Chief Ethics Officer: The last thing a bank needs
by: Ron Shevlin
In an article titled To Restore Trust in Banks, Build Ethics into Business Decisions in American Banker, the authors wrote:
“If a bank decides to have a formally designated individual (i.e., Chief Ethics Officer) with principal ethics responsibility, what steps should it consider to make the role effective? Such an executive could update and promulgate the company’s ethics policy and be responsible for training employees about their ethical responsibilities. He or she could help to illuminate decisions about what is “right or wrong,” even where there may be a legal argument to justify an institution’s proposed products, pricing or conduct. He or she also could be the senior officer to whom whistleblower complaints would be directed. The ethics officer might also be charged with identifying and investigating wrongdoing involving individual conduct to help ensure that the institution’s ethical culture is grounded in ethical behavior and not simply an abstract policy. In addition, he or she could be an advisor on products, services and programs, evaluating them in the light of fairness to their intended users.”
In many of these potential roles and responsibilities, there’s a strong whiff of “after-the-fact-ness,” meaning that the involvement of this chief ethics officer would come after some potentially unethical behavior was committed (with the exception of the training role).
A better solution would prevent unethical behavior (although, if you read my prior post on financial education, you might guess that I don’t think ethics education would be particularly successful). And, in fact, not only is that implied by the title of the AB article, but the authors write:
“One alternative or supplement to appointing a single officer to champion ethics is to require that bank decision processes explicitly incorporate ethics—whether the bank “should” as opposed to whether it “can”—into major decisions on products, programs and business initiatives. Especially given the subjective nature of ethical requirements, making ethics decisions part of a process that will incorporate the views of multiple executives may assist in capturing a broader corporate consensus.”
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