Ethics and Governance Analysis

Running head: ETHICS AND GOVERNANCE 1
Ethics and Governance
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ETHICS AND GOVERNANCE 2
Executive summary
The report is an analysis of the royal commission report on the conduct of financial
service entities. The commission found several instances of misconduct as evidenced in the
Freedom Insurance company which engaged in unethical practices by promoting highly
aggressive sales tactics among its sales agents. The first part of the report identifies one theory of
ethics and how it is evident in the Royal Commission report.

ETHICS AND GOVERNANCE 3
Introduction
The report entails evaluating conduct regarding providers of financial services who may
have indulged in misconduct. The report also goes further to assess whether or not the conduct
and operations of the financial service providers may have gone below the standards and
anticipations of the community (Commonwealth Australia, 2019). The conduct revealed and
analyzed by both the interim and final report revealed the conduct that many companies have
been practicing for many years leading to loss on the side of consumers while providing huge
profit margins on the side of financial companies involved. It has been found that such conduct
breaks the law with relation to the several acts in place as such conduct lacks the kind of
behavior that the society expects of the financial service providers and is contrary to the
definition of deontological ethics.
Part A: Deontology and how it is evident in the report
Deontological ethics is one of the philosophical theories that emphasis on the nexus
between duty and morality regarding people’s actions (University of Texas, 2019).
Deontological ethics considers an action to be morally right based on some traits embedded in
the action itself and not due to the product of the action being regarded as good (Ethical Centre,
2016). Deontological ethics postulate that some acts are morally obligatory irrespective of their
repercussions for human wellbeing. Teleological ethics, on the other hand, asserts that the
primary standard of morality is ultimately the value of what the action drives to surface (BBC,
2014). Deontological theories have been framed as formalistic due to their fundamental principle
that is based on conforming on action to the rule of law.
In almost all the situations observed, the conduct was a matter of concern that was driven
not only for the interest of the firm to make profits but also for individual’s interest to benefit

ETHICS AND GOVERNANCE 4
either from the salaries or from individual’s interest. Provision of efficient services was ranked
the second after business and individual interest. Sales were an essential activity for financial
service entities. The agents mandated to serve clients ended up becoming the sellers, and there
was a mashup of duties in front line services as the advisers changed to become sellers, and the
sellers became the advisors. The interim and final report was crucial as it evaluated how an
individual using the powers bestowed upon him to dispense duties ended up being rewarded for
misconduct. The issue of bonus and commission programs in the financial services industry
measure sales and profits but fail to comply with the set law. The rewards were given to the
employees irrespective of whether the methods used in conducting the sales procedure obeyed
the rule of law a core factor in deontological ethics.
It was against the law when employees in companies acted in the manner they did since
they had power and mandate to act that way due to the freedom available (Commonwealth
Australia, 2019). The companies were responsible for setting the terms employed in the dealings
with the consumers. The customers, on the other hand, had shallow knowledge and had little
understanding of the nature of the transactions making them vulnerable as they lacked the power
to negotiate better terms (Commonwealth Australia, 2019). The customers only had the privilege
of choosing from a wide array of financial services provided by a financial service entity,
however, at times the consumer could make decisions that led to wrong choices, and the
financial service providers failed to inform such consumers of the best options. This was against
the law as it is the mandate of companies to help consumers make well-informed decisions
regarding the choices they pick.
There was also the issue of conflicting interest as customers dealt with the financial
service provider through a third party. In this case, the consumer assumed that the intermediary