Commonwealth Bank: Business Ethics and Account Manipulation

This essay analyzes the ethical issues surrounding the Commonwealth Bank of Australia (CBA), focusing on the manipulation of children's accounts by retail branch staff. The paper explores the breach of trust resulting from these actions, where staff used various methods to illegitimately activate Youthsaver accounts to meet targets and earn bonuses. It examines the CBA's codes of conduct, including the Code of Banking Practice, and the significance of these codes in maintaining ethical standards and customer trust. The essay also discusses the role of Corporate Social Responsibility (CSR) in addressing such ethical lapses, highlighting the bank's responsibility to ensure client's funds are protected, compensate for misappropriation, and implement ethical labor practices. The conclusion emphasizes the importance of ethical conduct and the consequences of its failures, reinforcing the need for accountability and a strong ethical culture within the organization to prevent future incidents and maintain its reputation.

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Manipulation of children’s accounts by the Commonwealth Bank
Introduction
The Commonwealth Bank of Australia (CBA) also commonly referred to as Commbank is a
multinational bank of Australia with branches across the United States of America (USA), Asia,
United Kingdom, and New Zealand. It is the largest company in Australia as listed on the
Australian Securities Exchange from August 2015 (Joshi, Cahill, and Sidhu, 2010). Its brands
include; Commonwealth Securities, Bankwest, ASB Bank in New Zealand, Commonwealth
Insurance, and Colonial First State Investments. It offers several financial services such as funds
management, retail, insurance, superannuation, institutional and business banking as well as
broking and investment services. It was founded in 1911 as a government institution and fully
privatized in the year 1996 (Otchere and Chan, 2003). The Commonwealth Bank has been

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expressing several business ethical issues that have been affecting their operations. They range
from environmental, information data loss, financial planning, insurance division, money
laundering, and bank bill rate allegations. This paper, therefore, discusses the recent
contemporary business ethics issue that has been raised against the Commonwealth Bank
concerning the manipulation of children’s accounts and the role of Code of Conduct and
Corporate Social Responsibility in organizational operations.
The manipulation of children’s account
The Commonwealth Bank has been in the media for several reasons including both the positive
and negative. The recent issue that has been raised in the press is the manipulation of children’s
accounts. As of 20th may, the bank confirmed that there was a fraudulent manipulation of
numerous bank accounts of children by the retail branch staff (Fairfax Media report, 2018). The
scam was carried out with their goal being earning bonuses as well as meet their targets for their
benefits. The retail branch staff could either have used their own money or bank funds to activate
the Youthsaver accounts of the children illegitimately. The issue was raised by the Fairfax Media
report concerning the ethical issues surrounding the bank due to the several manipulations cases
reported. The chief executive officer of CBA, Matt Comyn, however, apologized for the problem
and termed it a breach of trust. The staff used small deposits as low as 10% to activate the
accounts hence appearing active to improve the incentive compensation of their staff members
(Fairfax Media report, 2018). The CBA’s Youthsaver account was established specifically for
the young people where the bank accounts created was designed to encourage as well as boost
saving habits very early in life. The accounts are opened of course with parental consent, and
there are no monthly or deposit account fees required. The management believes that trust is very
crucial in their operations when dealing with the numerous customers. So, such actions were a

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big ethical concern as it involved a breach of trust that is guaranteed for every customer that has
opened an account with the bank. The issue arose back in the year 2013, but the top management
implemented measures aimed at curbing the incidence from occurring again (Sydney Morning
Herald, 2018). Unfortunately, the same issue was reported by the Fairfax Media recently and,
therefore, confirming that the manipulation cases are not yet over.
Breach of trust
Having successful customer relations is vital for a firm’s operations. The success of a business is,
however, dependent on a simple concept of trust. With trust between the customers and the firm
as well as the employees and employers, it fosters a good working relationship which eventually
leads to a successful organization (Damodaran, 2009). Building trust is not an easy thing, and it
takes time as well as significant input from the top management of a company. The breaking of
trust also can occur very quickly if the company is not keen on how it carries out its operations.
However, if a firm incorporates the three primary stipulated core competencies; transparency,
consistency, and service, then its destined for success (Tsoukatos and Mastrojianni, 2010).
The CBA has over the years breached the trust it had with the employees due to several scandals
that arise every year. With the recent misappropriation of funds for the children accounts, the
customers feel betrayed by the bank. Some people have lamented over the issue calling for the
jailing of all the staff involved in the fraud. They think the bank has developed a culture of
dishonesty that breaches the trust code of conduct (Sydney Morning Herald, 2018). Although
none of the customers was financially harmed the incidence was a breach of trust which
undermines the confidence the clients, as well as the whole community, has on the bank.
Handling of any commercial revenues or money, as well as any operations, the firm requires
total honesty whether it involves a small or large amount of money. The issue raised a lot of

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questions regarding the culture of the bank as the same problem had occurred back in 2013 and,
therefore, it was described as somewhat common practice (Nielsen, 2014). Similarly, the
incidence was defined by another respondent as serious misconduct while someone else
explained it has an unacceptable thing to do and unethical sales practice which breached the
Banking Practice Code. The clients felt further betrayed as there was no disciplinary action taken
against the staff involved in the fraud (Sydney Morning Herald, 2018). Only an email was
written to the team reminding them that using the teller discrepancy funds as well as processing
of the valueless deposits was severe misconduct in themselves.
Codes of conduct
The Commonwealth Bank has adopted several codes of conduct that aims at providing customers
with a higher certain professional level of service. They include; the Australian Treasury
Operations Guidelines, code of Banking practice, ePayments Code, Life Insurance and General
Insurance Code of Practice, E-commerce Best Practice Model, Australian Treasury Operations
Guidelines, and Australian Direct Marketing and Financial Markets Association Code of Practice
(Taylor and Magee, 2017)
The significance of the Codes of Conduct and code of ethics in a business
Every organization has its unique policies, guidelines, and rules that govern its operations. These
Code of Conduct and Ethics play a considerable role in determining the success of an
organization. The Code of Ethics specifically, establishes various policies that an organization
employs in ensuring all the employees follow the required ethical rules when dealing with the
multiple activities of the firm. It also sets a minimum standard that the top managers, employees,
and employers have to follow in disseminating their duties. Therefore, these codes improve

