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Ethics in Banking and Finance

Operating according to ethical values, and being able to demonstrate how governance, strategy and decision making has been informed by ethical principles, is an issue which is squarely in the spotlight. Firms do not operate in a vacuum and their licence to operate depends on customers and stakeholders (including, importantly, regulators) being satisfied with their business approach. Building trust through an ethical framework and responsible business outlook is critical to sustainable success as well as to avoiding costly crises.

While engendering trust through an ethical business approach demands an organisational mindset which is focused on achieving the right outcome, irrespective of legal or regulatory demands, complying with the rules and requirements which have been designed to deliver such outcomes is mandatory. Legal, regulatory and societal expectations have been steadily increasing over recent years and a heretofore unseen volume of material now exists to help guide firms in the area of culture, conduct and ethics.

This report, which has been prepared in partnership with UK Finance, is designed to help firms more easily engage with the many and varied sources of those requirements and evaluate whether they are living up to these expectations and the values they have set for themselves. In it we profile issues which are relevant when considering organisational ethics, based around a firm’s leadership, governance, systems and controls; its workforce; its customers and conduct of business; and other stakeholders, in the process bringing together key sources and reference documents.

Download the full Ethics in Banking and Finance report

This introductory video features Stephen Jones (Chief Executive Officer of UK Finance), Clare Woodman (Head of EMEA and CEO, Morgan Stanley & Co. International and UK Finance Board member), Michael Kent (Partner in the Financial Regulation Group and Global Head of Finance & Projects at Linklaters), and Julia Dixon (Partner in the Financial Regulation Group at Linklaters) discussing the importance of ethics and why UK Finance and Linklaters have partnered in the preparation of this resource.

Introduction

Culture, conduct and ethics are words which have come to pepper the regulatory lexicon. The importance of these intangible concepts and “getting it right” has been clearly communicated, with myriad speeches and initiatives in the financial services sector focussing on these issues.

A sound ethical framework is something which can lay the foundations for, and strengthen, both the culture and conduct of an organisation. Meanwhile, whether or not an not an institution operates in accordance with its core values and principles needs to be examined by reference to its culture and conduct on a day-to-day basis. Issues of ethics, culture and conduct are, accordingly, intertwined.

Lawmakers, regulators and society have defined certain minimum expectations and standards of behaviour from the perspective of customer and business outcomes. These are sometimes framed or described as issues of trust, integrity or honesty and firms and individuals operating in the financial services sector must be mindful of these standards as well as the values and principles which they have set for themselves.

Navigating the wealth of materials which exists in relation to ethics, conduct and culture is a monumental task, but one that must be undertaken in order for firms to successfully and responsibly operate their businesses. This resource synthesises the many information points which exist and is structured around four core themes to enable firms to ask challenging questions and check that relevant minimum standards and their own ethical expectations are being met.

 



Key questions for firms

There can be no single definition of “what good looks like” when it comes to ethics. What is ethical has to be assessed in context, taking into account the nature of a firm’s business, its customers and its counterparties.

This resource does not purport to dictate how firms should define their values or operate their businesses. However, it is clear that firms will need to understand drivers of behaviour and decision-making within their organisations if they are ultimately to be successful in delivering their desired ethical, conduct and culture outcomes.

To help firms examine how their organisation conducts its business and how individuals carry out their roles, each theme and sub-section of the report poses questions which firm may find helpful to consider when considering how their approach furthers ethical objectives and contributes to good outcomes.

Leadership, governance, systems and controls

What are the key areas to think about when seeking to embed ethical principles within your firm’s organisational approach and control structure?

Read More Leadership, governance, systems and controls

Workforce

Organisations are shaped by the people who work there. Find out in this section how the approach you take in relation to your workforce can impact the ethical outcomes which your firm wishes to achieve.

Read More Workforce

Customers and conduct of business

Without customers, banks and financial services institutions would not exist. Do you have all the boxes ticked to meet your obligations while growing your business?

Read More Customers and conduct of business

Other stakeholders

What do you have to consider with regards to your external stakeholders when running an ethically sound business?

Read More Other stakeholders