Whether it’s a general discussion about consumers’ increasing trust of business and social networks over institutions, or a specific focus on the interrelationship between corporate culture and professional conduct, commentary about ethics is everywhere.

In a recent speech, ASIC Commissioner John Price said:

“Culture is at the heart of how an organisation and its staff think and behave. It is an issue that companies themselves must address. But as the corporate regulator, we see the very real impact of poor culture through misconduct, scandals and poor outcomes for investors and consumers.

“Companies should also be interested in culture because many studies have found that good culture is good for business and generating long-term shareholder value. Good culture enhances brand loyalty and bolsters reputation, which has a very real financial impact.”

ASIC’s work on conduct and culture is ongoing, much of which stems from s912A General obligations of the Corporations Act 2001 (Cth), especially s912A(1)(a), which obligates Australian Financial Services licensees to “do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly”.

ASIC’s regulatory guidance on general obligations and sector-specific activity reinforce this message. ASIC also has oversight of the bodies approved to monitor financial adviser compliance with the FASEA Code of Ethics.

The Banking Executive Accountability Regime (BEAR), set out in Part IIAA of the Banking Act 1959 (Cth), establishes accountability obligations for authorised deposit-taking institutions (ADIs) and their senior executives and directors. The regime also establishes deferred remuneration, key personnel and notification obligations for ADIs. Similar rules for senior leader accountability are proposed or in place in other markets, including the UK, Singapore and Hong Kong. The Laker report arising from the Prudential Inquiry into the Commonwealth Bank of Australia (CBA) is also worth reading.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is likely to trigger further scrutiny of the industry. When the interim report was released, Commissioner Hayne said it was:

“…a frank and scathing assessment of the culture, conduct and compliance of our financial system. Australians expect and deserve better.

“Our banks have failed in many ways. Failed customer, failed to obey the law and failed to meet community standards. And all of these failures are totally unacceptable.”

While not all regular inputs affect every sector of the industry, it is worthwhile following industry developments broadly, so your organisation can glean areas of practice coming under the greatest scrutiny and mitigate associated risks to your business from the perspective of regulator, employee, customer and community standards.


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