Significance of Ethics

This report aims to conduct an analysis upon corporate ethics, its importance within the organizational hierarchy. On the other hand, within this specific report, the sole purpose is to understand the effectiveness of the organization regarding that of corporate ethics.

Running Head: SIGNIFICANCE OF ETHICS
Significance of ethics
Name of the Student
Name of the University
Author’s Note

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Executive summary
This report aims to conduct an analysis upon corporate ethics, its importance within the
organizational hierarchy. On the other hand, within this specific report, the sole purpose is to
understand the effectiveness of the organisation regarding that of corporate ethics. On the other
hand, the sole aim is to understand the essence for making use of the corporate ethics within
the particular organisation and the extent of the positive effects that are being achieved by
making use of it. Within this very report, every aspect regarding that of corporate ethics will be
well elaborated. Besides, how corporate ethics impact upon one’s day-to-day work experience.
Besides the report focuses on the fault of granting financial aids to the needy ones without
evaluating their potential to repay back the loans.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Description of theory used for analysis (stakeholder theory OR values management)?.................4
Analysis...........................................................................................................................................5
Identification of 3 alternative solutions?.........................................................................................7
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
According to the author (De Colle et al., 2014), corporate ethics refers to the set of
specific standards of the discipline that is being introduced within the organisation to make sure
that each of the activities of the organisations falls legally. The primary aim of corporate ethics is
to make sure that the business undertaking of the corporate industry falls legally and that of the
activities of the future business expectations does not get hampered. It is not about right or
wrong; it is about what an individual precept regarding a particular subject. Ethics also reflects
our identity regarding that of the cultural values.
Discussion
The scenario is about the unethical behaviour for lending 35$ million questionable home-
loans, the concerning bank is that of the Westpac bank. It is an Australian origin bank; this
financial institution has been providing financial solutions to the needy one upon the introduction
of the formal agreement. It has it's headquartered in Westpac Place that is in Sydney. The bank
was inaugurated in the year of 1982; it resulted as a merger of the Bank of New South Wales and
that of the Commercial Banks of Australia (Baxter et al., 2014).
There has been a number of issues that have been taking place over the period of time
regarding the lending of funds that are being carried out informally. The bank is even not asking
any reasonable questions for hiring such funds. Besides, there has been a rapid increase in the
number of frauds that are taking place.

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Description of theory used for analysis?
According to the author Ferrell et al., 2015, there should be a concern regarding that of
the different stakeholders of the company. The stakeholders of the company can be internally as
well as externally; there is a requirement to have concern toward the stakeholders as they are the
principal bodies that contribute towards the business operation of the firm. In this case, it is the
contributions from that of the various stakeholders that contributes towards the business cycle of
the bank. It is the expectation of the stakeholders that they will be compensated with that of the
satisfactory amount that will result in positive revenue generation for the firm (Fox et al., 2016).
Taking into consideration this case of lending financial aids illegally, is not to be
accepted because it is not only hampering the business environment, but it is hampering the
interest of the individual stakeholders of the company as well. Besides, it is the coming era of the
ban; a time will come when there will be a number of fraud cases that will take place over the
period of time, and the sole liability will be upon the stakeholders of the company. Taking into
consideration the normal ability of the firm to operate, a firm should only focus on gaining
satisfactory market share, consumer’s satisfaction, and to identify the different business
prospects. This fact of lending financial funds is to be ignored.
The stakeholder theory will be undertaken for the analysis of the above case of the bank.
According to the stakeholder’s theory, there exists the interest and that of the profit maximisation
criteria. The banks have to be liable for the introduction of such credits to the general public
being it for any specific purpose (Saettler et al., 2014). On the other contrary, if the lending of
funds keeps on this manner irrespective of the legal terms than there is much of the change for
the bank to become bankrupt. This will not only affect the bank; this will directly affect the
different stakeholders of the firm.

