CH2-Ethics and Professionalism in Banking

Question 1

What are three common approaches to ethical issues?

Answer 1

1) Consequentialism
2) Deontology
3) Virtue

Question 2

What is consequentialism?

Answer 2

Right decision is the one with the best outcome and least harm.
Disadvantage is that its subjective in determining the positives and negatives

Question 3

What is deontology?

Answer 3

Duty to do the right thing, regardless of personal opinion.
Requires a set of consistent and objective rules for everyone to follow.

Deontology has two basic rules”
1) That which applies to oneself, must apply to all.
2) Cannot use people as a means to an end to preserve respect for people.

Question 4

What is a virtue based ethics approach?

Answer 4

Making decisions that move us towards being the best versions of ourselves. Need to be true to one’s self, willingness to lean from role models to be the best version of ourselves.

Question 5

What is virtue?

Answer 5

Aristotle wrote that “right” sits between two extremes. Courage is between cowardice and foolhardiness, modesty lies between shamelessness and shyness. Ethics is related to our character, and we shape our character by practising virtues until they become habit.

Question 6

To make better ethical decisions what are three resources available?

Answer 6

1) Subject matter experts especially within large organization
2) Peers/Mentors/Leaders to provide diversity of thought through different perspectives
3) Independent guidance like the Employee Assistance Program (EAP)

Question 7

___________________ are the foundation of the Carroll’s Social Responsibility Pyramid

Choose the correct option:
- Ethical Responsibilities
- Legal Responsibilities
- Philanthropic Responsibilities
- Economic Responsibilities

Answer 7

• Economic Responsibilities

Question 8

Consequentialism has 3 main forms, these are:

Choose the correct option:
-Virtue; Metacognition; Ethical Egoism
-Ethical Altruism; Utilitarianism; Virtue
-Ethical Egoism; Ethical Altruism; Utilitarianism
-Ethical Altruism; Utilitarianism; Metacognition

Answer 8

-Ethical Egoism; Ethical Altruism; Utilitarianism

Question 9

When we think about the influences on decision-making, what is framing?

Which option is correct?
-To make an easy decision, but not necessarily the best possible decision
-To conclude that the best solution is to make no decision
-To make a slow, deliberate decision over a fast, intuitive decision
-To remove the ‘noise’ from an issue to allow us to see the problem for what it is

Answer 9

To remove the ‘noise’ from an issue to allow us to see the problem for what it is

Question 10

What is ethics?

Answer 10

Practice of understanding how people make decisions to answer the question “What should I do?”
Derives from the free words “ethikos” and “ethos”, associated to the idea of “character” and “customs”.

Question 11

What are values?

Answer 11

Values are the beliefs that motivate you to live your life in a way. They determine what you see as ‘good’ and what is ‘right’. Values determine how you view the world, how the world ought to be and who you think should be in the world.

Question 12

What is an ethical dilemma?

Answer 12

An ethical dilemma is when you need to make a decision that forces a trade-off between your values.

Question 13

What are examples of values?

Answer 13

Loyalty, Freedom, Integrity, Fairness, Dignity, Autonomy, Fulfilment, Caring for others or the environment, Tenacity, Pleasure, Courage, Justice, Honesty, Respect, Equality, Happiness, Peace, Harmony, Power, Security

Question 14

What is the difference between ethics and morals?

Answer 14

Many ethicists consider the terms interchangeable.
Morals can be seen as more personal and influenced by traditions such as religious, cultural, societal or family.
Ethics is about the standards of “right and wrong” in a community or social setting.

Question 15

Why is ethics relevant to banking?

Answer 15

Banking finances the bigger picture and understanding what is important for the world at a local, country and global level influences where the bank directs its attention.

For example at present a world ethical issue is on UN Sustainable Development Goals.

Question 16

What is the difference between written and unwritten ethics?

Answer 16

Written ethics is where there is a clear consensus on an ethically right decision. This could be in the form of laws or policies and code of conduct. Sometimes written ethics can be too broad or too detailed.

Unwritten ethics generally reflect an ‘ethical norm’ which generally doesn’t have a clear consensus on definition.

