The assignment will analyse an issue relating to the companies investigated by the Banking Royal Commission. The chosen organization in this assignment is Australian Mutual provident. The organization was founded in the year 1849 and has been a key financial service provider in Australia. The organization has its operation in Australia and New Zealand and the headquarter lies at Sydney, Australia. AMP has the largest shareholders registered in Australia; this is because when AMP demutualised the policy holder of the organization received shares (loans, retirement and education 2018).
After the investigation conducted by the banking royal commission, it can be seen that AMP continues to charge the dead customers life insurance (Boleat 2012). AMP has admitted that they continue to deduct life insurance premium from their deceased customer (Siegel 2013). The reports suggest that the organization has charged more than 4600 deceased superannuation life insurance customers. This has been done intentionally knowing that they are dead and there was no more life insurer. The largest wealth manager of AMP owes about 1.3 million dollar in lost earnings and the insurance premium to the deceased family members. The organization knew about one of the similar incidents in 2016, but the organization started to investigate in July after the revelations in the banking royal commission. On Monday, the customer and the wealth executive told the enquiry team that there are other kinds of fees that also have been deducted from the deceased customer’s account that also need to be refunded. The banking royal commission heard the same incident when one of the staffs of the AMP questioned whether it is justifiable to charge from the deceased customer’s bank account. Mr. Sainsburry explained that the money which has been deducted from the account of the deceased customers will be refunded once the death claim was submitted (Karim, Huda nad Khan 2012).
The ethical question that arises from the current scenario is that is it justifiable to charge the deceased customer’s and deduct for their life insurance when there is no life to insure. The amount which was deducted from the customer needs to be refunded to the deceased customer family.
Corporate social responsibility is a management theory where an organization integrates the entire social and the environmental concerns in their workplace environment to better the interaction with the key stakeholders of the company (Saeidi et al. 2015). CSR helps in providing better understanding of the environment and the responsibilities which helps the company to achieve balance among the economic, social and environmental imperatives and at the same time fulfilling the expectations of the key stakeholders of the organization.
The organization has certain rules and regulations that they need to follow for sustaining in the organization. The organization is very much committed in managing the business in a sustainable manner for example the organization created long-term, shared values for their customers and the community. The sustainability of AMP is mainly built within the three areas of focus – customers, community and people. AMP have been involved in sustainability, when they reduced their environmental footprints being an organization and improved the gender diversity in the organization. According to AMP the organization is recognised for their social, environmental and governance policies through the inclusion in FTSE4Good index series (Belghitar, Clark and Deshmukh 2014). To help and continue the progress that the organization made till date and to set a path for future the organization is focused on strengthening their sustainability strategies. AMP is looking forward to:
Creating shared value is a business concept that was first introduced in the Harvard Business review article named as Strategy & Society: the link between competitive advantage and the corporate social responsibility (Crane, Palazzo and Spence 2014). The concept was explained by Professor Mark Kramer and Michael Porter in 2011. They explained that the shared value is used by the organizations to measure or create measurable value by addressing and identifying the social and the environmental issues that may come up and intersect with the business operation. Creating shared value will help in developing the future markets and will also strengthen the economy and the community. Creating shared value helps in increasing the profit at the same time provides benefits to the community. Porter and Kramer explained that the shared value can be created in three different ways:
The organizations can increase their share value by implementing the ISO 14001 standards, which will make the organization greener and will put the organization in a better position for the tenders. This will help them by giving them a competitive advantage in the industry. This ISO standard will help the organization to reduce their operational cost by using the reuse and recycling principles. There are other ISO standards that focus on increasing their product quality which will also help them to create shared value.
Stakeholder’s analysis is a method that is used for facilitating institutional and policy reform processes by accounting for and often including the needs of those people who have a stake or interest in the organizational reforms (Wagner, Hassanein and Head 2008). A stakeholder is any person who are interested in the organization and who can be affected by the organizational process. It is important to analyse the stakeholders of the company as they plays a vital role in deciding the revenue of the organization. Stakeholders of the organization can be individuals, unorganized groups or any organizations.
The four major attributes that are important for the stakeholder’s analysis are -Stakeholders position on the reform issue, level of interest they have in a specific reform, level of influence they hold and the coalition/group to which they are associated with. These attributes are measured with the help of various data collection methods, which includes interview with the knowledgeable country experts who can explain the stakeholder’s needs and the actual st6akeholders of the company.
The level of stakeholder’s influence highly depends on the quantity and the type of power and resources the stakeholders can put to promote their position on the reform. The level of salience and interest is the importance and the priority that the stakeholders put in the reform area. Stakeholders plays an important role in the organization, they help in setting up the rules and the regulations of the company, the targets and the objectives for which the organization will work. There are number of stakeholders in a company and it varies from industry to industry.
