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  • Subject Name : Business Ethics

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Case review of Australia Banking Royal Commission


Ethical practice in Business Finance




After the prolonged financial scandals faced by the renowned banks of Australia, like the Commonwealth Bank and National Australia Bank, the Trundall Government after pressures from the Labour Opposition opened a Royal commissions investigation on 14th of December, 2017 into the Banking misconduct, Superannuation and Financial Services Industry. The Royal Commission, headed by Kenneth Madison Hayne, who submitted the report on the 1st of February, 2019 which was then published in the media on 4th of February, 2019.


Case review of Australia Banking Royal Commission

The Australian Royal Commission, which was established to look into any sort of misconduct or ethical breaches that Australia’s major financial institutions have occupied in. Further if these institutions had to undergo any licit proceedings that should be referred to the Commonwealth.

Findings in the research by the Royal Commission

It was found that Australia’s main banks and financial planners were at fault of appalling behavior including bribery deciept, molding documents, incapability to substantiate living expenses of customers, wrongfully insurance sale to the public who could not manage it.

During one of the hearings it was found that the AMP was deceiving the regulators and that the Commonwealth Bank’s financial planners were wrongfully imposing fees to deceased clients. AMP’s chief executive was found to be the first high profile convict by the commission in this regard. The major banks whose names came up were: Commonwealth Bank, National Australia Bank, Westpac and ANZ. As per market value these are four amongst the five major Australian financial companies. Other companies include Aussie Home Loans and AMP.

These banks were following the vertical integration business model. They were aware of the fact that they could make large profits by selling financial advice to their customers. This advice was to acquire their financial items so that it could enjoy a feedback loop with immense profits.

Along with the poor financial advice that was offered breaches were found in conduct and working of the bank employees including fraudulent documentation, processing errors and lending obligations.

The Royal Commission had discovered numerous scandals with the major financial institutions of Australia and the government realized how bad the situation was (Atkins & Charlton, 2019).

However, the commission continued its research for the rest of the year.

The Australian financial institutions were involved in major ethical breaches for a long span. A large portion of the Australian population depended on financial advice from these institutions and they used the situation to their advantage and exploited customers. The seriousness of the situation had led to reforms in the working of the institutions. It calls for more accountability and transparency and better standards of working. The royal commission had discovered drawbacks and failures in the banking system. The question arises that how things got so bad in the once highly trusted banking sector and how the situation could be put back together. Earlier the things were not as complicated until the early 2000s when the banks entered the wealth management business (Atkins & Charlton, 2019).

The government is trying to bring the entire situation under control as soon as possible. Though most of Australia’s banks have been found liable for these breaches the next question that arises is how long it would take for the entire situation to get better. The Commission had been granted some extra time to bring out its initial report in September, 2018. This was a reckoning time for Australia’s banking business which was distracted from its core working. The hope was to bring back the situation to normal as soon as possible for the betterment of the banking sector and people.

image shows Royal Commission

Fig.1 Royal Commission

(Source: Gentilin, 2020)


NAME: Matthew O’ Connell

POSITION: Branch Manager

BANK: Australia Branch

KEY DETAILS: Post the Royal Commission’s publication report of Banking Misconduct, Superannuation and Financial Services Industry, the bank has undertaken several steps for enhanced transparency in the customer lending services. First and foremost, for positive remuneration, the bank has stopped the bonus payments to its offices for their sales performances and instead is rewarding them for bettering our customer base and the bank’s relation with it.

The bank has taken initiative in cross-verifying the data of living expenses produced by the brokers for the loan applicants to avoid conflict of self-interest and overcharging, as done before in the past misconduct. Along with these, dedicated customer relations officers explain the full process of the loan procurement and payment along with the important collateral factors like the series of trailing commissions earned by brokers on prolonged loan payments, for the customer to make an informed and well-advised decision.

The Bank is cooperating with the Australian Banking Association initiative Better Banking to provide further transparency in its procedures and maintaining supervisory guidelines established by both, the Royal Commissions and Australian Securities and Investments Commission or the ASIC to discourage dishonest misconduct and avoid further mishaps like the ones that happened in the past. This is done through independent third-part surveillance and investigation, whose reports are shared to the ASIC and Royal Commissions (Hargovan, 2019).

