Ethics Case Studies – Hire Academic Expert

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Checklist of attachments:

Task 1 – Case Study 1 questions

Task 2 – Case Study 2 questions

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This assessment relates to the following units of competency:

FNSINC514 Apply ethical frameworks and principles to make and act upon decisions

The unit of competency FNSINC411 Conduct work according to professional practices in the financial services industry requires all aspects of your job role in financial services to be completed to professional and legislative standards.

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Case Study 1 Scenario

Michael and Samantha Jones have operated and owned ‘Finance Broking Pty Ltd’ business for the last five years as an ACL holder.

Their vision statement has always been: “We simplify the complexity of reaching financial goals and take pride in providing professional and ethical services to our clients. We view their success as our success.”

Michael and Samantha thought long and hard about how they wanted the people in their business to behave and tried to capture that in their vision statement after they did some research into some of the industry leaders’ statements.

MFAA “Our Mission – To help our members be recognised as trusted professionals and be the client’s first choice”

FBAA “Our purpose is to assist our members to develop as business professionals and be skilled and successful finance brokers, by providing advocacy, education and support services.”

AFCA “Our vision is to be a world class ombudsman service, by:

raising standards and minimising complaints

meeting diverse community needs; and

being trusted by all.”

They currently have three brokers that work in the business – Bill Mason is the most recent to the business.

Michael and Samantha have recently completed an internal audit of files and noticed a breach by Bill Mason. It appears a systematic issue was established for not advising commission charged in the credit proposal. Michael noted that all of Bill’s applications had this critical item missing. Bill’s response seemed flippant and Samantha is very concerned about the ethical ramifications as it calls into question the integrity of the company and all those who work there.

Michael is handling the risk and legal ramifications; meanwhile when Samantha spoke to Bill about his attitude to this serious breach, Bill said “Most of my clients are not Aussies – mainly Greeks, Paki’s and Lebbo’s. My payment is none of their business, spending time going through that irrelevant information will only cause problems and take up more time, they would think I was overpaid and might want a cut! Plus, Aussies don’t bother reading anyway, those who do read it would probably not understand the fine print or how much time the loan takes!”

Samantha is horrified to hear the negative biases Bill is revealing and also very concerned because – under new requirements of Regulatory Guide 79 – Breach Reporting by AFS licensees and credit licensees (Sept 2021) – she will need to investigate and possibly inform ASIC of these infringements.

Bill definitely needs refresher training on ethical behaviour and the standards of ethics that a finance and mortgage broker needs to adhere to, along with addressing his appalling biases. Samantha will utilise internal documents such as Finance Broking’s Code of Ethics (see below) and their Vision Statement.

Finance Broking – Code of Ethics

Work in the customer’s best interest 

We are committed to a culture of acting in the customer’s best interest, every time. We ask questions and listen intently, so we fully understand our customer’s needs and objectives.

Transparency 

We do all that is possible to ensure our clients are fully informed about why we make the loan recommendations we do, and how we get paid.

Governance and culture 

We will always act in accordance with applicable laws and cooperate with any regulatory bodies. We see our role as constantly adapting, leading and shaping best practice in the industry.

Manage conflicts of interest 

Conflicts can happen from time to time. When any conflict of interest exists, we will disclose them to our customer and always give priority to their needs.

Committed professionals 

To deliver outstanding results for our clients, we invest in ourselves and our business.

You can have confidence we maintain, develop and apply a high level of knowledge and skills to meet all required industry standards and qualifications.

Quality 

We will do everything possible to ensure records of clients are retained, maintained and kept in a form that is complete, accurate and safe.

Case Study 1 – Questions

Highlight two ethical problems in the above scenario.

What two principles from Finance Broking’s Code of Conduct have not been upheld by Bill in this scenario?
Explain your response.

Complete the table below on how the listed misconceptions could impact Bill’s thinking and affect Bill’s role as a broker and then add one further misconception Bill could have considering the scenario in (b).

a) In the first column are some possible biases that could have influenced Bill’s thinking. The first example in red gives you guidance on the depth of the required answers – you are to complete the rest.

Bill has these common mistaken beliefs causing him to generalise generations, roles and cultural attitudes

Impact of his mistaken beliefs

How could his mistaken beliefs impact Bill’s broking role

Millennials are job hoppers

Bill assumes that it will be difficult to collect reliable income information and doesn’t follow up on Millennial appointments in a timely manner.