The stakeholder’s power and their impact on the organizational policy making process are conducted in several steps. The initial step is to form a continuum. These stakeholders are mapped on a continuum, which indicates support for the new reform on a scale of 0 to 100 from low to high. The second stage is organizing the data of the stakeholder’s according to power/influence and the salience of each of the stakeholders for understanding their potential opposition and support for the reform that is proposed. More often a particular matrix is taken for organizing and classifying the data of the stakeholders. Stakeholders are grouped according to the following aspects:
The stakeholders of the company are the most important aspect. AMP should analyse their key stakeholders correctly and then make their policy band reforms. The key stakeholders of the organization are the customer, government and the shareholders. The organization needs to divide them in a specific group so that they can fulfil each of their desires and interests towards the organization.
The principles and the recommendations of the ASX 2010 are listed below:
The organization needs to follow the following principles in order to effectively perform in the industry. The organization needs to manage their risks and form proper risk management system, which will help the organization to lead in an effective manner.
In general terms ethics is the study which involves morality. It examines the objectives and the significance of establishing moral norms (Utz and Wimmer 2014).
Banking ethics is the system of standards and rules of conduct for the organizational body and for its employees. Banking ethics can also be defined as the particular economic ethic’s form that covers the conduct of the banking employees. The banking ethics helps the financial body to operate the business smoothly and helps to follow the proper rules and guidelines. Many researchers believe the banking ethics is a type of professional ethics that includes in the field of finance, which exists along with the universal principles of morality and is characterized by specific norms of human behaviour in its specific activity.
External banking ethics governs the conduct of bank managers and employees with business representatives of the bank. It meant to create a positive image of banking institutions, fostering collaboration, avoidance and resolution of external conflicts of banks. Actual theory examines the bank as a financial institution customer oriented, occupied by permanent lifting quality of its products, whose business is based on massive deployment of information technologies. This inevitably leads to improving ethical banking standards.
Modern banks are motivated to have ethical conduct based on the following considerations:
Conclusion:
The aim of this assignment was to analyse an issue relating to the companies investigated by the Banking Royal Commission. The chosen organization for this assignment is Australian Mutual provident, founded in the year 1849 and has been a key financial service provider in Australia. After investigation by the banking royal commission, it can be seen that the organization continues to charge from the dead customer’s life insurance. The ethical question that arises from the current scenario is that is it justifiable to charge the deceased customer’s and deduct for their life insurance when there is no life to insure. The amount which was deducted from the customer needs to be refunded to the deceased customer family. Corporate social responsibility has also been discussed in this assignment. Corporate social responsibility is a management theory where an organization integrates the entire social and the environmental concerns in their workplace environment to better the interaction with the key stakeholders of the company. Stakeholder’s analysis has also been done so that the organization can understand the key stakeholders of the company.
References:
Belghitar, Y., Clark, E. and Deshmukh, N., 2014. Does it pay to be ethical? Evidence from the FTSE4Good. Journal of Banking & Finance, 47, pp.54-62.
Boleat, M.J., 2012. Building Society Industry (RLE Banking & Finance). Routledge.
Crane, A., Palazzo, G., Spence, L.J. and Matten, D., 2014. Contesting the value of “creating shared value”. California management review, 56(2), pp.130-153.
Karim, M.R., Huda, K.N. and Khan, R.S., 2012. Significance of training and post training evaluation for employee effectiveness: An empirical study on Sainsbury’s Supermarket Ltd, UK. International Journal of Business and Management, 7(18), p.141.
Lane, R. and Watson, M., 2012. Stewardship of things: The radical potential of product stewardship for re-framing responsibilities and relationships to products and materials. Geoforum, 43(6), pp.1254-1265.
loans, H., retirement, S. and education, N. (2018). AMP Personal Banking – Accounts, Super, Home Loans & Insurance | AMP. [online] Amp.com.au. Available at: https://www.amp.com.au/ [Accessed 26 Sep. 2018].
Nicholson, E., Collen, B., Barausse, A., Blanchard, J.L., Costelloe, B.T., Sullivan, K.M., Underwood, F.M., Burn, R.W., Fritz, S., Jones, J.P. and McRae, L., 2012. Making robust policy decisions using global biodiversity indicators. PLoS One, 7(7), p.e41128.
Ross, J.W., Weill, P. and Robertson, D., 2006. Enterprise architecture as strategy: Creating a foundation for business execution. Harvard Business Press.
Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of business research, 68(2), pp.341-350.
Siegel, E., 2013. Predictive analytics: The power to predict who will click, buy, lie, or die (p. 148). Hoboken: Wiley.
Utz, S. and Wimmer, M., 2014. Are they any good at all? A financial and ethical analysis of socially responsible mutual funds. Journal of Asset Management, 15(1), pp.72-82.
Wagner, N., Hassanein, K. and Head, M., 2008. Who is responsible for e-learning success in higher education? A stakeholders’ analysis. Journal of Educational Technology & Society, 11(3).
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