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The ethics of business relationships… what would you do?

Thursday 2 July, 2020
by Anonymous

You’ve just started a new role at a large financial institution with a solid portfolio of business clients. You’ve been told that as bankers to large professional service firms, your organisation gives discounts to the partners of those firms for their personal lending facilities in recognition of the wider group relationship.

While a bit surprised to learn of this, you’re advised by a senior leader that’s it the right thing to do in terms of building relationships. Those relationships are often quite significant, as are the discounts and well beyond what an individual could negotiate for themselves if they were to approach the bank directly.  You’re excited about your new role but something about this is making you feel uncomfortable.

What would you do?

  • What is your duty in this situation?
  • Who are you most accountable to?

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Comments

There are 6 comments for The ethics of business relationships… what would you do?.

Re: The ethics of business relationships… what would you do?

Friday 3 July, 2020
by Adrian
If this is a documented business policy of the new firm then as long as you are operating within those guidleines and acting as a responsible lender then I am OK with the situation. If on the other hand it is ad hoc discounts with no clear policy on how to manage conflict of interest then it is best to then raise this issue with the senior manager to either get a clear policy in place or to authorise such discounts at their level.
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Re: The ethics of business relationships… what would you do?

Saturday 4 July, 2020
by Sarah
I think I’d have to question why the benefits to partners etc was set up in the first place. If it’s a case of getting as many benefits from the relationship as possible, it would seem to be either greedy or the unintended consequences have not been thought out.
Should we be offering mates rates to anytime? There seems an obvious conflict of interest here!
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Re: The ethics of business relationships… what would you do?

Saturday 4 July, 2020
by Vincent
IMHO I think the lack of response to this "dilemma" shows it is not the best case study example. A business decision has made by the bank to provide preferential pricing to a specific group of customers in order to deepen relationships and obtain further business from them and their networks.
Does this not happen every day in most companies? Where is the ethical dilemma in this?
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Re: The ethics of business relationships… what would you do?

Thursday 9 July, 2020
by Rob
On the face of it, I don't think that this is an issue of ethics. It is a function of the markets that Banks operate in.
No one bats an eyelid at Union's negotiating on behalf of their members... unions
with larger numbers should have more power to negotiate (beyond what an individual can negotiate on their own).
In New Zealand all of the large banks offer personal banking packages (discounts) to their large corporate customers. Customers expect it! It is efficient for the banks to have the Corporate marketing the banks services to its employees, instead of the banks spending time and money trying to market to the individuals one by one.
In my view the issue of ethics could come up if... the senior leaders family member was a partner at a "boutique" firm and the senior leader required the staff member to offer that small firm the same (or better) package (depending on the policy (as the much bigger firms)!
Then there would be a conflict of interest and cause for discomfort.
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Re: The ethics of business relationships… what would you do?

Monday 10 August, 2020
by Adam
A dilemma could arise from how the discount is paid for. if the discount is subsidised by the firm's lending and the discounts are an incentive for the partners to move their business than this could be unconscionable. The partners should exercise their fiduciary duties to the firm first before considering their private benefits.
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