There are more than 400,000 people employed in the banking and finance industries in Australia, yet no more than 3000 of them have signed the Banking and Finance Oath.
That’s a lot less than 1 per cent. After the banking royal commission and all the pledges to do better and behave properly, it’s pitiful – unconscionable even, a word we’ll come back to later.
Here is the oath, in case you were wondering:
Trust is the foundation of my profession.
I will serve all interests in good faith.
I will compete with honour.
I will pursue my ends with ethical restraint.
I will help create a sustainable future.
I will help create a more just society.
I will speak out against wrongdoing and support others who do the same.
I will accept responsibility for my actions.
In these and all other matters; My word is my bond.
Pretty straightforward, you would think. “Where do I sign”, should be the standard response to it in the banking and financial services industries, after what’s been going on.
The oath was started in 2009 by Clare Payne, then Associate Director of the Integrity Office of Macquarie Bank and also a voluntary consulting fellow with the Ethics Centre with Simon Longstaff. She started talking to bankers about ethics, a banking and finance ethics panel was established and its first project was the oath.
These days the Banking and Finance Oath has a board chaired by John Laker, former chairman of APRA, and has been led for five years by Cris Parker, who also works at The Ethics Centre. The manager is now Jodi O’Callaghan.
The list of signatories and the organisations they work for is revealing, if unflattering, especially about the big four.
Westpac has 136 on the list of those who have taken the oath, NAB 36, ANZ 22 and Commonwealth Bank, the industry’s biggest employer, a miserable 10. That’s a total of 204 for the big four, out of more than 170,000 employees.
The new start-up, Judo Bank, on the other hand, has 115 signatories listed, which is 100 per cent of its staff. The bank that appears most often is Rabobank, which has 208 on the BFO list – I don’t know how many employees they have in Australia, but it wouldn’t be many more than that.
You could say the oath is just words, and apparently that’s what the leaders of the big four do say since they apparently haven’t pressed their staff to take it, but they are good, worthwhile words.
The current chairman of APRA, Wayne Byres said as much in a speech to the BFO conference in August: “Initiatives such as the Oath… are important building blocks for a stronger, more efficient, and more sustainable financial system. They should be welcomed and embraced by industry leaders.”
Another important, and related, word is unconscionable. It is the word that injects morality into the commercial law.
Section 12CB of the ASIC Act prohibits unconscionable conduct in connection with financial services. It mirrors similar provisions in the Australian Consumer Law.
The term “unconscionable conduct” has been part of the law for centuries, and it basically means conduct that is contrary the principles of good conscience. What that means is pretty much left to the court.
In a speech on the subject in August, the President of the Victorian Court of Appeal, (and my friend) Justice Chris Maxwell, said that using a quintessentially moral concept like unconscionability raises questions about the role of a judge as moral arbiter, “about the tension between the moral aspirations of the law and the profit-driven dynamics of the market economy”.
“We should start by acknowledging that ‘unconscionable’ is a word hardly ever encountered in ordinary usage. See if you can remember an occasion on which you have described — or heard someone else describe — a person’s conduct as ‘unconscionable’.
“It is surely remarkable that the Commonwealth parliament has, for the past three decades, relied on a term likely to be both unfamiliar and unintelligible to those whose conduct it is intended to regulate. And ‘unconscionable conduct’ was retained despite the 1997 recommendation of a parliamentary committee that the term ‘unfair conduct’ should be used instead.”
A search of ASIC’s website reveals 54 enforcement actions under the unconscionable conduct provision, including the 2016 actions against Westpac, ANZ and NAB for manipulating the bank bill swap rate. The latest was in July this year: ASIC sued ANZ over fees that were allegedly incorrectly charged.
Justice Maxwell’s speech went into some detail in defining the meaning of unconscionable, but perhaps the pithiest came from his quote of Justice Stephen Gageler of the High Court: “For a court to pronounce conduct unconscionable is for the court to denounce that conduct as offensive to a conscience informed by a sense of what is right and proper according to values which can be recognised by the court to prevail within contemporary Australian society.”
In other words, morality – a murky and grey but central idea to both the commercial law, and commerce itself, at least as it should be.
It seems to me the Banking and Finance Oath can be where commerce and this part of the law meet; it can give clarity to what “unconscionable” means in practice.
It means truth, honour, good faith, ethical restraint, speaking out against wrongdoing, accepting responsibility and making your word your bond.
So take the oath you lot. I have.