A study, released on Tuesday by the Economist Intelligence Unit and sponsored by CFA Institute, has shown that although financial services executives overwhelmingly recognise the importance of ethical behaviour in the industry, there is still a significant gap between that belief and the industry’s practices.

The study, A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services, shows that strengthening culture based around driving integrity and financial knowledge across firms is a priority for the financial services industry.

'Flexibility' helps

Despite the importance placed on creating a stronger ethical culture since the financial crisis, a serious disparity still exists when it comes to executives’ recognition that adhering to those higher standards will help earn trust, foster career progress and support financial performance.

Although 91 per cent of survey respondents placed equal importance on ethical behaviour and financial success, more than half (53 per cent) thought career progression at their firm would be difficult without being “flexible” on ethical standards, and just 37 per cent believe that their firm’s financials would improve if the ethical conduct of employees improved.

The study also looked at the critical issue of knowledge in the industry. Whilst 97 per cent of the respondents said that they were well qualified for their own role, 62 per cent admit that their colleagues know very little about what goes on in departments beyond their own. This showed that a “silo” culture was pervasive in the industry, with departments acting unilaterally rather than viewing themselves as part of the wider business, suggesting integrated functional and management approaches to risk-proof organisations remained weak.

jayanta.mallick@thehindu.co.in

Related Topics