Bill may lose valuable business due to his inactivity with the younger generation

Baby Boomers’ (those born between 1946–1964) don’t want to engage with technology.

Millennials’ (those born between 1981 – 1996) are addicted to technology.

Men always control the finances

Australians have a relaxed attitude

b) Now think about another bias you believe Bill could have that would govern his behaviours and attitudes. Add it in below, along with explaining the impact and how it could impact his role.

Bill has these common mistaken beliefs causing him to generalise generations, roles and cultural attitudes

Impact of his mistaken beliefs

How could his mistaken beliefs impact Bill’s broking role

Samantha is very concerned about Bill breaching regulation regarding commission/s.

Research both the Mortgage and Finance Association of Australia’s (MFAA) Code of Practice and the Finance Brokers Association of Australia’s (FBAA) Code of Conduct.

List the relevant responsibilities Bill should have adhered to regarding commission and include the clause number if they have it listed.

https://www.mfaa.com.au/about-us/membership-framework/code-of-practice

https://os-data-2.s3-ap-southeast-2.amazonaws.com/fbaa-com-au/bundle2/code-of-conduct-final-2017.pdf

MFAA responsibility

Click to paste information from MFAA here and make sure you reference the clause if there is one.

FBAA responsibility

Click to paste information from FBAA here and make sure you reference the clause if there is one.

Samantha is going to utilise Finance Broking’s Vision Statement and Code of Ethics to evaluate the situation Bill has put the company in.

List a minimum of five ways Bill has breached the Vision Statement and Code of Ethics.

List a minimum of five ways Bill has breached the Vision Statement and Code of Ethics.
Vision Statement ““We simplify the complexity of reaching financial goals and take pride in providing professional and ethical services to our clients. We view their success as our success.”

 

 

 

 

 

List a minimum of three ways that the Finance Broking’s reputation would be negatively impacted if The Financial Review released the following report to the public.

“Breaking News! The Financial Review reports:

ACL licensees Michael Jones and Samantha Jones of Finance Broking, along with mortgage broker employee Bill Mason are being investigated by ASIC due to ongoing significant breaches in relation to RG 78- Breach reporting by AFS licensees and credit licensees (Sept 2021).

Initial reports indicate an ongoing failure to produce and hold accurate credit contracts. Concerningly none of Mr Mason’s clients were informed of any commission/s he would initially be paid, or the ongoing commissions accumulated over the course of the credit contracts.

Ms Jones issued a statement “Finance Broking are diligently cooperating with ASIC investigators to ensure all breaches are rectified and processes put in place to ensure compliance in the future. We take the matter very seriously and do not accept any of the breaches had any malicious intention.”

Negative impacts on Finance Broking P/L

1

2

3

7. a) Explain one possible negative impact to each listed stakeholder.

Stakeholders

Possible outcomes

Finance Broking

Click to type a negative impact

Michael and Samantha Jones

Click to type a negative impact

Bill Mason

Click to type a negative impact

The other Brokers who work at Finance Broking

Click to type a negative impact

ASIC

Click to type a negative impact

Bill Mason’s clients

Click to type a negative impact

b) List three communication tools/technology you would you use to ease concerns about risks or outcomes to the stakeholders you identified in question 7a) above.

Communication tools/technology

1

2

3

8. Look at the 5A’s of Ethical Decision-Making Framework below to help you analyse the ethical dilemma Samantha and Michael’s are facing. The Finance Broking – Code of Ethics has also been placed below in case you wish to refer to it to provide a foundation for your response. You may copy and paste as has been done in the example answer.

The questions that underpin each of the 5A Steps are a guide to help you understand what each 5A Step means. You don’t have to address every question raised, but you must think about them and choose at least:

one of them where there are only two questions and

at least two questions where there are three or more to help guide your analysis.

5A’s of Ethical Decision-Making Framework

5A Steps

Questions that underpin each of the 5A Steps

1. Assessment – Make sure you have all the facts about the ethical dilemma

Does it abide by the law?

Does it align with the Code of Ethics?

Does it align with your ethical values and those of the surrounding culture?

2. Alternatives – Consider your choices

What are the possible alternative choices?

What are the pros and cons of those choices?

