Chapter Eleven: Ethics and Professional Standards

Question 1

What are the five developments in the the new regulatory framework from an ethical perspective?

Answer 1

Emphasis on the responsibilities of senior executives and accountability of individuals, including development and embedding of the firms culture and standards.

New standards of conduct for senior executives, including the assessment of competence, knowledge and experience to abide by standards.

Emphasis on the importance of integrity and due skill, care and diligence.

Delegation of responsibilities and oversight.

Ensure the independence, integrity and effectiveness of whistleblowing procedures.

Question 2

What professional standards did RDR promote?

Answer 2

Firms to operate by a set of ethical standards.

A commitment to professional bodies.

Embedding the ethical culture across its business.

Question 3

What are the four components of a firms ethical culture as set by the regulator?

Answer 3

Leaderships
Practices
Narratives
Capabilities

Question 4

What interventions has the regulator guided firms to consider to move towards a more ethical culture?

Answer 4

Influencing the composition of management.
Influencing incentives for good behaviour.
Requiring high standards of effective risk management.
Influencing the training and competence regime.
Deterring poor behaviour.

Question 5

How could an ethics framework within a firm be summarised?

Answer 5

Commitment - statement of values/code.
Leadership - role played by managers.
Operational - policies, procedures, toolkits.
Oversight - monitoring and review.

Question 6

What five key steps does leadership on ethics rely?

Answer 6

1. Understanding the language of ethics.
2. Craft a clear ethical vision.
3. Be good at shaping the way people make decisions.
4. Remove hurdles that get in the way of making ethical decisions.
5. Set an example when it comes to ethical behaviour.

Question 7

What process elements might be included within oversight and governance of ethics within a firm?

Answer 7

Governance - structure and management.
Risk management - risks exposed to.
Compliance - is the business conforming to standards.
Internal audit - independent check of all elements.

Question 8

What are the six outcomes that the regulator wants firms to achieve?

Answer 8

1. Consumers confident that fair treatment is central to corporate culture.
2. Products and services designed to meet the needs of customer groups.
3. Customers provided with clear information and kept informed
4. Advice received is suitable and accounts for circumstances.
5. Products perform as expected and of an acceptable standard.
6. No unreasonable post sale barriers.

Question 9

What are the twelve practical steps to complete a CSR programme?

Answer 9

1. ID stakeholders.
2. Prioritise them.
3. Establish key issues to them.
4. Understand how issues influence your business.
5. Understand where you stand on the issues.
6. Estimate where your stakeholders expect you to be on key issues and how this compares with the present.
7. Understand the level of resources.
8. Decide how to use resources.
9. Implement and monitor.
10. Communicate regularly on progress.
11. Have someone check your CSR programme is working as you would expect.
12. Tell people how you have improved as a result of CSR.