Critical Evaluation of CBA’s Practices and Financial Decisions as per the CSR Principles

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Principle of Finance

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Contents
Introduction......................................................................................................................................3
Critical Evaluation of CBA’s Practices and Financial Decisions as per the CSR Principles..........3
Importance of Sustainability and Social Responsibility Outcomes for CBA..................................4
Ethical Principles Breached by CBA...............................................................................................4
Discussion of Ethical Violations with Reference to Ethical Theories.............................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
The Commonwealth Bank of Australia (CBA) is a multinational bank involved in
providing various types of financial services that includes retail, business, institutional banking,
funds management, insurance, investment and broking services. It is attributed to be one of the
largest Australian listed companies on the Australian Securities Exchange. CBA’s insurance arm
is CommInsure that was established in the year 2002 and has become one of the largest life
insurers in Australia. CommInsure is actively involved in providing insurance products and
income protection to about 4 million customers with main product offerings of life insurance and
immediate annuities. However, the brand image of CBA was negatively impacted due to the
presence of unethical and illegal practices in its insurance arm. CommInsure insurance policies
were highlighted to be fraudulent as it has provided medical policies that were out of date. The
occurrence of such a scandal in CBA after its money-laundering scandal further negatively
impacted its brand image to a large extent. In this context, the present report aims to critically
evaluate the financial management policies and practices of CBA in respect to their social
responsibility and social outcomes of their actions. The ethical violation of CBA has discussed in
detail in the report in reference to corporate social responsibility principles, ethical codes,
principles and theories.
Critical Evaluation of CBA’s Practices and Financial Decisions as per the CSR Principles
The financial management policies and practices of CBA were heavily criticized after the
identification of the fraudulent activities ion the bank related to money laundering. However, the
latest scandal that occurred in the CommInsure, insurance arm of CBA, has emphasized the need
for CBA to review it financial management policies and practices. It has been ascertained by the
ASIC investigation that CommInsure was involved in selling of the life insurance policies having
outdated medical definitions for major diseases such as heart attack and rheumatoid arthritis. It
has also been identified in the investigation that CommInsure need to make major improvements
in its claim handling processes such as better interaction with the customers and improved
training programs for the claim managers. Therefore, CommInsure was alleged for providing
misleading and deceptive information to its customers and therefore breached ethical norms and
principles. The government has imposed penalties for the bank die to the presence of misconduct