BSB111 Business Law and Ethics: ANZ Bank's Loan Ethics Case Study

This case study delves into the ethical dilemma faced by ANZ Bank concerning the verification of loan applications made through brokers, particularly in light of the National Credit Act. The bank's admission of not verifying loan details, coupled with the potential impact on customers' ability to repay loans, presents a significant ethical challenge. The analysis employs three ethical frameworks – Utilitarianism, Kantian ethics, and Virtual Ethics – to evaluate the dilemma and its implications. Utilitarianism suggests balancing the benefits for the greatest number, while Kantian ethics emphasizes adherence to moral law and treating individuals as ends in themselves. Virtual Ethics focuses on the character and values guiding the bank's actions. The study recommends that ANZ adopt Virtual Ethics, emphasizing goodwill and respect for applicable laws, and formulate loan policies that benefit all income groups while ensuring thorough verification processes. Ultimately, the case study underscores the importance of ethical decision-making and adherence to legal standards in the banking sector.

Running head: DATA ANALYSIS
Data Analysis

DATA ANALYSIS 1
Contents
Introduction to the case and ethical dilemma.............................................................................................2
Analyses of the dilemma using three ethical frameworks..........................................................................2
Ethical Framework 1................................................................................................................................2
Ethical Framework 2................................................................................................................................3
Ethical Framework 3................................................................................................................................3
Implications of these frameworks on the ethical dilemma......................................................................3
Solution or Recommendation......................................................................................................................4
Conclusion...................................................................................................................................................4
References...................................................................................................................................................5

DATA ANALYSIS 2
Introduction to the case and ethical dilemma
Australia and New Zealand Banking Group Limited, also known as ANZ is the third
biggest bank in terms of market capitalization in Australia. It was founded in the year 1835. It is
headquartered in Melbourne (ANZ, n.d.1).
It deals in transactional banking services and provides international trading facilities to its
worldwide consumers. It also provides assets finance solutions and risk managing strategies to its
high profile consumers (ANZ, n.d.2).
ANZ claims to maintain the highest standards of continuous disclosure and corporate
governance.But recently, ANZ has admitted that it has not verified the details of the loan
applications which were made through its brokers. To add on to the issue, the bank itself has
declared that it is the responsibility of the brokers to verify the information by themselves.
Banking Royal Commission has heard in a related case that about 60% of the loans
submitted by the brokers and approved by ANZ, were passed with little authentication by the
bank. The bank has violated the laws as per the National Credit Act (Hutchens,2018).
As per these laws, it is mandatory for the bank to verify the financial situation of its
consumers applying for a home loan. The bank is being confronted with the ethical dilemma as
on one hand it was helping people in building their homes by providing them the loan and on the
other hand it was bound by its legal responsibilities of verifying their statement of living
expenses and providing them loans on that base.

DATA ANALYSIS 3
If anyone of its customers fails to meet their expectations of paying the loan in the future
on the basis of the statement of living expenses, then they would not be provided loan by the
bank.
Analyses of the dilemma using three ethical frameworks
Ethical Framework 1
Utilitarianism is a philosophical and ethical theory stating that the characteristic of the
best action is that it maximizes utility. The best action can be defined as the one which generates
the greatest good for the largest number of people.
In this context, utility amounts to all the pleasures resulting from an activity from which
all the sufferings of the people involved in it should be deducted. Utilitarianism considers the
equal interests of all beings (Mulgan, 2014).
However, this theory has also got some critics as well. As per their opinion, whether the
action is to be chosen on the basis of their results. The agents following this theory should
conform to the regulations which maximize the utility or the rule utilitarianism.Despite its
criticism, the theory has been applied to solve the problems of humanity and the crisis of global
poverty.
Ethical Framework 2
Kantian ethics is based upon the deontological ethical theory. It was proposed by a
German philosopher Immanuel Kant. It was developed as a result of Enlightenment rationalism.

DATA ANALYSIS 4
It is based on the theory that an action can only to be referred to as be good if it interprets the
maxim or the principle of the duty of moral law.
Kant’s construction of moral law is known as the categorical imperative which can be
implemented on all humans irrespective of their wishes or desires. He has developed the
categorical imperative in many ways.
The principle of universalizability states that activity is permitted only if it can be applied
to the general public without the occur ace of a contradiction. The second section of categorical
imperative states that humans should never treat others as a means to an end rather they are an
end in themselves (Mackenzie, Rogers & Dodds, 2014).
The concept of Autonomy denotes that humans are bound by moral law through their
own will. The concept of the Kingdom of Ends states the ideology of humans. It says that they
act as if the principles of actions formulate the law for an imaginary kingdom.
Ethical Framework 3
Virtual Ethics is a branch of normative ethical theories which highlight the merits of
character and mind. They define the nature of virtues and associated problems with them. It also
comprises of the process related to the acquisition of virtues and their application in various
contexts in real life (Wang & Calvano, 2015).
Virtual Ethics also discuss whether the virtues are deep-rooted in human nature or do
they exist in various cultures of the human race. They are known to be character based ethics.
They are based upon individuals instead of being based upon actions.

