The financial services sector is highly competitive, innovative and fast-moving, with a constant demand for new products in new areas that are subject to uncertain risks. It faces ever-increasing investor pressure to meet expectations, talent is at a premium and the resulting levels of returns and remuneration bring their own dangers.
The industry relies on trust, yet faces constant and conflicting pressures to maintain and build high levels of public confidence. Our responsible provision theme will explore the issues involved.
Integrity in financial services, the first issues paper from our responsible providers theme, suggests that insufficient thought has been put into reaching a common understanding of what it means to act with integrity in financial services, which is strange given how fundamental integrity is in the industry. We propose a framework to guide individuals and organisations in their behaviour and against which they can be judged.
The line of argument put forward in this issues paper and the framework for integrity that it proposes for the financial services sector are based on extensive research performed by the ICAEW in preparing its May 2007 publication Reporting with integrity as part of its Information for better markets initiative. This work looks at the challenge of establishing trust in financial reporting systems that span a host of distinct and often competing organisations. As in the financial services industry, creating trust is a collective enterprise that cries out for a shared understanding of integrity and a creative approach to building cross-cutting arrangements.
As well as reflecting a wide range of experience in promoting ethical behaviour in organisations, the ICAEW's work on integrity draws extensively on the literature of modern moral philosophy and everyday usage to argue that the concept of integrity contained in ethical guidance for the accounting profession needs to be broadened. The treatment of integrity by financial services regulators is similarly unsatisfactory, for example in failing to encompass an idea of wholeness, the importance of qualities such as courage and the idea that integrity is associated with doing the right thing from a broader community perspective.
By questioning established ethical guidance, the ICAEW is continuing a tradition which saw it pioneer the principles-based threats and safeguards approach to codes of professional ethics which is now widely followed throughout the world. Our guide to professional ethics is available to view.