The age-old debate is still raging and it is vital that you have your say on the matter. Robin Wood explains the ethical dilemma

I was fascinated to read in Insurance Times a couple of weeks ago that Dr Sandy Scott was continuing the debate about ethics and ethical standards within the industry.

As Scott is the executive head of the CII there is a risk that readers might ignore these comments as part of high level academic debate and I think this would be dangerous, particularly as Skills Council chief executive David Jackman is an equally emphatic champion of this subject.

Let us start by taking ourselves back a couple of thousand years and a question that Plato posed: "What is justice?"

In certain parts of the world, the penalty for theft is the amputation of a hand, in others, the penalty for adultery is death by stoning.

Indeed, in the area where I was born in the UK, the physical violence to pensioners that we witness today was unheard of; or shall we say that those who rarely perpetrated such crimes became a limping and half-blind advertisement to those that might seek to do the same in the future.

To those who live or lived in such a community, the justice meted out might seem normal and acceptable, yet to those with different ways of administering justice, these methods might seem barbaric.

So it is with the concept of ethics. It changes from culture to culture, from country to country and year to year. It can change from person to person in a society which is multi-cultural, not just in terms of religion, but also social and business development.

Let us consider the simple ethical clash between someone who runs a publicly quoted company on the stock exchange, (who believes that the shareholder's interests are paramount) and the manager of the household department of a high street firm of insurance brokers that believes that the customer's interests are most important.

The chief executive of the public company is remunerated by way of profit and size of dividend (often achieved by cutting costs and reducing the services to customers) and the high street broker is rewarded by the number of satisfied customers he/she deals with.

So, within one distribution chain, we have a clash of ethics. The broker thinks the CEO of the insurer is unethical for cutting costs and services to the extent that customers suffer and the CEO has been brought up and educated to believe that it is unethical not to do the best for the shareholders.

In reality, an ethic is the benchmarking of a standard of behaviour in any given situation.

I was at a conference on the subject of ethics within the industry recently and one of the delegates made a couple of interesting observations:

The first was that as a chartered insurer who had been qualified for 30 years he knew all about ethics and took offence at the suggestion that anyone with such qualifications needed to be told about ethics.

The second was his view that all the current talk about ethics was just about finding a new buzzword to sell products.

Dealing with the second point first, I do think readers should be wary about what is going to be a very hot topic over the next few years. When it comes from figures such as Scott and Jackman and their respective institutions (CII and FSA), I think it is incumbent upon practitioners to take note, but I have to express alarm at the growing number of commercial organisations that seem to be jumping on the band wagon with workshops and training on "ethical standards".

Responding to the first point all I can really say is "what are ethics?"

Are they really defined by an examination? Are people who take an examination more likely to be ethical?

On the face of it the answer is in the negative, but it is interesting to note that to abide by any code of ethics does tend to require an element of dedication, self control, perseverance and often the denial of self interest.

Consider the relatively new standard in football that it is a breach of the rules to tackle from behind. Many readers will have lived with such tackles as the norm, particularly through the 1970s (Norman Hunter et al).

Now such a tackle is frowned upon (it is unethical as it is likely to cause physical damage to a fellow player) but for many it is not an easy task to resist the temptation. Indeed, those who have been brought up with the idea that a tackle from behind is ok might not see it as unethical, despite the fact that they accept the change in rules.

Ask a solicitor whether it is unethical to use client monies to run one's business and the answer is very much in the affirmative. Ask the broker who has run his/her business on collected premiums for generations and, while he might accept the change in rules that

FSA brings about, it is difficult for this individual to understand how accepted practice becomes unethical overnight.

A generation ago, it was common to crack racist jokes. It still happens but a far wider proportion of the population find it offensive. Indeed, ethics have moved on so far that my own children do not even understand the point of many of these jokes.

The task that the leaders of financial industry the world over now face is the development of ethical standards that are commonly accepted in a global business.

The harmonisation of what is right and wrong and the way we approach financial services and its statutory objectives is one thing; the harmonisation of beliefs and attitudes into a benchmarked set of standards is gloriously complicated.

Let me leave you with a thought: If there are 100 people in a group and 51 frown on a particular behaviour as being unethical, is it incumbent upon the other 49 to leave the group as it would be against their ethics to do something in the manner that the other 51 expect? But then, are we confusing unethical conduct with unprofessional conduct?

The debate is on, and I think it is an important element of any practitioner's CPD to include reading and understanding of the subject. It will not go away and like any subject that is likely to affect the manner in which you work, make sure you have your say.
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  • This page is edited by RW Associates, specialists in training, compliance and competence. Email ruylopezuk@btopenworld.com

    Using this CPD page
    For the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated.

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