Question 17

What is moral absolutism?

Answer 17

Its when people assert that there are certain universal moral principles that all may be judged. Once size fits all.

Question 18

What is moral relativism?

Answer 18

Asserts that there isn’t on right answer to any ethical question because there is no universal or absolute set of moral principles that applies to all.

Question 19

Consequentialism has 3 main forms, these are:

Which is the correct option:
-Virtue; Metacognition; Ethical Egoism
-Ethical Altruism; Utilitarianism; Virtue
-Ethical Egoism; Ethical Altruism; Utilitarianism
-Ethical Altruism; Utilitarianism; Metacognition

Answer 19

-Ethical Egoism; Ethical Altruism; Utilitarianism

Question 20

The ISO 26000:2010
a) helps businesses and organisations translate social responsibility principles into effective actions
b) outlines clear requirements for how businesses and organisations should operate
c) is aimed at all types of organisations regardless of their activity, size or location
d) outlines core subjects for organisations to consider

Which of the options is correct:
(a) and (b)
(a), (b) and (c)
(a), (c) and (d)
all of the above

Answer 20

(a), (c) and (d)

Question 21

“The Code of Conduct clearly sets out what a member or employee can and cannot do. There is little room for misunderstanding.” Refers to what approach to a code of conduct?

Which is the correct option?
-Principles-based approach
-Rules-based approach
-Ethics-based approach
-Conduct-based approach

Answer 21

-Rules-based approach. Because it sets out what a member or employee can and cannot do.

Question 22

In Step Two - Facts of the five-step process for ethical dilemmas, you must ask yourself which of the following questions?

Which option is correct?
-Thinking about the issue, what are the verifiable facts? What is based on assumptions?
-Who are the relevant stakeholders and what are their interests?
-Which option has the best consequences?
-Am I prepared to explain the decision-making process to stakeholders?

Answer 22

-Who are the relevant stakeholders and what are their interests?

Question 23

All FINSIA members are expected to uphold the values and comply with the standards of conduct set out in FINSIA’s Code of Conduct. What are FINSIA’s values?

Which option is correct?
-Integrity, Professionalism, Fairness, Respect
-Integrity, Professionalism, Objectivity, Respect
-Integrity, Professionalism, Fairness, Responsibility
-Integrity, Professionalism, Objectivity, Responsibility

Answer 23

-Integrity, Professionalism, Objectivity, Respect

Question 24

What is a profession?

Answer 24

A disciplined group of individuals who adhere to ethical standards. Group possesses special knowledge and skills in a widely recognised body of learning, education and training at a high level and recognised by the public.

Question 25

What is a professional?

Answer 25

A member of a profession. Governed by a code of ethics and has professed a commitment to the competence, integrity, morality, altruism and promotion of the public good within their expert domain. Accountable to those they serve and to society.

Question 26

Codes of ethics can be rules-based or principles-based. How would you describe them?

Answer 26

Rules based is prescriptive with consequences for breaching the code. Motivators for adherence would be duty-base ethics and consequentialist ethics. Disadvantage is that its hard to write a rule to cover every situation.
Principles based presents a set of broad, high level principles that all members comply. It can apply more broadly and works well for professionals who must take responsibility and exercise professional judgement.

Question 27

What are examples of Industry Based Codes of Conduct?

Answer 27

• FINSIA Code of Conduct
• Banking Code of Practice
• Customer Owned Banking Code of Practice
• AFMA Code of Conduct
• General Insurance Code of Practice
• Insurance Brokers Code of Practice

Question 28

What are the five steps?

Answer 28

1) Recognise, the ethical issue, being able to define issue in terms of value or ethical tensions. Identify verifiable facts, versus ones based on assumptions or making judgements.
2) Facts, gather the facts and seperate from the noise
3) Discuss, use different ethical approaches to help make the best ethical decision
4) Act, test the outcome by being able to explain the outcome to stakeholders
5) Review, what did you learn from this process.

Question 29

What is Step1: Recognize?

Answer 29

Most critical step, recognising there is an ethical dilemma that requires resolution by defining the issue.
Need to collect all verifiable facts, identify items that are intuition or assumption based. Identify if there are any value judgements changing the the interpretation of the facts.

