Corporate Governance and Ethics

Running Head: Corporate Governance and Ethics
Corporate Governance and
Ethics
Report
System04104
4/27/2019

Corporate Governance and Ethics
1
Executive Summary
Banking Royal commission was formed by the Australian Government after a major
fraud detected in the banking and financial organisations. This report has been prepared on
the basis of the final report published by the Banking Royal Commission into misconduct in
the banking and financial service sector. The Banking royal commission published its report
that includes the unethical practices of banks and the financial system. The commission
report stated that these frauds were not possible without the involvement of senior leaders and
executive officers of the organisation. The unethical practices of the banking sector were a
breach of Utilitarian theory that supports those acts that are beneficial for mass and bad for
only a few people. The poor corporate governance and lack of ethical culture in the
organisations are the major causes behind these frauds. The Hayne Report also includes that
if the regulatory body strictly follows the laws and supervise the business operation of the
organisation, these unethical practices can be prevented. However, in the end of this report, a
case evaluation has been added that is based on the Freedom Insurance Group and its
unethical practices to sell insurance policies by outbound calls.

Corporate Governance and Ethics
2
Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Ethical Issues..............................................................................................................................3
Selection of Ethical Theories.....................................................................................................4
Theory that best applied to this Case......................................................................................5
Evaluation of Ethical Issues associated with Freedom Insurance..............................................6
Safeguards against such unethical Practices...........................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

Corporate Governance and Ethics
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Introduction
This report is about the Royal Banking Commission, which is also known as Hayne
Royal Commission. It was formed to investigate the unethical practices of banking and
financial organisations (Atkinson, 2018). The Royal Commission investigates the unethical
practices in Australian financial organisations and published its final report that consists of
various unethical practices and misconducts done by these financial organisation with their
customers (Legg & Speirs, 2019). The present report includes unethical practices of Banks
and explains how some major financial organisation of Australia violates the ethical business
standards that were against the ethical standards that should be maintained in the business.
This paper also examines the role of ethics in promoting integrity and accountability in the
financial and banking sector.
Ethical Issues
The Australian government formed an enquiry commission for investing the banking
and financial fraud and unethical practices after the involvement of AMP Limited in banking
frauds by charging some hidden cost to its customers. AMP was one of the major financial
companies in Australia and New Zealand (Robertson, 2018). AMP was providing
superannuation and investment funds, insurance, and financial advice to other financial and
banking firms. AMP was also involved in distributing loans and opening saving accounts of
people. Apart from this some other major financial institutions of Australia like Westpac
Bank and ANZ were also involved in banking frauds, cheating people by charging hidden
amount, charging fees for no service, showing frauds in allotted funds, represents misleading
information to regulators, and also misuse the investment funds of people (Lumsden, 2019).
These all frauds and unethical practices of banking sector organisation were published by the
Royal Commission in its interim report volume two. These unethical acts of banks and
financial institutions spread a negative sentiment among customers and people destroy the
image of whole banking and the financial sector that was also known as "ethical investing
sector" (William, 2018). The Royal Commission discovered and published frauds, bribery,
cheating, and many other unethical practices of banking and financial institutions in its final
report. However, it is really shocking for people who invest their savings in the bank on trust.
The royal commission also blames the top organisational executives including account
executives for their engagement in misconduct and frauds (McGovern, 2019).