Ethics subvert the commodity economy

I was in Perth last week talking about the Hayne royal commission - how it was called and what were the outcomes - to a group of academics attending the second West Coast Finance Colloquium.

It was after my talk that the questions began to flow about the challenges posed by the Hayne reform era for educators across the university sector..

Several questions centred on what universities can do to help 'build' finance professionals with a healthy ethical outlook.

This is in part due to the fact that the Hayne commission focused so heavily on notions of misconduct, breaches of rules and a general decline in what people in the community saw as individual ethics and customer service.

It was clear to me that the academics in the audience, along with others I spoke with over the day, were concerned about what they could do to help deter their students from being tempted by the dark arts when they landed a job in or around financial services.

This is an impact of the Hayne inquiry and other inquiries that few people consider when they write about issues arising from the royal commission - because it does not involve millions of dollars of remediation, possible jail sentences, politicians being embarrassed and regulators getting barked at for not doing enough.

There is great pressure on universities to deliver content that makes people work-ready.

Sixteen years after Justice Neville Owen gave a frank assessment of failures in the governance and management of HIH, the Hayne exposés are a reminder that widespread misconduct must be combatted by financiers and culture reformed in part by the values of recruits.  

Our universities need to have a realistic idea of what it is they are able to achieve within the context of their curriculum: a three-year undergraduate degree in technical areas such as accounting and finance needs to provide students with a foundation to deal with many different topics.

A consideration of ethical frameworks and the way in which ethical practice is achieved needs to be peppered throughout the degree rather than simply being one unit taught in the first, second or third year, which is then seen as a hurdle achieved by students who have their focus on the degree as a commodity that must be obtained as a rite of passage into their desired profession.

Students are focused on completing a degree and getting out into the workforce. Lifetime earnings maximisers with strategic thinking, probably, most will focus on what is measured in exams and assessments.

Ethical considerations must be woven into assessment tasks so that students are grappling with these across their degrees.

This means that case studies such as those aired during the Hayne royal commission allow for the exploration of complex relationships between advisers, clients and the advisers company.

Academics can set specific questions that relate to the law as it applies in a case study or ask students to discussion the behaviour of an adviser and evaluate whether the behaviour contravenes the law, ethical pronouncements or both at the same time.

Courses should go beyond classical theories such as utilitarianism and egoism and also consider decision making and thinking frameworks such as those written about by Edward de Bono.

His approach with the concept of Six Thinking Hats provides a decision-making framework in which a thorough evaluation process can be a part of a classroom environment. These are useful ways of teaching decision making by looking at all possible implications of an action.

Using the work of another ethicist, the late Rushworth Kidder, may also be useful for considering ethical dilemmas for those in universities seeking fresh inspiration to embed in courses.

Kidder was a thinker that placed a lot of emphasis on trying to get people comfortable with the concept of needing to choose between 'right and right'.

What Hayne said in relation to the ANZ bank using the power to appoint liquidators to shut down farms falls precisely in Kidder's space. A bank has the power to call on liquidators if a loan has defaulted but they can also deal with the issue in other ways that would not result in farmers losing their livelihoods.

Kidder's point was that the judicious exercise of power is necessary so that the outcome can be beneficial to all parties involved.

The workplaces students enter, the regulators that look at the financial sector, the professional associations and standard setters that set the norms for a profession are all complicit in the task of putting the settings in place to ensure that there is pressure placed on all individuals to behave ethically.

While universities play a major part in setting the educational foundations they cannot and should not bear all the weight of creating individuals with a watertight sense of right and wrong. That responsibility is shared by many other part of the community including the financial institutions that failed miserably in many respects to reinforce an ethical mindset in the decade leading up to the calling of the Hayne royal commission.