Topic 11 Flashcards
the phrase ‘the ends justify the means’ describes what type of normative ethics?
consequentialist ethics
If someone is a stickler for rules and believes they must be followed, regardless of consequences, what is his ethical stance?
deontological (or rules based) stance.
What are the 4 main drivers for the increasing importance of ethical business practices?
- Stakeholders/shareholders – expect higher ethical standards to make
the business more attractive to consumers, provide a competitive edge
and therefore make the business more profitable. - Information transparency – globalisation and the development of
digital technology mean that news and information is easier to find
and quick to appear. Consumers are now able to vent their displeasure
and frustration on social media for all to see – a reputation is easy to
damage but hard to rebuild. Establishing ethical practices and being
seen to carry them out is important, as is making sure commercial
decisions do not impact on the firm’s reputation. - Consumer demand – the nature of the consumer has changed in the
past few decades. While in the past the consumer might expect average
customer service and accept mediocre products and unreasonable
charges, today’s consumer is better informed, has higher expectations
and is more easily able to complain. - Regulation – financial services regulation puts consumer protection
high on the list of priorities but, as mentioned earlier, rules can only
go so far. Implicit in the FCA’s overall approach is that firms must act
ethically – within the spirit as well as the letter of the law.
Give 5 examples of characteristics of ethical behaviour in business
- Transparency – accurately representing facts, providing all relevant
information, not hiding or misrepresenting important information. Transparency leads to higher levels of trust from consumers. - Communication – effective and appropriate communication between
staff and between staff and customers, including communication channels. - Excellence – identify and implement the best ways to provide the highest
standards of products and service to customers, and to constantly
improve through review and innovation. - Equality – treating staff, customers and suppliers fairly and equally,
avoiding preferential treatment or bias. - Respect – for the rights, privacy and dignity of staff and customers.
- Trustworthiness – being truthful and keeping promises and
commitments made to customers, staff and stakeholders. - Responsibility/accountability – recognise and meet the firm’s
responsibilities to staff, customers and stakeholders, and to accept
responsibility for mistakes and put them right. Ensure senior staff are
accountable for their own areas of responsibility and for identifying
and maintaining the firm’s values and standards. - Integrity – basing the business on moral principles and sticking with
what is right, despite other business pressures.
what 5 conduct rules apply to all staff not in an excluded ancillary role in a financial firm?
- act with integrity;
- act with due care, skill and diligence;
- be open and cooperative with the FCA, the PRA and other regulators;
- pay due regard to the interests of customers and treat them fairly;
- observe proper standards of market conduct.
What is the time limit to qualify as a financial adviser after becoming a trainee financial adviser in a firm?
48 months
How many hours of CPD (Continuous Personal Development) must a competent adviser complete in a year and what does it include?
21 hours and it includes:
- seminars;
- lectures;
- conferences;
- courses;
- workshops;
- appropriate e-learning.
Name the 3 parts of the assessment of competence for an investment adviser
- knowledge of the areas and products about which they will be advising;
- appropriate skills required for the role;
- gaining a qualification deemed appropriate by the FCA – such qualifications are at Level 4 on the Regulated Qualifications Framework – equivalent to first year degree level.
Define virtue ethics
virtue ethics considers moral character rather than the type of action or outcome. eg an action would be ethical if it was taken by a virtuous person
Name the 3 broad categories of ethical theory:
- Normative (or prescriptive) ethics looks at the content of moral judgements and standards that assert what is right or wrong.
- Meta-ethics does not consider what actions are good and bad or right and wrong. It looks at the nature of moral judgements, whether there is such a definitive thing as good and bad, and whether morality is ever anything more than personal opinion or feelings, rather than a definitive code that everyone should follow.
- Applied ethics applies ethical principles to real-life situations, and it is the real focus of business ethics.
define values, morals and ethics
Values:
Values could be described as the fundamental beliefs that guide or motivate attitudes or actions, and they help us to judge what is important. Obviously,
there are material values, such as money and property, but values also determine the sort of person we aspire to be – how we treat ourselves and others, and how we fit in with the outside world.
Morals:
Morals represent a set of beliefs about standards of good or bad behaviour, fairness and honesty. As with values, there are individual morals, societal
morals and business morals. Society in general has a set of morals that enable people to live cooperatively in groups, although the morals may vary from
country to country and group to group. Businesses establish the way they wish to conduct their affairs, and those morals may influence the types of business they undertake or the businesses they work with.
Ethics:
There is debate among philosophers as to whether there is a difference between morals and ethics, as the two terms are often used interchangeably.
Those who do see a difference assert that morals are a set of beliefs, while ethics are morals turned into actions – morals are what you say, while ethics are what you do.
Since when has the financial services industry been subject to regulation in the UK?
1986 financial services act
