acoi welcomes our members to the 3rd seminar in the acoi lunch time cpd seminar series january -...

ACOI Welcomes our Members to the ACOI Welcomes our Members to the 3rd seminar in the 3rd seminar in the ACOI lunch time CPD seminar series January - June ACOI lunch time CPD seminar series January - June 2012. CPD Reference: 2012. CPD Reference: 2012-0406

Our Event:Our Event: Doing the right thing - a shared commitment to ethics excellence for Financial Services in Ireland.

Chaired:Chaired: Mr. Sean Wade, Vice Chairman of Ethics Committee and Head of Group Corporate Services, Friends First

Speakers:Speakers: Mr. Niall Gallagher, Chairperson of the ACOI Ethics Committee.

• Upcoming Events

Date Topic

27/03/2012 Lunchtime Seminar: Doing the right thing - a shared commitment to ethics excellence for Financial Services in Ireland.

03/04/2012 Lunchtime Seminar: Regulatory Update for the Funds Industry

17/04/2012 Lunchtime Seminar: Data Protection Directive

08/05/2012 Lunchtime Seminar: CBI Sanctions

15/05/2012 Lunchtime Seminar: FACTA - An Overview & Our Experience to Date

12/06/2012 Technical Workshop: AML / Data Protection

12/06/2012 Technical Workshop: CPC

22/06/2012 Lunchtime Seminar: Buildling a Shared Commitment to Ethics Excellence - A Global Perspective

22/06/2012 Annual Dinner: Celebrating the Buidling of a Shared Commitment to Compliance Excellence

Doing the right thing.-a shared commitment to ethics excellence for financial services in Ireland

-Chair: Sean Wade

-Presented by Niall Gallagher

- Tuesday 27th March 2012

©Copyright ACOI 2012

DOING THE RIGHT THING - A SHARED COMMITMENT TO ETHICS EXCELLENCE FOR FINANCIAL SERVICES IN IRELAND

This presentation aims :

1. to set the context for ethical decision-making particularly in financial services

2. provide examples of ethical dilemmas which distinguish between right and wrong and also which involve right vs. right situations

3. Provide personal guidance on making ethical decisions and business guidance on conditions and tools to help employees make ethical business choices

4. Identify barriers to ethical behavior and what to do when things go wrong

5. Leave you with some thoughts of what we (ACOI) can do and what you personally can do to improve the reputation of Financial Services in Ireland.

©Copyright ACOI 2012 4

The Association of Compliance

Officers in Ireland

5

Focus on the Thoughtful Compliance Officer

Doing the right thing - outline

• Basic issues in setting out the ethical agenda

• It is legal but is it ethical? Why you follow the ethical route

• What does the Regulator expect

• Where it is not so simple

• How to figure it out for yourself

• How organizations can create the right climate and use the right tools to promote ethical behavior, establish structures and deal with ethical issues

• Barriers to ethical behaviour

• Why things go wrong and how to deal with ethical lapses

• What can ACOI and what can you do to improve the chances of doing the right thing and improving the reputation of Financial Services in Ireland

• Discussion and practical examples.


BASIC ISSUES IN SETTING OUT THE ETHICAL AGENDA

• Where does ethics fit in today’s business environment?

• Personal and organizational/business ethics“It is true enough said that a corporation has not a conscience. But a corporation of conscientious men is a corporation with a conscience” Henry David Thoreau, American philosopher (1817-1862)

• Ethical values the basic building blocks• The importance of trust – particularly in financial services


IT IS LEGAL BUT IS IT ETHICAL? WHY FOLLOW THE ETHICAL ROUTE.

• Letter and the spirit of the law• Two examples: Company Taxation and Financial Speculation• Ethical perspective: Stakeholder Principle and Corporate Culture

“if you can see the line, you are probably too close to it”.

“To get through each day without being indicted is not a sufficient standard to aspire to”


WHAT DOES THE REGULATOR EXPECT?

