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'Unethical culture' threatening industry

'Unethical culture' threatening industry

Stefanie Garber
— 1 minute read

The CFA Institute has identified poor ethical frameworks within financial services firms as a key obstacle to restoring consumer confidence.

CFA president and Morningstar managing director of research and strategy, Anthony Serhan, said the institute’s Global Market Sentiment Survey 2015 revealed the need for companies to place more emphasis on ethics.

In Australia, 67 per cent of respondents indicated that “a lack of ethical culture within financial firms was the single biggest reason for the current lack of trust,” Mr Serhan said.

To address the problem, 36 per cent of Australians suggested compensation should be better aligned with investor objectives and 25 per cent suggested a zero-tolerance policy by management for ethical breaches, according to a statement from CFA.

While regulators have a significant role to play in improving consumer confidence, Mr Serhan said the ethical push must come from within firms themselves.

“Vigilant, proactive regulators are also crucial, but one of the most interesting revelations from this year’s survey is that ‘unethical firm culture’ is seen as the true culprit when it comes to lack of trust, more so than any failure of government regulation,” he said.

Mr Serhan suggested owners and managers need to take a leadership role in promoting ethical behaviour.

“If we are to earn trust from investors, ethical and literal compliance must be treated as equally important and equally enforceable,” he said.

“This means that employers must step up, create a culture of ethical compliance, and enforce it rigorously.”

The CFA survey gauged the views of over 5,200 investment professionals.

 

'Unethical culture' threatening industry
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