RB101 Business Ethics and Compliance
This module deals with business ethics and compliance. Specifically, it considers the moral principles underlying business ethics and argues in favour of deontology, where motives matter most when the bank adopts a customer-centric strategy. It also establishes a link between business ethics and customer trust, which is a determinant of customer loyalty necessary for selling other products to the customer. The module also deals with the separation of ownership (shareholders) and control (managers) and the resulting information asymmetry which provides an opportunity for managers to pursue selfinterest objectives. This creates agency costs for shareholders. Unlike non-financial firms, there is a complex web of agency relationships in retail banks and hence it is incumbent on senior management to create an ethical bank culture. Furthermore, the ethical stance of Johnson and Scholes is integrated with a culture model that provides a moral compass for all employees. Finally, sources of compliance risk that include data security, money laundering and terrorist financing are identified while the crucial role of the compliance department is highlighted in relation to its obligation (as proposed by BCBS ) to identify sources of compliance risk, take actions to mitigate these risks and provide timely reporting on compliance lapses to senior management and the bank board.
• Maintain an ethical values-based culture that enables excellent customer service.
• Implement a governance structure that optimally serves all stakeholder interests.
• Conduct business within regulatory constraints so as to manage risk.