• Strict compliance with the law and regulations – letter and spirit

• Fitness and Probity

•Treat Customers Fairly

• Avoid Conflicts of Interest or managing them effectively

• Clean and Transparent Markets

Absolute integrity and high ethical standards that underpin the actions of the firm and its individual officers


CASE STUDIES/ EXAMPLES

Conflict of Interest: Darleen Druyun and Boeing US in the 1990sFrom: All you need to know about Ethics and Finance”, John Plender and Avinish D. Persaud,

Longtail Publishing Limited (2007)

Fiduciary Responsibility: A fund manager and a trading error


WHERE IT IS NOT SO SIMPLE – GREY AREAS AND RIGHT VS RIGHT DECISIONS

Personal dilemmas- truth vs. loyalty

Business dilemmas- The Rousell-Uclaf (RU 486) case

(Ref Defining Moments Joseph L. Badaracco, Jnr. Harvard Business School (1997))

“Beyond Inspirational Ethics”


HOW TO FIGURE IT OUT FOR YOURSELF – WHAT TO CONSIDER IN DEALING WITH ETHICAL ISSUES

Personal Responsibility – the starting point• Three observations:

1. Pause to consider, understand and consult2. Look at other perspectives and viewpoints3. Fairness and justice must be respected and seen to be

• “people are more than five times more likely to do the right thing when they have some time to think about the matter than they are when they have to make a snap decision.”

• (Academy of Management Journal, January 2012)


HOW ORGANIZATIONS CREATE THE RIGHT CLIMATE , USE THE RIGHT TOOLS AND ESTABLISH STRUCTURES TO PROMOTE ETHICAL BEHAVIOUR

• Where we are coming from? – experience is shaped by the past

• Understanding the culture and its receptiveness or otherwise

•“Contrary to what many people believe, values and culture can be measured, and as we know, what can be measured; can be managed. The ability to measure and thus manage and change culture is the missing links between compliance without an ethical underpinning, which does not work, and the ideal “ethical culture” we all talk about. In other words, to put ethics at the heart of the compliance practice you start with values” (emphasis added)

(“Introducing and Implementing an Ethics Programme” Ruth Steinholtz, (Managing Partner of AretéWork LLP, ACOI Seminar May 2011/ Ezine June 2011)


HOW ORGANIZATIONS CREATE THE RIGHT CLIMATE , USE THE RIGHT TOOLS AND ESTABLISH STRUCTURES TO PROMOTE ETHICAL BEHAVIOUR

A relevant aside:

1. A clear and documented correlation between periods of rapid [economic/market] growth and decline in ethical standards

(Ref Ethics and Finance, Persaud and Plender (2007))

when greed and fear determine markets’, firm’s and individual’s behaviour, ethics are a declining or spent force.

2. After the bubble has burst – demands for higher standards and (over) regulation. Ethics a hot topic.. but for how long?

“Never waste a good crisis” ?


THE TOOLS AND STRUCTURES TO PROMOTE ETHICAL BEHAVIOUR

1. Leadership from the top – compliance can help make it happen

2. Analysis of what is good and what is dysfunctional (Ref Steinholtz)

.3. Assessment of key ethical and reputational risks

4. Visible, clear, unambiguous statement of firm’s values

5. Clear, well-written, easily-communicated policies – fit with values and regulatory framework, locally and internationally

6. Easy access to policies and procedures with guidance/help


THE TOOLS AND STRUCTURES TO PROMOTE ETHICAL BEHAVIOUR.

7. “Point person” for interpretation/assistance on ethical reasoning “Ethics Ambassadors” (Steinholtz)

8. A confidential “safety valve” – speak up /whistleblowing facility

9. Reporting on the effectiveness – with external verification

10. Training- integrated and in line with other areas of the business

11. Review, assess, update in line with changes in the business

12. Zero tolerance for ethical breaches.


BARRIERS TO ETHICAL BEHAVIOUR

• Rewards and incentives wrongly set or mis-aligned

•Lack of transparency – “sunlight is the best detergent”