Enhanced computing systems are placed to cross-reference and crosscheck submitted data to avoid false documents. The quality of the system is regularly checked by government-approved third-party quality assurance certification providers. The consumer lending practices and the guidelines governing them have been updated according to the Royal Commissions report and is being supervised by the Australian banking association.

Most importantly, the officers incriminated with misconduct have been reprimanded and instead of resignation, they have been asked to take responsibility for their actions, setting a positive foundation for promoting proper advisory behavior towards the consumers’ ultimate goodwill. This is in accordance as the report proposed by the Royal commission's commissioner, Haynes, whose belief is that instead of criminally charging a few individuals, inherent flaws in such institutions of this industry should be reviewed and rectified.

Ethical practice in Business Finance

“Ethics” means some upright principles that control a human’s behavior, the doing of some activity. Business ethics refers to executing suitable business strategies and schemes to maintain an inclusive financial system. Business ethics plays a crucial role to maintain and develop profitability. In business and in any financial management, there are a set of normative rules to uphold business practices. Ethical financial practices are extremely important to make a business more gainful for a longer time. Uprightness, honesty, unity, integrity, respecting others, fairness and justice- all are involved in business and finance. Indeed, financial ethics is a subspace of universal ethics. Trust is very important as financial markets will get broken without it (Crane et al., 2019).

Firstly, the ethical standard should be higher and the whole financial system should be incorporated. Secondly, morality should be maintained with consciousness, but it must be remembered that it should not be enforced. And last, of all, all the things involved in finance should be kept simple. The business ethics helps us to find this fact that while trying to succeed in the financial market and worldwide competition, the necessity to fulfill human need and improving quality of life are ignored. People who are involved in business should always be concerned how their economic decisions affect others and also the society. The global economic and financial crisis we are facing in recent times is due to a major deficiency of common ethical standards.

Our recent situation is proving day by day that the feasibility of the market economy is not assured at all. One consequence of violation of ethical standards can be demonstrated by the stock market scam of 1992. The investment professionals should consider the truthfulness of the profession and should treat the client with respect, fairness and honesty, and most importantly placing the client’s interest and need above their own. Business professionals need to remember that it is pivotal to build up trust; it is essential to preserve the interest of clients. Maintaining business ethics is vital for prevailing workability in capital markets all over the world. Any kind of business, small or large, should have the aim to increase the treasury of shareholders as much as possible, in a capitalist society. Small businesses should endeavor to put up to their community and to promote sustainable development and can never deny their social responsibility.

The Great Crash of Wall Street occurred because they forgot the principle of capitalism. However, global business ethics is also influenced by local values which in turn are swayed by culture. It means each professional is affected by their social structure, values, and their childhood experiences because ethics comes from these all. This era of globalization is creating an environment of liberty, unbound activities which can make the scope for economic growth but still some risks, global economic problems are arising because of the loss of ethical practices in management and business. So the role of business ethics is to produce maximum benefits to a business and sustainable global economic development (Werhane, Freeman & Dmytriyev, 2017).


The culture of greed and the concept of earning “profit at any cost” often costs common customers of banks to suffer due to wrong guidance and advice on their financial matters. The government along with the ASIC ( Australian Securities and Investments Commission) spearheaded the investigation into these frauds and scandal, which have resulted in many misconducts of the banks getting exposed, but in order to continue this, there is a need for constant vigilance and updating of regulation to ensure the financial security of the consumers.


Atkins, S., & Charlton, P. (2019). Chartered secretary: The banking royal commission final report: Culture and governance implications. Governance Directions, 71(2), 65.

Crane, A., Matten, D., Glozer, S., & Spence, L. (2019). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.

Gentilin, D. (2020). Inquiry into Australia’s Banking and Finance Industry - Ethical Systems. Retrieved 1 May 2020, from https://www.ethicalsystems.org/inquiry-into-australias-banking-and-finance-industry/

Hargovan, A. (2019). Chartered secretary: Banking royal commission final report: Cultural issues and implications. Governance Directions, 71(3), 128.

Werhane, P. H., Freeman, R. E., & Dmytriyev, S. (Eds.). (2017). Cambridge handbook of research approaches to business ethics and corporate responsibility. Cambridge University Press.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Ethics Assignment Help

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