The BFSO Young Ambassadors wrap up The BFSO | FINSIA Crossroads Conference

(Pictured L-R: Dani Simpson, Alex Green, Philip Joseph-Hauser)

As young people forging their careers in financial services, The Banking and Financial Services Oath’s (The BFSO) Young Ambassadors are the future leaders advocating for a stronger ethical foundation in the industry. On Thursday 8 August 2019, four of The BFSO’s six young ambassadors attended Crossroads – The BFSO | FINSIA Conference looking at how ethics can help navigate the challenges facing individuals in the industry. The following summary provides their key take outs from each session of the day.


Carol Austin, Chairman of Board Risk Committee HSBC Bank, Director of state super, Chairman Investment Advisory Board
Setting the scene: Financial Services in Australia

• Carol set the scene with the current state of affairs affecting the global economy
• The US has become very isolationist. It provided liquidity to the world when the GFC hit, however have made a clear decision to stand back now and would be unlikely to do the same again.
• The trade wars between the US and China are causing a lot of uncertainty which is harming economic growth, also the unrest in Iran and Hong Kong.
• Global growth is slowing, more than 23 countries have negative yield curves currently suggesting a global recession. Uncertainty around what will fix this as dropping interest rates has not achieved the required outcome. We have to go back to post the depression in the 1930’s to see a parallel to where we are currently heading.
• Modern monetary theory is likely to become a leading theory for getting economic growth in a world where expansionary monetary theory has not worked. This new theory partially explains the reason why we can’t stimulate growth now; as expansionary monetary policy won’t work if the environmental and employment restrictions do not allow the growth to occur.

Kat Dunn, CEO Grameen Bank Australia
Can Capitalism be saved? How financial services can build a better society and sustainable future.

• Her whole career Kat was told she couldn’t make a living and a change, had to choose one. She was one of the best wealth fund managers for her age in Sydney and was offered a role on the board of her company at 32, but decided that she needed job satisfaction and a meaning to her role, not just straight profit driven.
• Grameen is a bank founded by Professor Yunus on the basis of lending a small amount of money to very poor Bangladeshi women in order to try and get them out of poverty. This was initially a research project, but ended up becoming a multi-million dollar business.
• Grameen supports social businesses, ones which have a sole purpose of solving a social or environmental issue.
• Kat believes that we are heading towards a world where customers want more meaning from the financial decisions they make, rather than a straight price model. She also believes that in order for companies to keep millennials engaged, jobs will need to be a pathway for self-realisation, not just about making money.
• Social enterprises will be the future of the finance sector.

Wayne Byres (Chairman Australian Prudential Regulatory Authority, APRA)
Is self-regulation dead?

• Discussed the potential for self-regulation to be dead if organisations don’t start acting with better ethical standards.
• Since the RC, there is an understanding that financial institutions don’t value their customer, they use them for profit. This needs to change.
• Organisations need to be driven to do what is right because of the self-satisfaction, not by fear of getting caught. It is not enough to just do what is legal, they must be doing what is ethically right, which may change regularly.
• There will always be a need for formal regulation, but the hope is for 3 layers of regulation to be active:
  • Industry
  • Company
  • Individual
• First mover disadvantage is not a good enough reason not to act ethically.
• Even if something is incentivised, it is not a license to engage in unethical activity. Personal self-regulation should always be evident.

Panel: Wayne Byres, Chair, APRA; Rod Sims, Chair, ACCC; Karen Chester, Deputy Chair, ASIC)
Fireside Chat with the regulators

• Banking is unique in the sense that there is a lack of competition on price, it is like synchronised swimming where if one bank moves the others will follow. Almost like a cartel but there is no collusion so it is legal.
• The regulators believe that firms behaviour is directed by the regulation they make, therefore they are focusing on ethics based law.
• Some suggestions around unfair practice and unfair contract terms being introduced into regulation to shape banking ethics. Not an agreed consensus.
• The regulator is not your compliance department!

Anna Bligh, CEO, Australian Banking Association
Hard cases make bad law

• Hard cases make bad law.
• Responsible lending is the cornerstone of the industry.
• Risk fuels innovation, we can’t become too conservative but must look at everything going forward with a very strong ethical lens.
• If we lose good bankers, we lose everything, so we must encourage the right behaviour without making the role too regulated. We must trust the good bankers, and get rid of the unethical ones so not to taint everyone with the same brush.

Panel: Lisa Schutz, Verifier, Tony Ohlsson, Chief Data Officer, Volt Bank, moderated by Susheela Peres da Costa, Regnan.
The Ethics of Data

• Consumers don’t want to be financially strip searched every time they go for a loan.
• Some data we need, some is nice to have. The nice to have should not necessarily be collected.
• Customers should have a choice to pay a little bit more for a service and not have their personal information held, as compared to having no choice.

