Professional ethics and regulation

Professional ethics and regulation


Executive Summary

Professional moralss is concerned with the personal and corporate criterions of behavior expected of persons working in acknowledged professions. These ethical behaviors are of great importance when a concern provides service to the populace particularly when their actions or inactivities have effects on the stakeholders.

As a bank, GHF is a concern which must be built on a foundation of trust in order to guarantee its continued endurance. Its clients and other stakeholders at big must believe that the bank is concerned about making all-around value and is non merely interested in prosecuting the opportunism of a choice group of persons.

Over the old ages, the bank has gone through a figure of alterations. While non bad in themselves, some of these alterations have revealed oversights in corporate administration and internal control. Together with a worsening ethical stance, the bank has by and large fallen to a topographic point of discredit in the sight of its stakeholders and the populace. While some of the negative image projected of the bank may non be based on facts, it is of import to observe that reputes are built on both facts and perceptual experiences therefore, it is of import that a house is viewed positively by society in order for it to last.

In order to reconstruct the ethical criterions of the bank and reconstruct it back to its topographic point of trust amongst its stakeholders, immediate actions must be taken to decide the issues environing worsening ethical criterions, hapless corporate administration and weak internal controls. These actions will fundamentally go around around the bank’s work squad as an thought is merely every bit good as the people who are available to implement it.

In all, the bank must be ready to work manus in manus with it stakeholders to guarantee that it one time once more rises to its topographic point as a bank of the people. Changes have to be made and the Board must hold the will implement those alterations and be at the head of defending professionalism.

Table OF CONTENTS

Assignment Cover Sheet1

Executive Summary3

Table of Contents4

Introduction5

Analysis of the Problems Existing in GHF Bank5

Matters to be addressed by the Board of Directors8

Proposals for Rebuilding Ethical Standards to Restore Stakeholder Trust9

Recommendations and Conclusion 11

References12

Introduction

The banking sector plays an of import intermediary function in any market-oriented economic system today by utilizing assorted fiscal instruments to obtain excess financess from those who have chosen to waive current ingestion and doing those nest eggs available to the shortage disbursement unit for the intent of investing. As major stakeholders of a country’s fiscal assets, the banking sector is straight involved in the development of a nation’s economic system in footings of growing and stableness and it prevents big possible hazard for fiscal and reputational losingss.

In order to avoid these hazards, it is of import that Bankss adopt ethical rules while transporting out their professional and corporate duties to all stakeholders, as to advance trust and assurance in the banking industry. These ethical criterions use non merely to the banking industry as a whole but besides to persons working within the industry as personal life values are reflected in work moralss.

Analysis OF THE PROBLEMS EXISTING IN GHF BANK

A figure of alterations which the bank has embarked on and determinations which it has taken have presently led to a negative impact on the perceptual experience of clients and other stakeholders of the bank. While some of the unfavorable judgments against the bank are based on feelings, it is of import to observe that a bank’s repute is non merely built on facts but besides on the perceptual experiences that people outside the bank have of its services and operations. Some of the jobs confronting the bank include:

  1. Recruitment of Staff Without Proper Induction on the Bank’s Corporate Ethical motives and Culture

The bank recruited two senior executives who seem to hold different personal values and concern civilization from the values and civilization hitherto reflected by the bank. While the bank had antecedently conducted its concern based on a traditional attack over the old ages, the new executives had a consequentialist attack to state of affairss which focused merely on profiting a limited figure of stakeholders [ 1 ] . As a consequence, the executives brought in new methods aimed at bettering the bank’s bottom-line and sensed image as a “boring and conservative” bank and were non finally concerned with nucleus duties or a sense of responsibility to others including the clients. This finally led to a struggle of involvement originating from opportunism. The selling attack in selling the new merchandises was non decently channeled and segmented on clients ‘needs’ and ‘affordability’ standards. The on-boarding procedure for the new executives ought to hold enabled a gradual or step-wise debut of the new selling schemes, where divergence from the traditional civilization is gradual and about unobtrusive.

  1. Miss-Selling of Merchandises

Customer relationship directors received commission-based payments for each life insurance policy or involvement rate merchandise sold. Therefore, they focused on selling more merchandises in order to gripe up their committees and ignored their duties to the clients which include full revelation of all the pros and cons of the merchandise being sold ; and a full account of what the merchandise entails including the pricing footings. This attack has resulted to clients going disgruntled with the bank’s services and has led to slightly disbelief in their bankers. This will impact the bank’s ability to pull repetition concern from affected clients or new concern from prospective clients therefore endangering the possibility of long term sustainability of accomplishing gross revenues marks and pulling concern.

  1. Failure to Exercise Due Care to Customers

The bank failed to properly educate its clients on the characteristics and pricing of its insurance merchandises, therefore, clients bought into merchandises which they did non necessitate or could non afford in the long tally. In making this, the bank was professionally negligent. This creates a tally of assurance on the bank and likely discredit doing the clients believe that the bank does non see their involvements. A sensible degree of responsibility of attention by the bank is necessary in hiking assurance and confidences from clients.

