“Australians expect high standards from their financial institutions, but our research suggests that these are far from being met,” the chief executive of the Governance Institute, Steven Burrell, said on Wednesday to mark the release of its latest ethics index.
“The index suggests numerous high profile scandals, and the alarming corporate breaches being revealed on a daily basis by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, are undermining confidence in the sector,” Mr Burrell said.
The banking, finance and insurance sector saw the lowest score across all industries on the ethics index for the third year in a row. Industry super funds are still considered most ethical type of organisation, but also suffered a fall in esteem, while accountants had the highest ethical net score among occupations in the sector.
However, 42 per cent of respondents consider mortgage brokers to be either very, or somewhat, unethical. Funds managers aren’t far behind (37 per cent).
In terms of organisations, pay day lenders are considered the most unethical (68 per cent), with 50 per cent of respondents also considering life insurance companies somewhat or very unethical.
Retail banks didn’t fare so well either. They suffered a fall in net score of 26, with 46 per cent of Australians judging them to be unethical.
“The community’s faith in some of the country’s biggest corporations has been sorely tested, following a turbulent 12 months in Australia’s banking finance and insurance industry,” Mr Burrell said.
“Its net score has dropped dramatically from last year with a score of -15. It has never before scored this badly – 55 per cent of respondents consider the sector unethical and only 28 per cent view it as ethical,” he continued, suggesting the low ratings for life insurance companies and retail banks could be a by-product of the royal commission.
“If corporations like the banks and other financial institutions continue to be exposed for pursuing profit to the detriment of their customers, we can expect confidence in them to drop even further,”Mr Burrell concluded.