Contemporary Issues in Business Ethics - PDF
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Added on 2021-06-14
Contemporary Issues in Business Ethics - PDF
Added on 2021-06-14
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CONTEMPORARY BUSINESS ETHICS1NameInstitutionTutorCourseDate of submissionManipulation of children’s accounts by the Commonwealth BankIntroductionThe Commonwealth Bank of Australia (CBA) also commonly referred to as Commbank is amultinational bank of Australia with branches across the United States of America (USA), Asia,United Kingdom, and New Zealand. It is the largest company in Australia as listed on theAustralian Securities Exchange from August 2015 (Joshi, Cahill, and Sidhu, 2010). Its brandsinclude; Commonwealth Securities, Bankwest, ASB Bank in New Zealand, CommonwealthInsurance, and Colonial First State Investments. It offers several financial services such as fundsmanagement, retail, insurance, superannuation, institutional and business banking as well asbroking and investment services. It was founded in 1911 as a government institution and fullyprivatized in the year 1996 (Otchere and Chan, 2003). The Commonwealth Bank has been
CONTEMPORARY BUSINESS ETHICS2expressing several business ethical issues that have been affecting their operations. They rangefrom environmental, information data loss, financial planning, insurance division, moneylaundering, and bank bill rate allegations. This paper, therefore, discusses the recentcontemporary business ethics issue that has been raised against the Commonwealth Bankconcerning the manipulation of children’s accounts and the role of Code of Conduct andCorporate Social Responsibility in organizational operations. The manipulation of children’s accountThe Commonwealth Bank has been in the media for several reasons including both the positiveand negative. The recent issue that has been raised in the press is the manipulation of children’saccounts. As of 20th may, the bank confirmed that there was a fraudulent manipulation ofnumerous bank accounts of children by the retail branch staff (Fairfax Media report, 2018). Thescam was carried out with their goal being earning bonuses as well as meet their targets for theirbenefits. The retail branch staff could either have used their own money or bank funds to activatethe Youthsaver accounts of the children illegitimately. The issue was raised by the Fairfax Mediareport concerning the ethical issues surrounding the bank due to the several manipulations casesreported. The chief executive officer of CBA, Matt Comyn, however, apologized for the problemand termed it a breach of trust. The staff used small deposits as low as 10% to activate theaccounts hence appearing active to improve the incentive compensation of their staff members(Fairfax Media report, 2018). The CBA’s Youthsaver account was established specifically forthe young people where the bank accounts created was designed to encourage as well as boostsaving habits very early in life. The accounts are opened of course with parental consent, andthere are no monthly or deposit account fees required. The management believes that trust is verycrucial in their operations when dealing with the numerous customers. So, such actions were a
CONTEMPORARY BUSINESS ETHICS3big ethical concern as it involved a breach of trust that is guaranteed for every customer that hasopened an account with the bank. The issue arose back in the year 2013, but the top managementimplemented measures aimed at curbing the incidence from occurring again (Sydney MorningHerald, 2018). Unfortunately, the same issue was reported by the Fairfax Media recently and,therefore, confirming that the manipulation cases are not yet over.Breach of trustHaving successful customer relations is vital for a firm’s operations. The success of a business is,however, dependent on a simple concept of trust. With trust between the customers and the firmas well as the employees and employers, it fosters a good working relationship which eventuallyleads to a successful organization (Damodaran, 2009). Building trust is not an easy thing, and ittakes time as well as significant input from the top management of a company. The breaking oftrust also can occur very quickly if the company is not keen on how it carries out its operations.However, if a firm incorporates the three primary stipulated core competencies; transparency,consistency, and service, then its destined for success (Tsoukatos and Mastrojianni, 2010). The CBA has over the years breached the trust it had with the employees due to several scandalsthat arise every year. With the recent misappropriation of funds for the children accounts, thecustomers feel betrayed by the bank. Some people have lamented over the issue calling for thejailing of all the staff involved in the fraud. They think the bank has developed a culture ofdishonesty that breaches the trust code of conduct (Sydney Morning Herald, 2018). Althoughnone of the customers was financially harmed the incidence was a breach of trust whichundermines the confidence the clients, as well as the whole community, has on the bank.Handling of any commercial revenues or money, as well as any operations, the firm requirestotal honesty whether it involves a small or large amount of money. The issue raised a lot of
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