Financial and Banking Service Report 2022

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Name:
Course
Professor’s name
University name
City, State
Date of submission

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Table of Contents
Introduction..............................................................................................................................2
Issue of “Financial Advice” from a culture, governance and remuneration point of view
....................................................................................................................................................3
Identify and assess the effects on the stakeholders affected by this issue using Carroll
and Buchholtz’s........................................................................................................................5
Include an Analysis of what the financial institutions investigated reported in their ASX
Principles and Recommendations during the years before the Royal Commission..........6
Provide an assessment of diversity and inclusion of the boards investigated.....................9
Provide an overall ethical analysis using Normative Theories of Ethics, and
sustainability approaches......................................................................................................11
References...............................................................................................................................13

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Introduction
The main task of the commission has been to inquire and report on the conduct of
financial and banking service providers and whether some of the conducts might have led to
misconduct. The commission also looks at whether the practices, conduct and behavior of
these service providers fell below community expectations and standards. The report shows,
identifies and describes the conduct of the entities that have happened over a long period of
time which has led to substantial loss to their clients but leading to an increased profit for the
entities involved (ArAs, 2016). However, if the law has not been broken, the entities involved
has fallen short of the expectations of the customers and the kind of standards and behavior
that the community expects from entities. The final report shows the issues, causes, responses
and recommendations to the issues of misconduct in the financial service entities.
Issue of “Financial Advice” from a culture, governance and remuneration point of view
The last decade has seen an increase in the financial advice sought by Australian. This
has also seen an increase and growth in the financial advice industry. According to the report,
as at 1st April 2018, the number of financial advisors were 25,386 compared to 13, 188
financial advisors in August 20018. This is an increase of 41% in the number of financial
advisors. According to the commission, the productivity of the sector in 2015/2016 was
estimated to be $ 4.6 billion. There were issues that emerged in connection with the advice
which include; fee for no service, where financial advisors charged fees when there was no
service given to the customer. The second issue was that, the client was given poor customer
advice that left them worse off than they were. Lastly the third issue is ineffective and
fragmented disciplinary system given to financial advisers.

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The issues raised have their roots in the financial service history. It is impossible to
understand the current issue regarding financial advisory without understanding the history of
the financial advisers. From the point of view of the subject of consultation - subject
classification; from the point of view of the method of consultation - methodological
classification (ElGammal, et al 2018).
Subject classification is more common, because it is more understandable to
consumers of consulting services. In accordance with it, consulting services are qualified
depending on the sections (elements) of management to which they are directed: general
management, financial management, production management, etc.As for the methodological
classification, it is professionally oriented to the consultants themselves, as they qualify them
depending on the working methods. In accordance with this classification, expert1, process
and training counseling are distinguished.
It should also be noted that the classifications published by national and international
associations of consultants often combine subject-specific and methodological approaches,
however, focusing more on the former. In addition, they include in the list of consulting
services and other professional services. An example of such a "synthetic" approach is given
in table. This classification includes, on the one hand (subject-specific), such services as
information technology, industrial engineering, management training (training), public
relations, etc., which make up professional services, and on the other hand, these types
counseling, like training consulting, i.e. counseling method.
Types of consulting services according to the classification of the Australian directory of
management consultants

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1.0 General management
1.01 determination of the effectiveness of the management system
1.02 business evaluation
1.03 innovation management
1.04 determination of competitiveness / market research
1.05 diversification or the formation of a new business
General management advice, i.e. assistance in solving problems associated with the very
existence of the object of counseling and the prospects for its development. Consultants deal
with issues such as assessing the state of the organization as a whole and characterizing the
external environment for it, determining the goals and value system of the organization,
developing a development strategy, forecasting, organizing branches and new firms,
changing the form of ownership or composition of owners, acquiring property, shares or
shares , improvement of organizational structures, etc.
There are three main cases when consultants consider problems of general
management:Firstly, during management research. Most management consultants have
established practice: before proposing possible solutions to any specialized problem, it is
necessary to conduct a brief review and study of the organization as a whole; secondly,
during studies of specific functional areas of management, when it turns out that certain
changes are necessary in the overall management structure, i.e. the consultant must solve the
general managerial problems that underlie the solution of particular problems; thirdly, during
the solution of tasks related to one or more issues of general management. The solution of
these issues can take the form of extensive research, rather than brief reports, as in the

