Ethical Issues in Australian Banks Charging Fees for No Service

0
Comparative Business Ethics and Social Responsibility

1
The article posted by The Sydney Morning Herald will be analysed in this essay to identify
the key ethical issues which are raised in the article. The title of the article is
“'Unreasonably delayed': Banks hit again over fees for no service” which was posted on
March 11, 2019. This article was written by Sarah Danckert in which she highlighted the
issue of Australian banks that charged fees on their customers without providing any
services. Danckert (2019) provided that the issue which is raised is whether some of these
cases might be considered as ‘criminal’ offences or not because in some cases the
officers of the banks were aware of these practices still they did not take actions to stop
these practices. Commonwealth Bank (CBA) is a major player in this issue which has
imposed most charges on its customers without providing them any services; however,
other banks such as National Australia Bank (NAB) and AMP are also gaining popularity in
this list (Danckert, 2019). The Australian Securities and Investments Commission (ASIC)
provided that these institutions are taking substantial time in completing their review to
make sure that they work along with government regulators to speed up remediation
programs. Danielle Press, the ASIC commissioner, provided that these reviews are being
unreasonably delayed by these institutes which show their unwillingness to pay back to the
customers (Danckert, 2019). This essay will evaluate the ethical issues raised in this
article and evaluate whether the most ethical decision has been made. This essay will also
apply principles of ethical philosophies in this case and also provides an ethical solution
through ethical decision-making processes.
There are a number of ethical issues which are raised in this article as a result of the
failure of Australian major banks to fulfil their social responsibilities. Social responsibility is
referred to an ethical framework which provides that the corporations and individuals have
an obligation to act for the benefit of society at large (Cheng, Ioannou and Serafeim,
2014). In order to comply with their social responsibilities, companies have to make sure
that they comply with the principles of corporate governance which is defined as a set of
rules and practices which enable organisations in identifying the impact of their operations
in stakeholders and implement policies to make sure that they maintain a balance between
their interests (Claessens and Yurtoglu, 2013). CBA and other major Australian banks
have failed to comply with these guidelines since they imposed charges on their customers
without providing them any services. These banking corporations have also implemented a
corporate social responsibility (CSR) structure which is a self-regulatory model that
enables these companies to become more socially accountable towards itself,
stakeholders and the public.

2
The CSR structure provides that these corporations should focus on prioritising the interest
of their customers above profit maximisation; however, they have not complied with these
policies (Lanis and Richardson 2012). In most times, the banks and their officers were
aware regarding the charges which they were imposing on their customers; however, they
did not stop those operations, and they were not held accountable for such violation as
well. As a corporate citizen, the company owes duties towards its customers, and those
duties were violated because of the illegal operations of these banks (Chau, 2019).
Furthermore, these banking firms are also ‘unnecessarily delaying’ the reviews in order to
pay remediation to their customers which shows the failure of compliance with ethical
leadership principles. Due to a violation of these policies, these corporations have raised
various ethical concerns relating to imposing unnecessary fees on customers, failing to
conduct a review on time and repaying the customers on time as well.
Currently, the most ethical decision has not made in this scenario since the banking
corporations that are involved in this case have not faced any legal consequences, and no
accountability or penalty is imposed on their officers who were aware regarding these
practices. This can be justified by the Kantian ethical philosophy which emphasises on the
duties of parties while deciding the ethical outcome of a scenario. The Deontology
(Kantian) ethical theory provides that parties should not engage in any practices which
result in violating their duties even if those actions have positive consequences (Taylor,
2014). In this case, the banking corporations violated their legal and ethical duties towards
their customers by levying fees on them without providing them any services. They also
violated their duties by failing to quickly repay their customers based on which their actions
are unethical. Another relevant ethical philosophy that applies in this scenario is
Consequentialist or Utilitarianism ethical theory which emphasises on consequences of
actions while determining the morality of a situation. This theory provides that actions
should focus on achieving greater happiness for a maximum number of people to be
considered as ethical (Burnes and By, 2012). The decision taken by Australian banks
imposed high fees on their customers resulted in violating their rights. The companies
have not taken corrective steps to repay these customers which show that they have
violated the principles of this theory and their actions are not considered as ethical.
In order to make an ethical decision, in this case, the steps of ethical decision making
process can be applied. The first step focuses on identifying ethical concern. The
imposition of fees without any service and unnecessarily delaying in paying those dues is
the ethical issues presented in this case (ASIC, 2019). The second step is the collection of