Business Ethics Survey – Financial Services industry represents a mature culture

The issue of ethics in South Africa has seen many challenges. Some of these are also relevant to the financial services industry. Various court cases and determinations illustrate ways in which financial advisors acted in an unethical manner. But what is the current state of affairs?

The Ethics Institute (TEI) has just released its 2019 South African Business Ethics Survey (SABES). Although the survey found an increase in unethical behaviour at work (up from 18% in 2009 to 31% in 2019), the number of employees who saw and reported this behaviour also increased – from 48% in 2016 to 55% in 2019.

The core question asked by the survey was what the state of ethics in corporate South Africa is? In the latest survey, 2 253 respondents from several organisations in various industries, including banking, finance, medical services, insurance and business services participated in the survey.

One of the outcomes of the survey was the calculation of an overall risk score. The overall corporate South African Ethical Culture Risk Score is 63 – a score that represents moderate risk and illustrates a developing ethical culture. An analysis of the score per industry reveals some interesting pointers.

The industries with the highest ethical scores are the banking, investment, finance, insurance and medical services industries, scoring between 67 and 72. The financial services industry is therefore definitely doing something right.

The implementation of accountability measures, a commitment to ethics and awareness and rooting out of unethical behaviour are just a few of the actions that the survey identifies as measures towards creating an ethical culture. Many of these are already implemented in the financial services industry.

“South Africa has faced no shortage of governance and auditing scandals in recent years. Improving ethical culture in an organisation, however, is not just down to one thing but requires several interventions working together – from the influence of senior management to having channels of accountability throughout the organisation”, Lameez Omarjee reports on the survey in a FIN24 article.

This may very well be true of the financial services industry, too.

Embedding the fair treatment of customers, TCF, is simply an exercise in creating a culture of ethics in relation to clients. The measurement of TCF is how an organisation lives out this culture, as opposed to complying with a set of rules.

“In SA corporates, ethical culture may be present in some departments within organisations, but it has not yet permeated throughout the entire organisation, said Liezl Groenewald, co-author of the report. The report suggests several measures which can build ethical culture in an organisation.”

1. Ethics accountability and responsibility

“… accountability is not just about punishing those who do wrong, but also to recognise and reinforce ethical behaviour by employees.”

2. Senior management and commitment to ethics

“Senior management must be ‘consistently, audibly and visibly’ demonstrating the organisation’s values, the report read. Senior managers must invest time and resources to build ethical culture and not view it as an afterthought…”

3. Middle management commitment to ethics

“Middle management needs to realise that they are the conduit of the ethics message from senior management to non-managerial employees.”

“Tone at the top can effectively stop at middle-management if they are not included in the journey.”

4. Ethics awareness

“If employees are aware of acceptable and unacceptable organisational behaviour – it would enable them to comply with organisational values…”

“It is imperative for organisations to ensure that employees know what to do when faced with pressure, who to ask for advice and where to report unethical conduct…”

5. Ethical treatment of employees

“Favouritism, nepotism, poor working conditions, unsafe working environments, and the like, are not conducive to job satisfaction,” according to the report. “Satisfied employees are motivated and productive employees are intrinsically driven to live the organisational values and contribute positively to the organisational goals and ethical culture.”

Treating employees fairly is imperative to them embracing the principle when interacting with clients.

Protect whistleblowers

“Among the other factors necessary to improve ethical culture is to ensure that management is trained in handling information from whistle blowers, according the report. Employees fear victimisation and would therefore be more likely to report misconduct if they were confident that their reports will be handled confidentially, the report reads.”

“Confidential handling of reports signals to employees the organisation is committed to its values and ethical standards. In turn, there should be feedback to employees that action is being taken to address concerns, the research suggested.”

Click here to download a copy of the 28-page survey results document.

Click here to listen to an interview with Liezl Groenewald on CapeTalk Radio.

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