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diagnosis, especially if these are problems of the highest level of leadership associated with
the general course of organization management. Implementation of such projects may require
a large amount of time (for example, it may take six to nine months to develop a development
strategy for a new company (Filatotchev, and Stahl, 2015).
Identify and assess the effects on the stakeholders affected by this issue using Carroll
and Buchholtz’s
Consumers are making large purchases on white goods, motor vehicles and furniture
bso as to pay for the product. Application for credit is usually made at the point of sale. It is
not done at the lenders promises. The person that the consumer deals with is not subjects to
the NCCP Act. Retail dealers like any other car dealers are not entitled to act holding an
ACL. They have offered loans to their consumers to be provided by the lenders in the
financial institution. The other name given to the retail dealers is vendor introducers. The
case studies by the commission showed the three effects of stakeholders affecting the process.
The effects include: the use of the flex commission on stakeholders, the lenders
capitalize on the insurance cost in the amount lent and lenders relying on retail dealers who
provide accurate information about the financial information of the borrower.
The flex commissions – under this kind of arrangement, the lender fixes a fixed rate in
interest that is charged under the loan agreement. If the dealer could purposely persuade the
dealer and the borrower to pay an increased rate of interest, the dealer may receive a much
bigger part of the payable interest which is over and above the base rate. Many borrowers
know nothing before the arrangements. The dealer’s interest is to secure the highest rate
possible for profit maximization (Hong, Li, and Minor, 2016).

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Include an Analysis of what the financial institutions investigated reported in their ASX
Principles and Recommendations during the years before the Royal Commission.
When consulting on general management, consultants face two main problems:
developing a decision-making mechanism and choosing a leadership style. The presence of
the first problem may mean that in the client organization there are forms of decision-making
that lead to negative consequences. For example, excessive centralization of operational
decisions makes the company inflexible, slowly responding to changes in market
opportunities (DeMartino, and McCloskey, 2016). Financial management consultants provide
assistance in solving the following main tasks: 1) search for sources of financial resources; 2)
assessment and improvement of the current financial performance of the organization; 3)
strengthening the financial position of the organization for the future. They deal with issues
of financial planning and control, taxation, accounting, placement of shares and shares in the
market, credit, insurance, profit and cost, insolvency, etc.
The first of these is the principle of personnel selection. In this case, the consultants
try to prepare a description of the "ideal" performer who has a certain professional training,
qualifications, experience that are required to perform this work (Jain, and Jamali, 2016).
Based on this, methods for evaluating, selecting and arranging staff are being developed. The
main recruitment methods are testing and interviewing.
The corporate culture of the organization is its intangible asset, which manifests itself
implicitly, but nevertheless has a significant impact on labor and business relations, the
quality of work of employees and, in general, the state of the organizational system. In
general terms, the concept of "culture" denotes the universal relationship of a person to the
world through which a person is aware and creates both the external and his internal world.
Corporate (organizational) culture - a set of models of interpersonal, intrapersonal social

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relations, staff relations to the material and intangible values of the organization, to work, as
well as behaviors that are created by the organization in the process of adapting to the
external environment and are accepted by most members of the organization(Tran, 2019).
According to the organization’s intellectual capital management concept, corporate culture is
part of:
- financial capital, as it manifests itself in the worldview, principles, attitudes, values, rules
of conduct of each employee of the organization, considered as a person;
- organizational capital, as in a formalized form it regulates the behavior of employees, their
attitude to work, to each other, material values, to the organization as a whole - corporations;
- market capital, as it determines the nature of relations with market entities, the degree of
their productivity, primarily relations with consumers.
Organizational culture manifests itself at various hierarchical levels: individual, group,
corporate.
In modern conditions of Australia, corporate culture is one of the organizational
problems that need to be addressed. There are a number of reasons for this:
1. A small history of market relations in Australia, the absence of generally accepted
traditions of doing business, rules of business relations.
2. The criminal nature of the formation of Australian business, the formation of property,
competition.

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3. Negative traits of the Australian mentality, such as a low level of discipline, sloppiness,
non-obligation, discrepancy between words and deeds, lack of initiative and humility,
violation of ethical standards of behavior both towards one's subordinates and in relations
with colleagues, profanity and drunkenness.
You can determine the following relationship between the quality of work of the
organization’s personnel and a group of factors: That is, culture, along with other
components, affects the quality of work and, accordingly, the quality of the result.In studies,
it was noted that in the unstable conditions of the world environment, the issue of the stability
of the existence and prosperity of countries in the long term becomes relevant. "The country
may be rich today, but what will happen to it tomorrow?" asks the question and then answers
that only the formation of intellectual capital ensures the future competitiveness of the
country, its readiness for sustainable growth, which is based on quality and innovation
(Landry, Bernardi, and Bosco, 2016). At the same time, he points to the importance of the
cultural component of intellectual capital and, in particular, its certain aspects: openness and
accessibility of education and the information environment, willingness to take on innovative
risks and the ability to develop continuously. It should be added that the cultural component
that includes relations between people, financial relations to material and non-material values
created by other people, to its history is no less important.
The concept of culture is comprehensive, but the degree of its influence on the quality
of life, labor results, well-being, and development prospects is very poorly understood by a
person, which requires the formation of an organizational culture and its management system.
The main problem in this case is that the characteristics of organizational culture are largely
determined by the mentality of society, taking into account its historical perspective and the

