service was a mistake whereas it was a deliberate policy.
The boardroom in charge of the financial institution now has said that initiatives have already been taken to change the firm’s culture and ethics in attempt to curb occurrence of similar scandals within the firm. From the above case, it is clear that ethics calls just for simple honesty which is the building stones upon which the whole community sits on in regards to morals. It is therefore an integral value while conducting business to have predetermined standards of honesty that should be strictly followed to the letter (Vilcox & Mohan, 2007). Such standards should therefore meet the general moral standards that are generally acceptable and applicable in the society.
Lack of proper and firm ethical framework that resulted to the implementation of such unethical policy has resulted to negative implications on the company. A whole one billion dollars was wiped of its market value following the allegations. The argument offered by the royal commission as to why such a huge figure was scrapped is that the money had been earned dishonorably and illegally and the company could not raise any legal claim to the funds. Apart from money, the company that has worked for one hundred and sixty-nine years building its reputation just set a negative view of itself to its clients, all other stakeholders and the world at large.
Simultaneously, it is a duty and a responsibility of companies and all other public institutions to offer guidance to customers basing on ethical principles (Ahner, 2007). Essentially correct business patterns and behavior models all which should be positive are what to be shown to customers. It has been observed globally that clients develop a preferential attitude towards companies and institutions that have well set ethical grounds and have responsible policies when relating to customers’, employees and the general business environment (Flynn, 2008). It is therefore worth noting that customers are the key pillars to the success of any business and hence firms formulate their business policies and codes of ethics with respect to the demands and needs of their clients.
Looking from a different angle, firms are driven by a desire to raise their profits to the maximum. Similar to AMP of Australia, majority of these firms usually ends up being tricked by such desires and finds themselves embarking to the principle of ‘ends justifies the means’ (Brenkert & Beauchamp, 2012). This principle results to unethical business policies in attempt to maximize the profits while at the same time, clients are subjected to practices that ends up doing more harm to them than good. It in relation to this that a majority of business specialists base their argument that the drive by investors to maximize profits is not the only justification that is to be acceptable for all cooperate decisions resolved to and actions taken (Frederick, 2008).
It is clear therefore that the essence of business policies that are ethical in nature emanates from the philosophical and moral domain and has little or no association with the actual business practices and the business itself (Malachowski, 2001). Many companies however, and especially in the developing nations embark on principles and policies that are unethical so as to achieve a competitive advantage against their rivals (O’Sullivan, et al., 2012). Such companies should note that violation of codes of ethics impact the development of relationships negatively.
Business ethics therefore tries to induce moral principles to all business undertakings so as to find solutions to, or get clarification to issues regarding moral conduct that may arise within a business setting. On the other hand, moral philosophy are the principles and/or rules that people refer to when making decisions on what is right and what is wrong. Corporate social responsibility is any kind of business activities that are voluntary and aims beyond enhancement of economic performance and legal compliance. While doing so, the business plays a vital role in development of sustainable environment under which the business operates. It is however worth noting that ethics and principles of ethics extends to all scopes of human life.
More attention is being drawn towards corporate social responsibility as recognition is being gained by the complement of social activities and means of sustaining the business. There have also been notable changes in values, contemporary developments and the general expectations of stakeholders as companies strive to survive in the current business world. For corporate social responsibility to gain momentum and lead to positive results in a company, it must be integrated into the business model and documented as a policy. CSR goes beyond the economic objectives of a firm and aids it in replicating ethics within their vicinity of their operation. Ethics concern while conducting business is a crucial aspect of a corporation since they help in enhancing the corporate image in the eyes of stakeholders, existing as well as potential customers. This means that interest in ethical issues enables an organization to achieve its goals which revolve around the profit-maximizing and brand development. Thus, corporate ethics ultimately raises the general status quo of the entire company
References
Ahner, E. C., 2007. Business Ethics: Making a Life, Not Just a Living. s.l.:Orbis Books.
Anon., n.d. The Guardian. [Online]
Available at: https://www.theguardian.com/australia-news/2018/apr/20/amp-chief-executivebanking-royal-commission-scandal
[Accessed 28 05 2018].
Bickers, C., 2018. News.Com. [Online]
Available at: https://www.news.com.au/finance/business/amp-ceo-craig-meller-resigns-in-wake-of-banking-royal-commission-scandal/news-story/4c4aed55f7c21644c7c5b2cebbe367a7
[Accessed 28 05 2018].
Brenkert, G. G. & Beauchamp, T. L., 2012. The Oxford Handbook of Business Ethics. s.l.:OUP USA.
Duran, P., 2018. Reuters. [Online]
Available at: https://www.reuters.com/article/us-amp-ltd-chairman/australia-banking-scandal-claims-more-amp-scalps-chairwoman-quits-idUSKBN1I00WK
[Accessed 28 05 2018].
Flynn, G., 2008. Leadership and Business Ethics. s.l.:Springer Science & Business Media.
Frederick, R. E., 2008. A Companion to Business Ethics. s.l.:John Wiley & Sons.
Malachowski, A. R., 2001. Business Ethics: Critical Perspectives on Business and Managemen. s.l.:Taylor & Francis.
O’Sullivan, P., Smith, M. & Esposito, M., 2012. Business Ethics: A Critical Approach: Integrating Ethics Across the Business World. s.l.:Routledge.
Verrender, I., 2018. ABC. [Online]
Available at: https://www.abc.net.au/news/2018-04-30/amp-scandal-shows-the-cover-up-is-often-worse-than-the-crime/9710362
[Accessed 28 05 2018].
Vilcox, M. W. & Mohan, T. W., 2007. Contemporary Issues in Business Ethics. s.l.:Nova Publishers
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