Analyse the extent to which issues of nancial service ethics are effectively addressed.

Authors Avatar by ellouise1997hotmailcom (student)

I am working as a trainee TV journalist for ITV. ITV is planning to run a feature article on financial services. My production has been seen by a financial services recruitment agency, Taylor Green. They were most impressed with the quality of my production. Taylor Green wants me to produce some materials for them. Following my research and investigation, I am going to produce a report that analyses the extent to which issues of financial service ethics are effectively addressed by the current regulatory framework. I will provide a report giving a balanced view on the effectiveness of legislation and reach a judgement on this and make recommendations.

All businesses that operate in the financial services industry has a duty of care towards their customers. They must make sure they are completely honest when selling products to their customers. They need to make sure they provide all details of products, what it is, how it works the benefits and also the risks; they cannot force products upon the customers. They should also not be supporting any business that is working in an unethical way. An example of unethical practice was when financial institutions like bank and building societies mis-sold payment protection insurance (PPI). Banks devised an insurance product that was designed to not pay out due to the strict terms and conditions and began to force customers to buy the insurance when taking out loans, mortgages and credit cards. This was very unethical and the financial services were not taking any duty of care. The Financial Services Authority (FSA) then imposed fines to all banks and building societies who mis-sold PPI and were instructed the institutions to compensate their customers. Lloyds had to pay £9.8billion, Santander £500million and the Co-operative Bank £100million proving that they had to pay large sums of fines. Lloyds were also fined again by the FSA because they were taking too long to compensate their customers. The FSA were very effective in dealing with the PPI issue. They identified the problem, made the banks and building societies compensate their customers and stopped PPI being sold again which is very effective. However, PPI was going on for a number of years and therefore the FSA could have acted quicker. They could have done this by checking to see if all products that the banks and building societies sell are being sold to customers in good faith and be of value to them. Another example of unethical practice where banks did not show a duty of care to customers is when Lloyds pressurised staff to hit sales targets or risk being demoted and have their pay cut. This meant they would pressurise customers into buying products that they didn’t really need. The Financial conduct authority (FCA) then got involved and fined Lloyd’s bank £28 million. Lloyds failed to have a duty of care for their customers and staff. At this time the FCA stepped in and were able to stop the issue. They were extremely effective. I assume that the staff complained to the FCA and is how they were able to intervene so quickly. They acted upon the unethical practice of Lloyds and fined them for their wrong doings. They did a great job and they should continue to act upon complaints especially from staff.
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All businesses and individuals have a social responsibility in regards to the paying of tax. No business or person should avoid or evade the payment of taxes as it is unethical. Tax avoidance is the use of legal methods to modify an individual's financial situation in order to lower the amount of income tax owed. An example of tax avoidance in the UK is Starbucks. Starbucks were manipulating their financial data to show that they had losses. Corporation tax is only payable if you make profits, therefore Starbucks didn’t have to pay any corporation tax. Starbucks were still ...

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