Ethical Misconduct in ANZ Bank: Key Findings and Recommendations

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ACCG100
ACCOUNTING IN SOCIETY

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Contents
Introduction......................................................................................................................................3
Part 1: Key findings/recommendations that has been provided in commissioner’s final report of
year 2019.........................................................................................................................................3
2. Ethical Misconduct in ANZ Bank as per Royal Bank Commission Report................................3
Part 3: Role of accounting and reporting in encouraging the ethical business conducts.................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
The present report has been developed in the context of gaining an analysis into the
inquiry held by the Banking Royal Commission during the year 2017-2019. The inquiry has been
carried out for evaluation of the business misconducts in the banking, superannuation and
financial services sector. This has been carried out by evaluation of the commissioner’s report
and outlining the key ethical misconducts and discussing one of them in detail with reference to a
real banking entity that is impacted by the finding of the commissioner’s report.
Part 1: Key findings/recommendations that has been provided in commissioner’s final
report of year 2019
The purpose of report given by Royal Bank Commissioner aims to make enquiry on
conduct of financial services entities that tantamount to misconduct and to check whether the
practices, conduct, business activities and behaviour of these entities fell below the standards and
community expectations. Enquiries by commissioner have led to find four main findings and on
the basis of these findings, various recommendations have been provided (Royal Commission
Volume 2, 2019). Firstly, in almost every case, conduct by the management was the serious issue
as there were issues related to distribution of remuneration to individual or profit for the
individual business. Rewarding scheme such as bonus, commission etc is based on sales and
profit but not on compliance with the law and proper standards. Secondly, commissioner has
noticed that entities and individual have acted in the way they did as they could. There are
defined deals with set terms, from which consumer have to choose. Consumers have little
knowledge of the transactions and they do not have power to make negotiation with the terms.
Third, it was noticed by commissioner that consumers dealt with the financial services entities
through intermediary. There are many cases where intermediary acted on the behalf of service
provider and consumer assumes that person standing between financial entities and client will
provide services in interest of clients but it is not so (Royal Commission Volume 1, 2019).
2. Ethical Misconduct in ANZ Bank as per Royal Bank Commission Report
Ethical Misconduct by ANZ and the Impact on Key Stakeholders
The banking royal commission report has identified ethical misconduct within the
operational activities of the bank ANZ in relation to its remuneration practices. The banking
commission in this context has identified that the executive bonus targets developed by the bank
fostered ethical misconduct as they emphasizes on achieved improved financial outcomes
without considering the outcomes for the consumers. The lack of an effective risk management
strategy within the bank is responsible for the occurrence of ethical misconduct in relation to its
remuneration systems. The inquiry carried out by the Banking commission has revealed
systematic problems within its incentive systems that were developed for rewarding staff for the