OPINION | When I was asked to write this article about why so few individuals within the super industry have signed up to the Banking and Finance Oath, I thought it would be much easier than it was.
I have been on the board of the Banking and Finance Oath for a number of years. In my previous role, as chief executive of the Association of Superannuation Funds of Australia, when I spoke to super providers about the oath, most showed little interest, citing that it was not relevant to super because of the fiduciary duty to members. Others stated that it did not apply to super because super was different to banking and finance. But as we know, super funds are now retail savings vehicles, wholesale fund managers, significant direct shareholders, insurance providers and income-stream product issuers, as well as full financial advisers. Following the recent budget announcement, super funds will now also be involved in members’ saving for housing deposits.
The BFO has been designed to incorporate the entire financial services sector, and super, like it or not, is part of the finance industry. Its footprint on the financial goals of consumers’ lives is increasingly significant.
While super is different to retail and wholesale banking and other parts of the finance industry, it interacts with them at a number of levels on behalf of members. Taking the oath does not align super providers with banking activities but it does mean starting to acknowledge the responsibility of being part of the broader financial services industry.
Proactive not reactive
Parts of that industry have traditionally invoked ethics reactively. The super sector should consider whether it could fall into the same trap.
As part of the banking and finance industry, individuals in super should be on the front foot. Unethical behaviour does and will happen and there is little to be gained from trying to apologise after the behaviour has been exposed and the damage done. The likelihood of weakening consumer trust is increasing as competition ratchets up, advisers employed by funds sell income-stream products, and the current default system changes. The controls need to be tightened. A way to do that is to start individual conversations from an ethical perspective.
In this highly competitive and changing environment, it will continue to be difficult for the industry to come together and agree, except in those areas where there is complete sector neutrality. These areas are few and far between; even those issues that are relatively sector neutral, such as efficiency and insurance, continue to have their challenges.
So let’s take a different approach, rather than rely on organisations, sponsors and shareholders agreeing, there is now an opportunity for individuals at all levels, in all sectors and in all parts of the value chain, to make an individual commitment to ethics. This way, everybody starts from the same position.
The greatest challenge for the industry is to control its own destiny and the destiny of the system. It has to prove it can collectively put the members first. Every statement of the oath is relevant to this objective and just maybe, if a large percentage of super operatives signed the oath, the trust in the industry might strengthen.
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.
Pauline Vamos is a director of The Banking and Finance Oath. She is a qualified lawyer with over 20 years’ experience in financial services and a former chief executive of the Association of Superannuation Funds of Australia. The BFO’s inaugural Banking and Finance Ethics Conference will be held in Sydney on June 8, 2017. For more information or to register for the event, CLICK HERE.