3. Analysis – Identify your decision and test its validity.

Will your decision have a positive impact or prevent harm?

Does your decision take cultural differences into account?

Will your decision still seem like a good idea in a year from now?

Are you free to make this decision free from external influences?

Are you calm and able to make logical decisions?

Are you able to stand by your decision legally?

Do you have to notify any third parties?

4. Application – Apply ethical principles to your decision

Would your choice result in the greatest good?

Would your choice be fair and beneficial to those involved or concerned?

Does your choice/decision show respect?

5. Action – Make a decision

Are you willing to accept responsibility for your decision?

Could you make your decision public and feel good about it?

Are you ready to act?

*Underpinning framework from the Project Management Institute.

Finance Broking – Code of Ethics

Work in the customer’s best interest 

We are committed to a culture of acting in the customer’s best interest, every time. We ask questions and listen intently, so we fully understand our customer’s needs and objectives.

Transparency 

We do all that is possible to ensure our clients are fully informed about why we make the loan recommendations we do, and how we get paid.

Governance and culture 

We will always act in accordance with applicable laws and cooperate with any regulatory bodies. We see our role as constantly adapting, leading and shaping best practice in the industry.

Manage conflicts of interest 

Conflicts can happen from time to time. When any conflict of interest exists, we will disclose them to our customer and always give priority to their needs.

Committed professionals 

To deliver outstanding results for our clients, we invest in ourselves and our business.

You can have confidence we maintain, develop and apply a high level of knowledge and skills to meet all required industry standards and qualifications.

Quality 

We will do everything possible to ensure records of clients are retained, maintained and kept in a form that is complete, accurate and safe.

Imagine Michael and Samantha now have to go through the 5A’s to work out what information they will discuss with Bill to make him aware of his unethical behaviour/actions.

They have started and written in their own analysis of the first 5A Step – Assessment – so use their example to guide you in the depth of response we expect. You’ll see how they have answered some of the underpinning questions from above to help them capture the essence of Assessment and how they see the situation.

Do not copy and paste the Underpinning Questions in as your answers as this will not be accepted and you will be asked to redo this part of the assessment. Note the example below, there are no questions written in, but the response is answering the questions.

Analysis Process

Assessment

Bill’s actions breached the NCCP Act as he didn’t declare the commission he would make so we have to take steps to monitor Bill to show we are dealing with the breach and to show the regulators how we have resolved this. Bill’s actions also doesn’t align with our Code of Ethics point “Transparency… how we get paid.” Our business has always followed the values in our Code of Ethics because that’s how we keep our customer service standard high, our reputation has always been unblemished and we remain compliant to legislation.

Alternatives

Analysis

Application

Action

9 a) Samantha and Michael have analysed their options using the 5A’s framework and feel they may need specialist assistance to make sure they take the right steps.

Select a minimum of two to a maximum of four professionals and/or entities they could speak to.

Previous Mentor

Legal advice from a solicitor

Wikipedia

ASIC

A lender on their panel

Industry professional body e.g. MFAA, FBAA

b) Select the three most appropriate questions you could ask yourself in order to decide whether you could proceed with the plan independently or if you required support?

☐ Do I have the skills required to handle this on my own?

☐ Is there someone else that could offer further insight?

☐ Can I just chalk it up to experience and do nothing?

☐ Should I close down the business?

☐ Are there legal aspects that I need to address?

10. Outline two types of Cognitive biases that Bill seems to display and explain why you have chosen them. Refer to https://www.ethicalsystems.org/biases-and-decision-making/ website again to find the biases that match Bill’s behaviours.

The definition of Cognitive bias is “Cognitive bias – also known as psychological bias – is the tendency to make decisions or to take action in an unknowingly irrational way.” Mind Tools

11. Explain two strategies or processes Bill could use for overcoming these biases and changing his attitude.

12. Using your answers from Q8 the 5A’s Ethical Decision-Making Framework, answer the following from Samantha and Michael’s perspective.

By completing the questions (a) to (c) you are laying the foundation of developing an implementation plan for an ethical response.

a) Select the three correct forms of evidence Samantha and Michael would need to collect.

Copies of contracts showing the commission error

Bill’s credit representative number

Ethics training that Bill has completed with Financial Broking

Bill’s industry association membership number.

Statements that Bill has made about his errors

b) Select the two correct answers to whom Samantha and Michael may need to speak with.

