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Ethics and Unconscionable Conduct

Ethics and Unconscionable Conduct

By Michael Dolan

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On 19 August 2019 the Federal Treasurer announced publicly a programme of legislation to implement the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry which reported to the Governor General earlier this year. (1)

On the same day, the Australian Financial Review reported that “ASIC is planning a litigation blitz in coming months as it puts up to 50 matters into the courts, many of them arising from the Hayne royal commission.” (2)

Financial institutional business behaviour under intense scrutiny

The importance of ethical behaviour in day to day business activities came into sharp relief last year in the hearings and reporting of the Financial Services Royal Commission. (2) Even many experienced observers and commentators were shocked by many of the revelations which came out of the public hearings, often only after sustained cross-examination by Counsel assisting.

What became obvious from that work is need for financial institutions to foster and promote a culture of ethical behaviour within their organisations where the customer comes first.  This must be endorsed and supported by Boards and Senior Management with the early implementation of intensive staff training and salary incentives for good behaviour.

There is an urgent need for financial institutions to look inwards to their ethical obligations towards customers and shareholders and commit to honest and transparent behaviour in the future.  Only by doing so will they regain the trust of the public which has now been shown to have unravelled so badly to the detriment of Australian society.

The Importance of ethics as part of corporate decision making

Lawyers working within and acting for these organisations have an important role to play in this regard. As officers of the court they have a fundamental commitment to ethical behaviour and are in an ideal position to lead by example and provide expert advice to their clients.  Being ethical is not only about obeying the letter of the law, it is about doing the right thing when no-one is looking.

This important matter was raised for discussion by the President of the Victorian Court of Appeal, the Hon Justice Chris Maxwell AC, when he delivered the annual Oration of the Victorian Law Foundation on 14 August 2019. (2)

It may be that the training of lawyers in, or aiming for, commercial law practice should give much greater emphasis to these notions of good conscience.  We would not be expecting lawyers to stand in moral judgment of their clients but rather to make sure that their clients have a good appreciation of the moral dimensions of the legal prohibition of conduct which is against conscience.  Given the centrality of this moral concept in the framework of business regulation, commercial lawyers should be making sure that the moral dimension is quite explicit in the advice they give.”

This is a constructive and important suggestion which requires thoughtful consideration by all engaged in the teaching and practise of the law.

References

  1. Federal Government reveals timeline to implement its 54 banking royal commission recommendations 
  2. ASIC on the verge of Hayne litigation blitz
  3. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
  4. Equity and good conscience: the judge as moral arbiter and the regulation of modern commerce 

 


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