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Ethics: Bankers Must Be Better Than Others
Ethics is a leading news item. Fueled by Enron, the stories just keep coming. None of the stories complement Enron or the people who made and reviewed Enron's decisions. In fact, if you want to insult someone's business ethics or morality, just compare them to Enron. It is the new term for bad guy.
Financial institutions are different - and for good reasons. Financial institutions rely on their reputation (and of course, that handy government deposit insurance.) Consumers looking for a financial institution are looking for a place where they feel safe - safe with their money, safe with their privacy, and safe with their reputation. Yes, consumers want good banking products. Yes, consumers want fairly priced banking products. But they also want more. Fundamentally, financial institutions sell much more than their services. They sell their good reputation. Customers want a financial institution that is more than convenient. They want one they can trust.
Trust is the institution's most important product. How do we inspire trust? How do we maintain it? Through honesty and consistently ethical behavior. Yes, this means that bankers must be better than oil companies. It means that bankers have to work at being ethical. It means that bankers should be in front of the pack when it comes to ethics.
That's why financial institutions should always have a code of ethics. It is why that code of ethics should be strong, clear, and specific. It is why when someone comes to work in a financial institution they understand that they now work in a special place with special responsibilities. They should realize that they are held to a higher standard.
Yes, bankers are better than others. But we do so much moaning about what it takes to be better that we come off sounding like sour grapes. We may be looking at the wrong side of things. What we should be looking at - with pride - are the high business and ethics standards followed by chartered and insured deposit institutions. Financial institutions should be touting what wonderful places they are.
Ethics is more than the document that codifies the institution's ethics. It is more than the expected behavior of staff. The institution's ethics should be reflected in everything - including products and service decisions. Ethics is what the organization takes into account when making decisions. Ethics influences choices and decisions beyond what gifts to accept.
A genuine ethics code should be reflected in how the institution makes decisions and in what decisions the institution makes. A genuinely ethical corporation knows the difference between fee income to fatten up the bottom line and fee income to enable the institution to provide better service. A genuinely ethical corporation offers products that its customers want and need, not simply the products that are most profitable.
When consumer protection laws, also known as regulatory burden, are necessary to ensure that financial institutions provide fair and ethical services, the financial institutions should hear a larger message. When Truth in Savings was enacted, it meant more than providing disclosures to deposit customers. It also meant that decisions made by some institutions were inappropriate - if not downright unethical. Decisions such as the now infamous decision to pay interest only on the investable balance were behind that legislation. CRA was prompted into enactment by decisions to lend only outside of the immediate market area.
Now the hot term is unfair and deceptive trade practices. This is simply another term for unethical behavior. When the regulators get concerned about unfair or deceptive trade practices, as they are now, the industry should be hearing a message. It is time to sit up and pay attention to ethics!
Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 6, 5/02
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