Panel: June Smith, Deputy Chief Ombudsmen; Margo Lydon, CEO Superfriend, Dr Kym Sheehan, Sydney University, moderated by Pauline Vamos, Director, The BFSO.
Dignity and the wellbeing of employees and society

• Ethical Characteristics of fairness:
  • Play by the rules
  • Do what you say you will
  • Comply with industry codes and practices
  • Products fit for purpose
  • Act in the best interest of the customer
• We need to be putting the customer at the centre of our mind, and proactively managing the non-financial risk.
• The way you treat your staff is the way they treat the customer.

Panel: Nikola Zaorska, Tammie Christie, Darren Dawson, moderated by Cris Parker, Head of The Ethics Alliance.
Permafrost… Say it isn’t so: Overcoming the challenges faced by tomorrow’s leaders

• General discussion around the challenges faced by middle managers today who will be the leaders of tomorrow.
• No middle manager feels like they are doing a good job because they essentially deal with above and below’s issues, they can’t often win.
• Role is to feed info up and down the chain, which has its rewards and mainly challenges at the moment. A lot of top down management occurring and little listening from bottom up.
• If you make mistakes share with the whole team so that everyone learns faster in this environment of rapid change.

Tim Dean, Philosopher
Moral courage: Linking your purpose to positive change

• Outrage/anger and fear are very powerful motivators for speaking up about ethical behaviour. Fear and self-interest are also the main things that prevent you speaking up.
• Sometimes we need to lower the bar for doing the right thing, change the norms. If someone speaks up about an ethical issue we should encourage and allow it, not make it a way to punish them and limit their career.
• Think about what sort of “norms” you are projecting around the workplace, are they positive or damaging to the culture.

Shade Zahari, Westpac Scholar, Director of Influenco
Five generations in one workplace: From traditionalists to Generation Z

• We are in a strange position where we have five generations in the workplace, this creates many challenges but also opportunities.
• Be cautious to walk in someone else’s shoes, they have views for a reason, and each generations view has been shaped by the different events they have experienced in their lifetime.
• Respect differences, avoid bias, focus on similarities, and embrace diversity.
• Diversity of thought gives you strong commercial advantage, so utilise it.
• Leadership is about doing what counts AND what is counted, not just what is counted.

Dr Walter Jarvis, UTS, Kylie Blundell, Head of Education and Standards, FINSIA, Joseph Healy, Judo Bank. Moderated by philosopher and ethicist Leslie Cannold.
Hope dies last

• The purpose of the banking and finance industry is to look after and responsibly manage people’s money
• To create a banking profession there needs to be a code of ethics and a clear course of study that people can take to acquire all skills necessary for a modern banker
• Formal university education is supposed to equip students with the ability to make the hard decisions, not just teach theory
• Businesses should encourage their employees to gain a professional or post-graduate qualification before entering upper ranks of management
• Employees should be encouraged to adopt an attitude of continuous-learning to have the technical skills required to deal with ever-more complex challenges (especially in the areas of data literacy, AI and IT)

Leslie Cannold, Philosopher
What Do Rotting Fish Have To Do With It?

• Adam Smith pointed out flaws in his conceptualisation of the market that people have since forgotten about.
• The interests of those who earn their living from rents and salary are aligned with those of the broader market but the interests of those who earn their living from making a profit are not.
• For people making their living from profits, they benefit the most when competition is lessened so it is in their interests to reduce competition.
• Campaign financing is an area that needs reform as this is how businesses are able to have an outsize impact on politics to serve their own interests at the expense of broader societal welfare.
• This goes against the original conceptualisation of democracy as ‘one person, one vote’.

Alexis George, Deputy CEO, ANZ, John Atkin, Chair AICD, Pru Bennett, Principal at Guerdon Associates
Exploring the Tension between Customer, Shareholder and Employee: What are the ethical dilemmas in the trade-off between stakeholders?

• Index funds are ‘patient money’ which allows them to formulate long-term plans with company directors.
• Social investing is pressuring boards to focus on integrated reporting that captures more than just the financial performance of the entity but also the impact on communities and the wider environment.
• Making business decisions that align with the ethical expectations of society can be an ambiguous and time-intensive process as the expectations and the part that business has to play in meeting these expectations are not always clear or uniformly agreed-upon.
• Having an ethical decision-making framework can aid this process and reduce the time it takes to come to a decision.
• Creating the right remediation packages for executives is not always easy because the person ultimately responsible for determining the remediation is usually the head of HR who reports to the CEO.
• A greater proportion of long-term, stock-based compensation can go some ways towards aligning the interests of shareholders, management and customers.

Overall the conference was an incredibly open and honest discussion considering the level of professionals in the room, it was very refreshing. The general mood was somewhat negative about where we have got to and what we are still yet to face, but very positive and hopeful in regard to change and the differences that we can all make. The finance industry is supposedly heading in a much better direction ethically, and considering the attendance of some of the most influential players to this conference I think we can believe that. This can only be good for the industry and can only make doing the job we love that much easier to consolidate with our own self-realisation, or moral conscience.