  1. Negative Impact on Bank Stakeholders on the closing of 40 Branchs in the Rural Areas

While the closing of economically unsustainable subdivisions is non an issue in itself, the procedure environing the closing and the radioactive dusts from the closing has led to a figure of issues. A figure of employees were rendered excess and paid merely the basic rupture fees. This could hold a negative impact on the bank’s repute in footings of staff public assistance and besides affect the attitude of other staff presently working in the bank or new staff which the bank may wish to use in the hereafter. Additionally, the uprising being championed by the bank’s brotherhood could take to break of services even in other subdivision locations.

The bank besides failed to do equal alternate agreements to run into the banking demands of their clients of the closed subdivisions. This poses a reputational hazard to the bank in footings of service bringing.

In all, the bank failed to take its stakeholders, notably its clients and employees, into consideration when taking the determination to shut the rural subdivisions. Therefore, it failed to equilibrate its demands to do net incomes with its corporate societal duties to its staff and clients. This failure led to a negative repute for the bank [ 2 ] .

  1. Use of Fear Tactics as a Selling Scheme

While there could be a demand to sell a merchandise to a client because he may really necessitate it, it is of import that the gross revenues techniques being used by the bank should be based on a sense of responsibility to function the client. Fear / high-pressure techniques which forces clients into purchasing merchandises that they do non necessitate, albeit under duress, are ethically incorrect and frequently convey about one-off gross revenues. They besides discourage clients from utilizing any other merchandise or service offered by the bank, as there may be the fright that such a merchandise could farther harm them financially.

  1. Corporate Governance Issues

The bank awarded “across the board” salary additions for executives even in the face of worsening profitableness, repute and low growing degrees. The consequence of this is heightened when the lower limit final payment made to redundant staff from the closed subdivisions is brought into position. This wage strategy has been made possible as a consequence of failure of the bank’s corporate administration. Remuneration schemes and policies have been formulated by concentrating on the demands of a little subset of the bank’s stakeholders ( the executives ) at the disbursal of the bulk. As a effect, the bank has earned itself a negative image in the sight of its stakeholders, the media and public.

  1. Low Social Image from the Media

The banking concern is one that is founded on a bedrock of trust and repute. With negative media image associating to the bank’s processes, current and prospective stakeholders will get down to hold a negative perceptual experience of the bank. While this perceptual experience may non be based on facts, it is of import to observe that reputes have been built or marred over the old ages by the perceptual experiences of persons towards organisations [ 3 ] .

  1. Possible Liability from the Proposed Replacement of Senior Executives

The bank could confront possible judicial proceeding from its proposed replacing of executive officers. This could take to reputational discredit particularly in the face of an already negative media image. It could besides hold fiscal effects.

  1. Ineffective Feedback Mechanism

There is small or no bing feedback mechanism or scheme that would hold enabled the bank notice the worsening repute and growing early plenty, before it becomes clearly public cognition and more hard challenge to manage.

Matters TO BE ADDRESSED BY THE BOARD OF DIRECTORS

In visible radiation of the jobs analyzed supra, a figure of issues have to be addressed in order to put the foundation for reconstructing the bank’s ethical criterions and reconstructing stakeholder trust. These include:

  1. Staff that have been rendered excess by the closing of subdivisions should be decently remunerated as a affair of urgency in order to reconstruct the belief of staff in the bank in footings of their public assistance. Some of the closed subdivisions can be strategically reactivated to supply micro insurance and micro nest eggs merchandises, in which disengaged, but efficient staff can be re-engaged. These will non merely avail fiscal services to bing and new clients within such countries, but besides provide new merchandises that can advance the bank’s profitableness and growing.
  2. The salary addition awarded to bank executives needs to be reviewed. Wage should be based on public presentation of the bank and non on a demand to fulfill the executives. An independent assessment for public presentation betterment of the senior executives, by the full bank’s staff will be a positive feedback ; this will finally supply information for the reappraisal of senior executive’s wage or detachment.
  3. The Board needs to reconstruct its wage policies so that wages are based on a balance between the demand to retain a certain cell of staff, their public presentation and the bank’s long term ends.
  4. Staff Awareness and Training:Customer-facing staff of the bank needs to be adequately trained to enable them supply proper feedback to clients particularly in countries where subdivisions have been closed. They besides need to be trained on proper methods of marketing bank merchandises. As mentioned above, the selling attack in selling the new merchandises has to be decently channeled and segmented on clients ‘needs’ and ‘affordability’ standards. Marketing scheme howbeit aggressive, should be client focal point and driven by every sense of corporate duty.

Besides of importance is the edifice of proficient competency in client service forces in other to heighten their professionalism.