Question 30

What is Step2: Facts?

Answer 30

Look a the facts of the situation and all available options.
Identify all key stakeholders and their interests in the situation.
Taking into account the body of facts, challenge these facts against a broad range of possible actions such as:
- legal, regulatory or policy positions on the issue
- Profession standards and codes that apply

Question 31

What is Step3: Discuss?

Answer 31

Engage with others to seek opinions and feedback.
Test options to determine which is better.
Re-adjust or re-think as necessary.

Question 32

What is metacognition?

Answer 32

Thinking about thinking. A practical capability that needs to be practised in order to build experience and knowledge to carry forward.

Question 33

What is Step4: Act?

Answer 33

Implement the most appropriate course of action.
Remain open to feedback.
Be prepared to explain the decision and decision making process.

Question 34

What is Step5: Review

Answer 34

Reflect on the decision-making process, build experience and knowledge, share with others.

Question 35

What are six key Whistleblowing Principles?

Answer 35

1) Bank executives need to demonstrate strong and visible leadership
2) Policies musta allow disclosures on a range of issues from a range of people associated with the bank, not just employees.
3) Banks provide clear guidelines on reporting and investigation
4) Banks provide support and protections for whistleblowers
5) Whistleblowing program is known, accessible and training provided
6) Whistleblowing program is monitored for awareness and effectiveness.

Question 36

What is the name of the Royal Commission into Misconduct in the Banking Superannuation and Financial Services Industry?

Answer 36

Hayne Royal Commission of 2018

Question 37

What were six key principles from the Hayne Royal Commission?

Answer 37

1) Obey the Law
2) Do not mislead or deceive
3) Act fairly
4) Provide services that are fit for purpose
5) Deliver services with reasonable care and skill
6) When acting for another, act in the best interest of that other

Question 38

Data is so important in the operation of a bank, however in doing so that act of data analysis has ethical implications. What are primary ethical concepts for data analysis?

Answer 38

Privacy and consent

Question 39

When thinking about decision making algorithms what are two key concepts when determining who is responsible for bad or faulty decisions?

Answer 39

Moral agent - A ‘being’ who has the ability to discern right from wrong, make considered judgements based on profesional experience or seek help if needed. Clearly, this role can only be performed by a human.

Moral responsibility - Addresses the scenario where an algorithm makes decisions causing harm by assigning moral responsibility to those who:
1) Allowed it to take place due to their actions or inaction
2) Intentionally brought about the effects or could foresee them. Example is a programmer who designed that algorithm causing harm.
3) Impact effect is morally important

Question 40

What are two essential elements to build a machine learning algorithm?

Answer 40

1) Historical data to process for the algorithm to learn.
2) Definition of success

Question 41

What are the five threats to professionalism?

Answer 41

1) Self-interest - Judgement is influenced by personal factors
2) Self-review -???
3) Advocacy - Alignment to a customer/employer can compromise professional judgement.
4) Familiarity - Long or close relationships can compromise professional judgement.
5) Intimidation - Pressures or perceived pressures to compromise professional judgement.

Question 42

What are six safeguards to protect professionalism?

Answer 42

1) Minimum education and training requirements
2) Continuous professional development
3) Adherence to corporate governance
4) Abiding by industry professional standards
5) Monitoring and disciplinary procedures for non-conformance.
6) External review by third party

Question 43

Starting from top to bottom, what are the four layers of the pyramid of social responsibility

Answer 43

Philanthropic (top), Ethical, Legal, Economic (bottom)

Question 44

What is ISO 26000 - Social Responsibility?

Answer 44

International standard that provides guidance as opposed to requirements on social responsibility.

Question 45

What are seven influences on decision making?

Answer 45

1) Intuition - Risk of confirmation biases as we are using our own judgement to fill gaps or make guesses.
2) Fast and slow thinking -
3) Expediency - Easy decisions rather than the best possible decision
4) Do Nothing -
5) Framing - Remove the noise to make better decisions.
6) Group Conformity - Follow the group think
7) Not Thinking - Do what has been done before, or what everyone else is doing.