Standing up for accountability

ARTICLE CATEGORIES


ARCHIVES


financial accountabilityAccountability is important in an advanced society.

We are about to see two examples of accountability in the near future. One here and one south of the border.

Our value system is based on the concept of fairness. Good things should happen, but when they don’t there needs to be an acknowledgement of wrongdoing and a correction of poor behaviour.

Correcting poor behaviour can take many forms. Punishment, or the anticipation of punishment, passing new laws and regulations, and even public shaming can have an effect on behavior. Sometimes it is a combination of all of these.

Recently thousands of employees from the top five Canadian banks complained about being forced to use unethical and illegal tactics to meet unrealistically high sales targets. CBC’s Go Public broke the story.

If these alleged activities occurred it is fair there should be repercussions, both punitive and new regulations for oversight.

There are two compelling questions regarding accountability in this case.

Did the banks use inappropriate pressure tactics to force bad behavior from employees? Did the regulatory body responsible for policing banks fail to do its job?

Next month, parliament’s finance committee will start investigating. It will hear from the banks and government departments that have the responsibility of overseeing bank activities. I can’t help wondering who will speak on behalf of the anonymous bank employees.

It will be interesting to learn more about these alleged wrongdoings.

It will be equally interesting to gauge the public’s reaction if any of Canada’s top financial institutions be found to have engaged in poor behaviour.

Accountability will also take centre stage in the United States over allegations that President Donald Trump’s actions could lead to impeachment.

It’s hard to be specific on all the allegations because every few days the list seems to grow. However, after the evidence is in, if there have been any wrongdoings he should be held accountable.

How is all this relevant to us, and will it have an influence on how people receive financial advice and learn about financial products?

There are plenty of significant issues being discussed now that affect the financial services industry.

These include advisors putting client’s interests above their own, removing embedded commissions from mutual funds, and fully disclosing all costs of financial services and products like mutual funds.

The Canadian bank story and that of the president of the United States will capture headlines and people’s interest. If the mood of the day is accountability, and that wrongdoings must be acknowledged and corrected because that’s what society in 2017 demands, there could be a positive spillover.

With public focus on accountability and good behavior due to the newsworthy stories, my prediction is that those working hard behind the scenes to correct poor behaviour, and advance the financial services industry, will have a receptive audience.

My hope is we will see significant advancements to the governance of the financial services industry in the near future.