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Professional ethics and Regulations : Assignment

   

Added on  2021-01-02

11 Pages2862 Words368 Views
Professional ethics andRegulations

ContentsINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................1Governance, management and business process of Albion Bank Ltd....................................1Degree to which shareholders are exposed to 'agency problem' and potential increases inagency cost.............................................................................................................................3The potential exposure to conflicts of interest arising from business processes....................5Recommendation....................................................................................................................6REFERENCES................................................................................................................................7

INTRODUCTIONEthics may be defined as the moral principles which directs an organisation to conduct itsbusiness functions in right and effective way by following an appropriate legal structures andpractices. It governs the actions and behaviour of company and ensure that they act in a rightway towards its interested parties such as customers, employees, shareholders and community asa whole. Every organisation whether engaged in banking, retail or manufacturing should followrules and regulations framed by governing bodies. The present assignment is based on the castestudy of Albion Bank Ltd. which is engaged in offering a range of conventional moneytransmission, deposits and credit products with the help of its branch network. The project reportdiscusses the governance arrangements in the banks including the structure of the board andmanagement, assessing the potential exposure to conflicts of interest and agency problems. Lateron, recommendation has also be given under this report.TASKGovernance, management and business process of Albion Bank Ltd.The concept of Corporate Governance came into existence in the year 1992 by CadburyCommittee which defines such concept that it is the system by which an organisation directs andcontrolled. It mainly emphasis on framing the values of company instead of bringing efficiencyin operational activities. It highlights the best practice for accountability, transparency, probityand long term success. It is further described by OCED which mainly focuses on the rights andinterests of shareholders, equitable treatment among shareholders, giving equal rights to otherstakeholders, disclosure of financial information and maintaining transparency, and Board ofDirectors (Akisik, 2013).The concept of corporate governance in UK have changed over a period of time as it firstlyemphasis on satisfying the legal requirements of shareholders but at present it also focuses onidentifying the needs and requirements of shareholders in wider context. These are theindividuals whose support decide the growth and success of an organisation as they both getaffected from each activities performed. Therefore, Corporate Governance is not just morallysuperior but also ensure organisation to achieve long term performance and stability. AlbionBank Ltd. is following UK corporate governance code along with exercising best practices whichincludes leadership, remuneration, shareholders relations, accountability and remuneration. The1

code is not essential to comply as some of the principles Albion Bank Ltd. Can ignore to followbut the reason of non-compliance should be given on financial report prepared on annually basis.Management structure of Albion Bank Ltd.:The structure of management board on the surface meets the code have more directorswho perform different roles and responsibilities. Furthermore, the key provisions of the code arethat every director is independent according to the law under the company’s act 2006. This isclearly at the case of Albion Bank Ltd. where the various functional directors influences thedecisions of board of directors due to which the solely decision cannot possible to take, Suchfunctional directors holds various responsibilities related with operations, marketing, informationtechnology, human resource and administration (Arnaudov and Koseska, 2012). According to thecompanies act, 2006 an individual said to be a director of company when their name is registeredunder the documentation of company’s registry but it is not in the case of Albion Bank Ltd. asthe name of these functional directors are not registered as directors of company indocumentations.In companies act, any interest in making transactions will be clearly mentioned which isnot considered as good corporate governance as well. As in the case of Albion Bank Ltd., allcontracts on shoplifting and refurbishment of premises are outsourced by company which isowned by the son-in-law of the executive chairman which is unethical and not considered asgood corporate governance.Another requirements of corporate governance is that CEO and Chairman performsdifferent roles and responsibilities which is clearly seen in the case of Albion Bank Ltd. whereCEO is responsible to conduct day-to-day operations and executive chairman who is responsibleto retain an office in head office.Business process of Albion Bank Ltd.:Since the banking sector facing financial crisis in the year 2000, banks have been facedlots of pressure to increase cost and lowering its profitability. To deal with such situations,business process management is required to perform its roles and responsibilities that will helpbank in achieving competitive position at market place (Barnett and Molzon, 2014). There aremainly three elements of business process management which brings profitable results to AlbionBank Ltd.:2

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