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However, upon having a thorough evaluation, it was being observed that it is an
automation fault that on an automatic basis grants loans to the general public. However, for such
an incident, the bank has been charged a penalty amount. The penalty is being charged by the
Australian Securities and Investments Commission (ASIC). ASIC further added that this would
be the largest civil penalty awarded under the National Credit Act if approved by the Federal
Court. The bank made use of the HEM rather than calculating the customer’s declared living
expenses and admitted this practice breached the National Consumer Credit Protection Act
(Jones et al., 2017). This meant affected customers were approved for home loans; they
potentially could not afford to repay without financial hardship.
Analysis
Analysis 1:
Upon having a thorough analysis of the case it was being observed that the concerning
bank made use of the low HEM benchmarks, the bank should have been made use of the manual
workforce to depict out the potential to repay the loans of the concerning individuals. On the
other hand, ASIC stated that it is poor internal management of the organisation such that they fail
to address as of whether interest-only borrowers could continue to afford their mortgage without
financial hardship when the interest-only period ended and principal and interest payments had
to be made. ASIC supported its answer by stating that $500,000, 10-year, the interest-only period
at an interest rate of about 5.24 per cent (Dell'Atti et al., 2017), where Westpac's method of
assessment assumed repayments of $2,758 a month, while the actual principal and interest
repayments would be $3,366.
Analysis 2:

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It was being observed that the concerning firm Westpac did not state that yes it was fault
form their side. The bank further added that it was the personal financial need of the needy
persons which the bank aimed to fulfil. On the other hand, they have only made efforts from
making their clients dream get fulfilled. They further said that they did not find any such point
that would make their potential clients unsuitable for the grant of loans. "From a credit quality
perspective, loans approved under these circumstances have continued to perform similar to, or
better, than the rest of the group's home loan portfolio," said the bank's head of consumer
banking George-Frazis (Grayson-Morison et al., 2014). However, now the bank claims that
taking into consideration the occurrence of such cause the bank will make efforts towards
monitoring the loans that are presently being given to the potential needy consumers of the
market, and the future loans will be tailor-made according to the potential to repay it back.
At present, the bank has been granting about 5,400 loans. This set of loans are active; this
loan accounts to about 0.4 per cent of the bank's mortgages. On the other contrary, the bank
changed its lending policies in 2015, meaning that all borrowers are now assessed against the
higher of their declared living expenses or the HEM and interest-only loan serviceability is
assessed using the full principal and interest repayment. ASIC chairman James-Shipton proposes
that this set of penalty has been a lesson for the bank for which they will stronger their lending
policies and make sure that this would not happen again shortly.
Analysis 3:
They want to differentiate themselves from that of another rival market for which they
made use of the digital banking service. On the other side, the concerning bank worked with that
of the Fiserv to conduct extensive primary consumer research to understand consumer drivers,

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unmet needs and success criteria for digital banking. They made use of the IT applications for
which they feel like they are on the profitable side. They started to make use of the number of IT
applications, but the end outcome fails to be positive. They hugely rely upon the IT system for
the ease of convenience in carrying out the desired activity. They even made use of the third-
party applications that gathers the consumer’s data. The bank fails to understand that there lies a
huge need to understand the significance of the manual work that is required to be carried out by
human force.
Identification of 3 alternative solutions?
 The bank should make use of the HR force and that of the back team to make sure that the
ability of the clients to repay back the loan stays in the hand of the consumers.
 Besides, there should be a team of IT professional to take care of the applications and the It
resources that are being made use by the bank for carrying its banking activities (Senadheera
et al., 2017).
 The proper evaluation is to be done for this; the loan is not to be initiated for the first 1week.
The entire week is required to be focused upon the background and that of the financial
health of the clients. Their objective as to why there is a need for the loans. What is the
nature of the concerning person.
 On the other hand, there is a requirement by the HR department to make use of the ethical
practices within the presence of the individual employees. So, they understand the
importance to have a healthy and positive business environment.
Recommendations
Thus, it is being concluded that there is an immense need to maintain positive ethics not
only within the internal environment of the organisation as well as upon the external aspects of

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the environment. On the other hand, it is the corporate ethics that ensures positive sustainability
within the organisational premises. It is not the sole activity of the management to make
mandatory that ethics is being flowed (Park et al., 2014). Ethics is an activity that is the inner
quality which is required to be maintained and followed by the individual concerning employees
of the organisation.
By making use of the incentive and that of addressing the personalities in the eye of the
concerning employees helps in pulling the attractiveness towards making use of corporate ethics.
Conclusion
Thus, it is being concluded that ethics is one of the principal means of sustaining the
corporate environment. It is the ethics that make sure that each of the activities within the
organisational premises in being carried out legally. On the other hand, it is the corporate ethics
that contribute towards the success of the business. The use of IT applications enables us to be
convenient in carrying out the desired activity. However, a firm cannot fully rely upon this
platform as much of the development is still required in terms of the IT intelligence.

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