Rot from the top: Aussies slam financial services ethics

By Grace Ormsby

November 13 2019
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Less than one in five Australians has faith that the boards and executives behind our financial services institutions will improve their ethical behaviour.

The Governance Institute of Australia’s Ethics Index for 2019 has revealed that the banking and financial services sector is viewed as the least ethical industry in Australia by virtue of consumer sentiment and perception.

The media, large corporations and government only ranked marginally better in the eyes of Australians.

Investment banks, retail banks, life insurance companies and payday lenders were also individually recognised in the “bottom 10” for ethics on an organisational level.

According to the CEO of Governance Institute of Australia, Megan Motto, “the banking and finance sector continues to suffer from credibility issues following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.”

She indicated that one in two people now rates the sector either “very” or “somewhat” unethical.

Bank senior executives, bank directors and insurance company senior executives were viewed as the least likely to showcase improvements to ethical actions, with more than 50 per cent of respondents indicating they don’t expect any improvement in ethical behaviour showcased by individuals in these positions “to actually occur”.

Directors and senior executives within the insurance company were viewed similarly, with just under one in two respondents again indicating their expectation for no improvement in ethical behaviours.

With low opinions across the board for executives, it should come as no surprise then that Ms Motto said “high executive salaries are seen as the most ethically important issue for the banking and finance sector, with 74 per cent of Australians saying it’s unethical to offer a CEO salary of more than $3 million per annum”.

Fifty-one per cent of respondents said executive salaries are the top issue and influence relating to unethical behaviour in the banking and finance sector.

One in two Australians (50 per cent) said bribery and corruption is also an ethically important issue, while insufficient regulation came in third place, with 49 per cent of survey respondents considering it as one of the top issues for the sector.

Coming in a close fourth, 48 per cent of those surveyed also slammed executive bonuses as a a top influencer of unethical behaviour in the banking and finance sector.

Lack of government action, treatment of customers, poor corporate culture and poor corporate governance were also all flagged as issues.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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