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Principle buoys can act to prevent a pantomime of ethics

One of the FSA&#39s discussion papers released at the end of last year has to a large extent gone unreported. There has been only a brief comment here and there about discussion paper 18, An Ethical Framework for Financial Services.

I think it is vitally important that the FSA should be asking questions about the industry&#39s values. It is even more vital that the industry should be asking these questions of itself.

Unfortunately, one of the results of an overdependency on regulation is that the values of practitioners tend to be sidelined or to be talked about solely in terms of compliance.

I was reading some material recently about the Watergate scandal in the US in the early 1970s. In the aftermath of that particular failure, many lawyers felt that law schools and bar associations should placate the public by requiring students and lawyers to take courses in legal ethics.

This certainly benefited law professors but it is hard to see that much more came out of it. The way the subject was approached meant that professional responsibility became merely another part of the regulatory system.

In accomplishing whatever they wanted to do, lawyers were required to stay within certain limits to avoid getting into trouble. The same might be said today of financial advisers, who are encouraged to be careful by teaching them the regulatory rules and the dangers of getting caught. But this does not teach them to be virtuous.

The FSA document implies certain values but it is difficult to see how we will move to a position where specific moral goals are internalised and generally accepted. The problem is that there is no basis or authority for a wider description of the shared values of the financial services sector. As soon as we start to debate this, we fall back into compliance.

Discussion paper 18 asks a number of questions which we are expected to debate. These questions imply certain values such as:

•Do we wish to treat everyone as we would like to be treated?

•Do we want to keep people in the picture about what is going on?

•Are we listening to others?

•Do we want to help others understand us?

•Are we willing to resolve conflicts of interest?

•Do we wish to deal with people with respect and without prejudice?

•Do we always do what we say we will do?

•Do we believe in cooperation as opposed to coercion?

•Should we be trustworthy?

•Do we believe in shared purpose and loyalty?

•Do we apply ethical criteria simply to gain an advantage or because we believe we should?

This is just a selection of the principles embodied in discussion paper 18. They do bear thinking about. If ethics is to be more than another part of the regulatory system, it must be based on firm convictions about the values of the sector in which we work and, indeed, of our lives. But where are these questions being brought up in our training and internal discussions?

Some of the issues which have arisen in the accountancy field highlight these matters with great clarity. Are some of the accountants who are being targeted with criticism at the moment merely people who went a bit wrong or are they people who were prepared to take big risks in a bid to get stinking rich?

If those concerned had been lucky, they might still be being praised as creative improvisers who knew how to bend the rules just enough.

Does ethics mean more than knowing when to take a risk and when to play it safe? If, in a training course, you were asked to explain why ethics means more than just avoiding getting caught, would you be taken seriously?

Should we not be defining the profession of financial adviser as a calling, dedicated above all else to honest dealings and with a paramount duty of care for the consumer? In this case, should we not reward ethical behaviour rather than just reward people who make the most money or help firms grow in size and success.

The alternative to defining ultimate goals is to accept an amoral and chaotic social order. To a great extent, that is what we have done but how long will it take before we learn that this result is intolerable?

I throw out these thoughts as a contribution to the debate on discussion paper 18.I would be very interested to know what you think.


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