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current socio-economic situation. A systematic review of the concept of "organizational
culture" allows you to highlight its types, which are independent objects of management:
Provide an assessment of diversity and inclusion of the boards investigated.
The law in my view 182 should be amended so as to what breach of an enforceable
provision will and if it will constitute a breach of law. The law should also be amended to
provide remedies from such breaches. The remedies should be modelled on the consumer and
competition (Act Pozgar, 2019). The process of identifying and enforcing an enforceable
code of provision will proceed in four steps.
1. The industry should identify the laws, guidelines and provisions that govern the
contract terms between the financial advisers and customers or the guarantor.
2. The industry should also seek the ASICs approval of the provisions, laws and
guidelines mentioned,
3. ASIC should have a review of the guidelines and provisions put forth by the industry
4. When the provisions are approved by ASIC, the enforceable code provisions will be
enforceable by the statute.
After the steps, the customer will be able to act or enforce for any breaches in the
provisions through certain mechanisms such as internal and external dispute resolution
mechanisms. This may include settling the disputes through the courts. The corporations Act
is a preferable avenue because it already have ASICs approval code power. The royal
commission into misconduct, superannuation and conduct of financial service industry is
good because it creates a system that is enforceable and don’t interfere with the existing
ASICs rule (Rodriguez-Fernandez, 2016).

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The industry should continue to be given an option to seek ASIC approval for its codes
because it has the customer’s confidence. The ASICs power to approve codes of conduct
extends to the APRA regulations and institutions with ACL holders. ASICs approved code of
conduct in the industry may include enforceable code provisions with respect to
contravention of breach of law. The model may also supplement rather than derogate from
the external and internal existing mechanisms required that are provided by the relevant
provisions (Henderson, Peirson, Herbohn, and Howieson, 2015).
The model is good because it shows something exists beyond the provisions. The
experience shows that there are systemic issues that are identified by the office of the
ombudsman or have been revealed in the course of determining disputes of individual’s
financial institutions and their clients. In the process of determining disputes, the report has
not always resolved in a way that encourages future compliance with norms. Some of the
entities have disagreed with conclusions reached by external dispute resolution bodies. This
is as a result of persisting in some practice that have been criticized. The problem with this
kind is likely to be reduced or eliminated if breaches in contravention are made to be relevant
(Scherer, et al,2016).
The fundamental and primary responsibility for financial service industry misconduct lies
with the entity concerned that control and manages them through effective leadership,
appropriate corporate culture and good governance. Corporate culture, good governance and
remuneration are closely related. Supervision must be extended from financial risk to non-
financial risks and this requires the attention of governance, culture and remuneration.

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Provide an overall ethical analysis using Normative Theories of Ethics, and
sustainability approaches
In leading countries, the society has already appreciated the importance of ethical
regulation of ongoing economic processes, at all levels - from the level of an individual
organization to the national - there is a ramified ethical infrastructure, the core of which are
ethical committees (Pilaj, 2017). These committees work in all spheres of economic and
social life. Their work is led by directors and administrators of ethical issues, who are a kind
of “arbitrators” in solving complex ethical dilemmas. It should be noted that Western
business has already come to recognize the importance of the work of ethical committees,
including to increase the sustainability and profitability of their activities. "I do not think that
ethical behavior is incompatible with profitability. I don’t remember the situation when I did
wrong, and we earned a lot of money, and vice versa, we suffered from the right actions. This
opinion is not a special case, but an already established tradition, the whole point of which is
that the costs of creating and maintaining an ethical infrastructure easily pay off in the market
when interacting with contractors who want to work with a reliable partner. And reliability in
the eyes of the business community is achieved through ethical and consistent actions in
carrying out business.
Professional ethics should come to his aid in finding opportunities for establishing
business contacts: having familiarized himself with ways to solve the moral problems that
arise in various companies, having studied their ethical infrastructure and analyzing codes
and declarations of ethics, a novice businessman will make the right choice and find the
partner whose interaction will be mutually beneficial and bring moral satisfaction to both
parties (Schäfer, 2016).

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Effective codes of ethics contribute to the optimization of the organizational structure
of the organization, its spiritual healing (Biller-Andorno, and Capron, 2016). They play a
special role in the activities of transnational corporations, which are especially vulnerable to
the unlawful and immoral actions of local representations. And the point here is not in the
unsuccessful selection of personnel, but in the difference in the understanding of
representatives of different peoples and cultures about the ethical and unethical. The solution
to the problem can be the creation of separate codes of ethics for each local division of the
corporation. However, this is not the best solution, since in this case there is a danger of their
excessive isolation, which will result from the implementation of various values indicated in
the codes (Tran, 2019). To preserve the unity of the organization and update its moral
climate, we can recommend the creation of a global code of ethics, the implementation of
which will maximize the effectiveness of ethical programs in the corporation.

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References
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perspectives. Routledge.
DeMartino, G.F. and McCloskey, D.N. eds., 2016. The Oxford handbook of professional
economic ethics. Oxford University Press.
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Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Hong, B., Li, Z. and Minor, D., 2016. Corporate governance and executive compensation for
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Landry, E.E., Bernardi, R.A. and Bosco, S.M., 2016. Recognition for sustained corporate
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and Environmental Management, 23(1), pp.27-36.

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