Applying an Ethical Approach Flashcards
How should the board handle ‘self-interest’?
It should set the tone by putting customer interest before self interest.
What is fiduciary responsibility?
Legal/ethical relationship of confidence or trust regarding the management of money or property.
Who is the fiduciary in an agreement?
The bank or trust
Who is the principal in an agreement?
The customer
How can a firm with staff engaged in roles where there is a requirement to build a fiduciary responsibility, reinforce it?
Apply ethical competency tests for staff in those roles.
What does a Tied Agent do?
They sell the goods/services of one provider in exchange for commission.
What should Tied Agents do before entering business?
They should disclose that they don’t evaluate the whole market.
What did the Retail Distribution Review (RDR) do?
It banned many types of commission structures available to Tied Agents.
What did MiFID II do in relation to commissions?
It banned several types of commission in the EU.
What is the risk of non-fixed commissions?
These could encourage firms to offer higher commissions to tied agents in order to attract them and compete against other firms.
What should corporate stakeholders do in relation to ethics?
Observe market and conduct rules and act fairly and with honesty.
What are the role external stakeholders in relation to a firms’ ethics?
They should hold the executive accountable on their ethical stance.
Which kinds of stakeholders does the CISI expect its members to apply the code of conduct to - executive or non executive?
Executive and non-executive