• Weak or morally unsound leadership

• A culture of fear – peer pressure to cover the tracks

• Competitive Vs co-operative behaviour (shareholder Vs stakeholder)

• Ambiguity and uncertainty of direction and moral standards

• Speculative climate ( as above)

• Fear and over-zealous enforcement


WHY THINGS GO WRONG - HOW TO DEAL WITH ETHICAL LAPSES AND BREACHES

• Recognise the mistake and the consequences• Cover-up is worse than the original “mistake”• Speed of response from those authorised and capable• Corrective action and institutionalizing it (revise policies)• Learn from mistakes• Preserve integrity of the people and the system and act fairly• Deal openly and honestly with the regulator

“The biggest risks most businesses face today stem from human error; and human error often turns on decisions that may appear legal,

but which entail ethical abuses..” (Persaud and Plender)


WHAT CAN WE (ACOI) DO AND WHAT CAN YOU DO TO IMPROVE THE CHANCES OF DOING THE RIGHT THING AND ENHANCE THE REPUTATION OF FINANCIAL SERVICES IN IRELAND?

• Compliance and ethics are boardroom responsibilities but..

• Ethics is an integral part of the compliance profession

• Compliance must focus on the values side - letter and spirit

• Tell stories – get the narrative right through examples/case studies• Ethics by fear does not work - when the crisis is over “normal” behavior is resumed. • There is a key role for ACOI in Ethics education and training

Ethics in the clouds is a dangerous practice


DOES ETHICS PAY?

• YES but it is difficult to prove in the short term

• Reputation is a valuable asset but is easily lost ( like trust)

Ethical indifference is an absence of ethics


SUMMARY AND CONCLUSIONS

1. Ethics in business and business ethics are inseparable

2. Ethical dilemmas challenge our values and can shape the future – for the individual and the business – “defining moments”

3. Doing the right thing, not about instinct. It is a thoughtful process

4. Individual responsibility is an ethical responsibility

5. Firms should invest in ethical leadership and ethical governance

6. ACOI and individual compliance officers must be at the forefront

in ethical practice and education


Legal Framework Statutory Regulation

Corporate GovernanceRegulatory compliance codes of practice

Ethics & Values

ETHICS AT THE CENTRE OF BUSINESS DECISON-MAKING

Business Environment Competition

Useful references

Business Ethics and Values, Colin Fisher and Alan Lovell, FT Prentice Hall, 2nd Ed. (2006) Weighty text book – MBA standard - many case studies

All you need to know about Ethics and Finance”, John Plender and Avinish D. Persaud, Longtail Publishing Limited (2007) Excellent, practical guide with case studies

Defining Moments, When Managers Must Choose between Right and Right, Joseph L Badaracco, Jnr. Harvard Business School Press 1997 Brilliant with detailed cases.

Stakeholder Theory, THE STATE OF THE ART, R. Edward Freeman, Jeffrey Harrison, Andrew C. Wicks, Bidhan L.Palmer, Simone De Colle, Cambridge Press (2011). The latest word on stakeholder theory and where ethics fits

Ethical business conduct in BAE Systems plc – the way forward. Woolf Committee Report ,( May 2008)

Websites:

DCU Institute of Ethics www.dcu.ie/institute_ethics

The Ethics and Compliance Officers Association (US) www.theecoa.org

Institute of Global Ethics www.globalethics.org - excellent ethical dilemmas

Institute of Business Ethics (UK) www.ibe.org.uk


http://www.dcu.ie/institute_ethics

http://www.theecoa.org/

http://www.globalethics.org/

http://www.ibe.org.uk/

DISCUSSION


THANK YOU

Please contact me if wish to discuss any matters raised in the presentation or if you wish to obtain a copy of my script

Niall Gallagher;

e-mail: [email protected]


mailto:[email protected]

DON’T MISS

• Friday 22nd June 2012

• LunchTime Masterclass with Keith Darcy

• “Building a Shared Commitment to Ethics Excellence – A Global Perspective”

acoi welcomes our members to the 3rd seminar in the acoi lunch time cpd seminar series january -...

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