Comparative Business Ethics & Social Responsibility
Business Ethics: AMP Banking Scandal
Certain issues are regarded to be potentially controversial concerning business practices and policies. Such issues could include; fiduciary responsibilities, corporate social responsibilities, corporate governance, discrimination, bribery and insider trading. A 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 or applied ethics that scrutinises ethical challenges or ethical principles and morals that could arise in a business environment.
One of Australia’s main banks, AMP, has been scrutinised by the public and the global eye after being entangled in a scandal whereby it’s alleged to confiscate money from its clients. In contrast, 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 an attempt to understand why such institutions had been charging fees to their customers for services not provided. Mr Regan Anthony, 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.
However, the company’s chief executive, Craig Meller, resigned after all the shocking and disturbing revelations at the royal banking commission (Anon., n.d.). He has, however, apologized severally. He acted responsibly and in good faith when he said he never knew about the behaviour but again admitted that he was responsible. 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, 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 an interim basis.
The royal commission heard that the financial institution had continuously charged fees to “orphan” clients unlawfully and deliberately for three months (Bickers, 2018). There is a high possibility, therefore, that the company will likely face all the criminal charges 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 the draft, 25 to be specific and several changes. This was done by AMP’s senior executive officers and members of its board, who are again said to have altered significant evidence in an 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 of the previous year and has refunded more than fifteen thousand seven hundred customers exceeding 4.7 dollars. However, AMP still carries the blame on its shoulders after it emerged 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 to curb the 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 stone upon which the whole community sits regarding 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 society.
The lack of a proper and firm ethical framework that resulted in implementing such an unethical policy has negative implications for the company. After the allegations, a whole one billion dollars was wiped off its market value. The argument offered by the royal commission as to why such a huge figure was scrapped is that the money had been earned dishonourably 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.
Simultaneously, it is the duty and responsibility of companies and all other public institutions to guide customers based on ethical principles (Ahner, 2007). Essentially correct business patterns and behaviour models, all of 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 with well-set ethical grounds and 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. Hence, firms formulate their business policies and codes of ethics concerning the demands and needs of their clients.
Looking from a different angle, firms are driven by a desire to maximise their profits. Similar to AMP of Australia, most of these firms usually end up being tricked by such desires and embark on the principle of ‘ends justifies the means (Brenkert & Beauchamp, 2012). This principle results in unethical business policies in an attempt to maximize profits while at the same time, clients are subjected to practices that end up doing more harm to them than good. This, 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 and actions taken (Frederick, 2008).
It is clear, therefore, that the essence of ethical business policies 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 developing nations, embark on principles and policies that are unethical to achieve a competitive advantage against their rivals (O’Sullivan et al., 2012). Such companies should note that violations of codes of ethics impact the development of relationships negatively.
Business ethics, therefore, tries to induce moral principles to all business undertakings 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 people refer to when deciding what is right and wrong. Corporate social responsibility is any kind of voluntary business activity that aims beyond enhancing economic performance and legal compliance. While doing so, the business plays a vital role in developing a sustainable environment under which the business operates. It is, however, worth noting that ethics and principles of ethics extend to all scopes of human life.
More attention is being drawn towards corporate social responsibility as recognition is gained by complementing 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.
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Verrender, I., 2018. ABC. [Online] Available at: http://www.abc.net.au/news/2018-04-30/amp-scandal-shows-the-cover-up-is-often-worse-than-the-crime/9710362
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Vilcox, M. W. & Mohan, T. W., 2007. Contemporary Issues in Business Ethics. s.l.:Nova Publishers.