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business relations as it provides ethical values that the staff has to adhere to while performing
their duties. For instance, honesty and trust is key while handling customer’s questions and when
offering feedback. Also, they prohibit inappropriate behavior such as engagement in fraud and
funds embezzlement by the employees. Therefore, the Code of Conduct and Ethics that the
Commonwealth Bank follows does not condone such kind of behavior. As such, in the latest
fraud case, the CEO Matt Comyn said that a cation would be taken against the staff involved in
the scandal. They also hold the management and employees accountable for their actions
whereby they are called to show honesty, integrity, and transparency in their operations. The
CBA Codes of Conduct, therefore, promotes high standards of service delivery to its customers,
provides a benchmark of consistency in its operations, and establishes a framework
encompassing the professional responsibilities as well as behavior.
Code of banking practice
Every organization has a specific code of practice that should be adhered to during its business
operations. The Commonwealth as well is also a signatory to the Code of Banking Practice that
was revised a few years back. The Code of Banking Practice, therefore, requires every bank to
avail general information to its customers regarding several banking matters. They include;
handling of personal information, obligations, and rights of every party involved in the
customer/banker relationship, how to go about any complaint, and procedure to follow in case of
financial difficulty (Howell, 2015). Within the Commonwealth Bank, they follow strictly clause
40 which is one of the principal clauses of the Code. Here, they provide several guidelines to
customers regarding essential information on mortgages transfer application and consents. Also,
how to enforce debts regarding the Family property settlements.
Corporate social responsibility (CSR)

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Corporate social responsibility is an organizational policy that usually is described as self-
regulation policies of international private business operation (Adams and Zutshi, 2004).
Nowadays, however, the corporate social responsibility is no longer only a corporate self-
regulation issue, but it encompasses mandatory schemes that should be implemented at a
regional, national, as well as transnational levels. At the organizational level, it’s a policy that
should align and become well integrated into the business model of the firm for the organization
to be successful (Chan, Watson, and Woodliff, 2014). At the Commonwealth Bank, the
implementation of CSR does not only comply with the regulatory requirement set out by the
government, but it also engages in specific actions aimed at achieving social good for the interest
of their customers. Engagement in corporate social responsibility by companies can be based on
ethical or strategic purposes (Adams, 2002). Concerning strategic approach, the Commonwealth
Bank aims at achieving trust among its customers and shareholders as well as increasing profits
in the long-term by creating positive public relations as well as high ethical standards. By taking
responsibility for their corporate actions, therefore, they can minimize any legal and business
risk that can occur (Adams et al., 2017). Thus, on the issue of manipulation the children’s
accounts, the Commonwealth Bank has a social responsibility to ensure that their client’s money
is taken care of and they are compensated for any misappropriation. Also, the concept of ethical
labor practices has to implemented whereby the employees have to be treated fairly and
ethically. For instance, the staff that had engaged in misappropriation of the funds of the
children’s accounts had to be legally accountable and an action taken on them. The CBA aims at
providing sustainable and better services to its customers and ensuring that the customer’s trust is
not broken (Saeidi et al., 2015). As such, the new executive officer of the CBA in response to
manipulation of funds case said that his first and foremost priority was to implement changes

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that would ensure any unethical behavior amongst the staff that undermines the client’s trust is
cut off. Also, sending home any employee who engages in illegal conduct knowingly.
The policies and practices of the Commonwealth Bank group are made in such a way that they
reflect or represent the highest standard required by the corporate governance. The top
management has adopted a comprehensive framework involving various corporate governance
guidelines which are designed to bring a balance between the firm’s performance and
compliance to the legislative ethical rules and regulations (Aguilera and Cuervo‐Cazurra, 2009).
They strive to ensure professionalism, fairness, and honesty throughout their dealings with
customers. They have a Fraud Policy outlining several fraud control principles within the
organization as well as the mandatory requirements and accountabilities that need to be adhered
to by all the staff. The policy states that fraud is not tolerated within the organization. Also, it
defines its commitment in endorsing, promoting, and sustaining a sound ethical culture within
the organization and with its operations with the stakeholders, customers, and the broader
community (Carroll and Buchholtz, 2014). As such, any time a complaint is raised concerning
any issue with the organization, such as fraud, the organization takes all the necessary measures
and precautions to ensure the problem is handled in the right manner and that the incidence does
not repeat itself.
Conclusion
The Commonwealth Bank is named as the largest throughout the Southern Hemisphere. It covers
all the aspects of financial services that the customers could be interested in throughout Australia
as well as in other parts of the world. Over the years, several ethical issues have been raised in
the media concerning the CBA with the latest being the fraud with the children’s money
accounts. Such crisis stresses the importance of Code of Conduct and Code of Ethics within the

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organization. The set-out rules and regulations guide the behavior of the staff and, therefore, in
case of failure to follow the set standards, then there are legal consequences. The CBA as well as
high standards corporate governance framework that enhances its sustainability and promotes
performance. For successful organizational performance, it is vital for the management to
employ honest, trust, transparency, and integrity in its operations.

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