DATA ANALYSIS 5
They focus upon the character of persons initiating the actions instead of highlighting the
ethical responsibilities or results of certain activities as described by Utilitarianism or Kantian
ethics. Thus they deal with the wrongness or righteousness of activities along with providing
guidance regarding behaviors and characteristics a good human being would seek to accomplish
(Crisp, 2015).
Implications of these frameworks on the ethical dilemma
Utilitarianism differentiates right from wrong on the basis of outcomes of the act. It states
that the most ethical choice would generate the greatest good for the largest number of people. It
aims at increasing the utilities for every individual (Feiwel, 2016).
Thus, in this case, utilitarianism can be applied to balance the pleasures and pains of
people. ANZ should verify the statement of living expense of every individual and provide them
home loan accordingly. Those with low income can be provided loan with fewer interest rates
and increased tenure of repayment so that they can also build their own house.
On the other hand, Kantian ethics describe that an activity can only be good if it follows
the duty of moral law. An action is only permissible if it can be applied to all the people without
the occurrence of a contradiction (Baron, 2018).
So, As per Kantian ethics, ANZ Bank should verify the details of all its consumers. If
anyone of them fails to meet the criteria, then he /she should not be granted home loan by the
bank.

DATA ANALYSIS 6
Virtual Ethics provide an opportunity to the managers of the bank to ponder upon the
thought that what kind of individuals they become through their activities. They should think that
how their decisions influence the lives of other people (Van Hooft, 2014).
It gives an opportunity to consider the fact that what kind of societies are developed by
them with the help of their operations and products and services offered by the bank. So, as per
Virtual Ethics, the bank should formulate such policies which could benefit the consumers of
every income range along with abiding by the rules of the National Credit Act.
Solution or Recommendation
So, it is being recommended that ANZ should follow Virtual Ethics as they describe the
essence of life as doing good and avoiding evil. These should be practiced by the employees of
the bank in their routine life at their workplace. It requires efforts, awareness and most
importantly goodwill.
It is the responsibility of everyone in the bank ranging from the CEO to the lower level
management. They should follow the rules relating to ethical decision making and respect for all
the applicable laws on the bank.
Hence, ANZ should formulate the policies related to granting of loans in such a manner
that the low-income group people can also obtain them and build their own house. They should
be provided loans with subsidized interest rates approved by the government. Furthermore, the
bank should also authenticate the details of each and every consumer aspiring to obtain the home
loan.

DATA ANALYSIS 7
Conclusion
Hence to conclude, it can be said that ethical dilemmas are situations in which the choices
are to make between two mutually exclusive options. Ethical dilemmas assume that decision
maker will follow the norms of the act in order to make the choice ethically impossible.
In the given case, ANZ Bank was confronted by an ethical dilemma in which it had to
verify the details of each and every consumer to which it was providing home loan as per the
norms of National Credit Act. So as a result, the consumers with low-income range or higher
expenses could not be provided the home loan. As discussed earlier, the bank should follow
Virtual Ethics to resolve the dilemma.

DATA ANALYSIS 8
References
ANZ (n.d.1). Company Profile. Retrieved March 25th , 2019 from
http://www.anz.com/corporate/banking-business/corporates/products-services/
ANZ (n.d.2). Products and services for corporates . Retrieved March 25th , 2019 from
http://www.anz.com/australia/aboutanz/corporateinformation/company.asp
Baron, M. W. (2018). Kantian ethics almost without apology. USA: Cornell University Press. 1-
10.
Crisp, R. (2015). A third method of ethics?. Philosophy and phenomenological research, 90(2),
257-273.
Feiwel, G. R. (2016). Arrow and the Foundations of the Theory of Economic Policy. United
States: Springer. 1-20.
Hutchens, G.(2018). ANZ admits not checking key details of loan applications made via brokers.
. Retrieved March 25th , 2019 from
https://www.theguardian.com/australia-news/2018/mar/19/anz-admits-not-checking-key-
details-of-loan-applications-made-via-brokers
Mackenzie, C., Rogers, W. & Dodds, S. (2014). Vulnerability: New essays in ethics and feminist
philosophy. USA: Oxford University Press. 1-50.
Mulgan, T. (2014). Understanding utilitarianism. UK: Routledge. 1-10.

DATA ANALYSIS 9
Van Hooft, S. (2014). Understanding virtue ethics. UK: Routledge. 1-20.
Wang, L. C. & Calvano, L. (2015). Is business ethics education effective? An analysis of gender,
personal ethical perspectives, and moral judgment. Journal of Business Ethics, 126(4),
591-602.