  1. The bank should desperately see alternate options of supplying services to its clients that have been affected by the closing of subdivisions. These could include the usage of regional subdivisions to cover a figure of countries, or the debut of correspondence banking through other Bankss.
  2. Code of Conduct and Ethical motives:A documented codification of behavior and moralss in line with the bank’s beliefs should be developed sketching the expected behaviour of staff. This should clearly mirror the positive traditional values of the bank, which clients have hitherto enjoyed.
  3. Ethical Standards of the Bank’s Current Staff:The personal ethical beliefs of the current staff of the bank needs to be assessed in relation to the expected behaviours reflected in the bank’s codification of moralss. This is as concern ethical behaviors are most likely a contemplation of personal ethical behaviors.
  4. The bank’s enlisting procedure: The procedure of enrolling new staff needs to put more focal point on the ethical beliefs and civilization alteration of the prospective campaigners to guarantee that they do non run wholly parallel with the positions, moralss and civilization of the bank.
  5. Introduction of policies on work criterions including effects for transgressing laid-down criterions. Attachment to these criterions should be enforced and monitored by the bank’s internal control.
  6. Customer Enlightenment / Education:As portion of the bank’s policies, the Board should put out guidelines associating to client instruction on merchandises and services in order to guarantee that clients are to the full cognizant of every facet of whatever merchandise or service they are purchasing into.
  7. Renegotiation of Customer Payment Footings for Bank Merchandises:Payment footings should be renegotiated for clients who are already tied with the bank’s merchandises and are confronting challenges in doing payments. This will ease the force per unit area on the clients and better their belief that the bank is concerned about them.
  8. Customer Reward Systems:In order to counterbalance those clients who have already bought into merchandises which they no longer experience they need or can afford, the bank should offer wagess to clients who are able to run into their payment marks in order to promote more clients to make so. A dinner, shopping, vacation, etc verifier can be honoring and promoting to clients, while bettering the bank’s loan/premium recovery and finally profitableness.

PROPOSALS FOR REBUILDING ETHICAL STANDARDS TO RESTORE STAKEHOLDER TRUST

In order to reconstruct ethical criterions and reconstruct trust in the bank, a figure of recommendations are proposed including:

  1. Reappraisal of the Employment Procedure: Before a new employee is recruited into the system, he should be made cognizant of the bank’s ethical stance and civilization. The enlisting procedure should seek to detect if a candidate’s personal moralss is in line with that of the bank and that the on-boarding procedure is limpid, with the ability of doing most employees become in sync with the bank’s ethical behavior and civilization.
  2. Review of Corporate Governance: Employee wage and/or benefit additions should non be arbitrary, but based on facts originating from feedbacks or public presentation assessments. Wage should be tailored in such a manner as to bring forth long term motivational effects. The bank should present portions, portion options and pension rights as portion of the wage bundle.
  3. Corporate Social Duty:The corporate societal duty of the bank to stakeholders ( particularly clients and host communities ) should be enhanced, as this will finally better its media and public evaluations.
  4. Employee Education and Training: This will enable the bank’s staff provide concise, sufficient and elaborate merchandise consciousness pitches to clients, thereby forestalling possible struggle of involvement, and enabling clients make the right determinations.
  5. Employee Motivation: The demand for employee motive can non be over-emphasized, as the current staff detachment will trip disloyalty and non-commitment. The bank should make assorted incentive strategies ( such as household holiday, retirement preparations, etc ) that will farther actuate the staff.
  6. Customer Education: A elaborate merchandise booklet should be produced ( print, electronic mails, bank’s web site, etc ) for each of the bank’s merchandise, this will guarantee that clients are sufficiently provided with equal merchandise information, even when the bank’s selling staff are hasty in explicating the merchandise. These merchandise booklets should hold a limpid FAQ ( often asked inquiries ) subdivision.
  7. Feedback Mechanism: An efficient client feedback has to be implemented, aside the call centre, a ailments desk at each bank subdivision should be activated, and every dealing completed by a client should hold a feedback faux pas. Rather than concentrate merely on calls for debt recovery, the bank should do random calls to understand what and how the clients feel about their services.

RECOMMENDATIONS AND CONCLUSION

The challenges faced by the bank have chiefly being as a consequence of a failure of corporate administration, internal control and hapless ethical values. Professionalism requires that corporations and the persons working in them live by values. Therefore, it is of import that the bank follows the proposals that have been set Forth in this study.

The impact of these proposals should be reviewed quarterly to give room for an appraisal of the bank’s advancement and chances to do amendments if needed. It is of extreme importance that all staff of the bank be carried along in this transmutation procedure as the lone thing better than a great thought is the people who will implement it.

Mentions

Sachdev, A. ( 2014, June 29 ) . “Is Corporate Tax Loophole Unpatriotic? ” ,Chicago Tribune. Retrieved from hypertext transfer protocol: //www.chicagotribune.com

Professionalism, Ethical motives and Regulation ( 2013 ) . London, UK: BPP Learning Media

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Assignment Cover Sheet Version 1

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