Possibly ASIC

FASEA

Staff at Finance Broking

Bill’s wife

c) Put the following steps in developing an implementation plan in order. 1 is the first step, 2 is the second step and so on.

Order Number

Sequence of actions required in developing your implementation plan

Inform relevant stakeholders of the meeting’s agenda and time

Record minutes of the meeting assigning responsibilities

Collect information/evidence of the issue to act upon

Act on (implement) agreed strategies

Have a collaborative meeting and allow staff to have input

Review outcomes with relevant stakeholders

13 a) Think about what Bill might say to excuse his non-compliance in relation to not explaining his commissions to his clients.

Provide two excuses.

b) From your two answers in question 13a, what would you say to Bill in return if you were Samantha or Michael?

Case Study 1 – The scenario continues

Michael and Samantha decided to have a 1:1 meeting with Bill to firstly discuss how his breaches have impacted the compliance of Finance Broking. They sent an email to invite Bill and a representative of his choice to take notes of the discussion. They will also issue Bill with a written warning and placing him under an undertaking as he has not been compliant with several aspects of his employment contract and ASIC guidelines.

Michael and Samantha also had to report the breaches to ASIC as they had been ongoing and cumulative. It was very stressful, but it was found to not be a significant breach as it was identified quite early, and they took measures to ensure it wouldn’t happen again in the future. The ramifications to your reputation have been quite widespread and they will need to issue a formal statement to their previous and current clients to explain and regain their trust.

14 a) From Bill’s point of view do you think the issue has been resolved? Answer Yes, No or Maybe, and explain your reasoning.

b) From Samantha and Michael’s perspective do you think the issue has been resolved? Answer Yes, No or Maybe, and explain your reasoning.

c) From ASIC’s point of view do you think the issue has been resolved? Answer Yes, No or Maybe, and explain your reasoning.

15. Imagine you were a mortgage broker at Finance Broking, do you agree with the outcomes in relation to:

How Samantha and Michael handled the ethical and compliance issue? Explain why/why not.

How Bill complied and dealt with the situation? Explain why/why not.

What a journey Finance Broking and the team have had!

16. Thinking back over the Case Study, how could you potentially avoid ethical situations or improve on the response?

Select the three most appropriate strategies.

Ensure I ask direct questions in the beginning, to find out about biases that may already exist in potential staff.

Only hire staff that pass a formal ethics test.

Double check own values and Code of Ethics before making decisions where it is difficult to determine the right ethical response.

Consult with trusted peers e.g. previous Mentor, especially in sensitive situations.

Only hire staff that get good scores on a personality quiz.

Refer to Section 3 of the Compliance, Regulation & Ethics Learning Guide to answer the questions in this section.

You have just submitted your client Callum’s loan when he says, “You’ve made this process so much easier and to show I really appreciate your efforts, here’s one ticket to watch the footy from behind the goals.” The gift is worth approximately $105. Do you need to list this in the Gift, benefits and hospitality Register? Explain your answer.

You have been referred a client from a George Stefan from AAMC Financial Planners who is a Financial Planner you have a referrer agreement with. He’s asked if you could urgently help his clients as their previous broker has let them down and now they’re situation is time sensitive. You accepted the referral and immediately commenced working with them. During the loan process (whilst you’re doing the mortgage product research for your client) George offers you two Gold Class Experience E-Voucher to the movies valued at $159 and includes two glasses of wine and meals in the Gold Class section at Village Cinemas to say thank you.

Complete the Gift, benefits and hospitality register below (ensure you refer to the examples provided in Section 3 of your Compliance, Regulation & Ethics Learning Guide).

The dates have been completed for you.

Use your name as the Staff Member.

Date Received

Date Recorded

Received
by staff member

Provider

Information

Value of gift/benefit

05/01/20XX

07/01/20XX

Case Study 2 – Gifts, benefits, hospitality and your ethics

Scenario

Xavier is a friend in Adelaide who, like you, is a finance and mortgage broker; you are based in Sydney so aren’t in competition with each other. Xavier entered into a referrer agreement with a national real estate agency called Ray-Courts last year and has been getting quite a few cool thank you gifts.

Xavier has mentioned that Ray Courts really show their appreciation to mortgage brokers that get good results with their referred clients. They “shout” brokers for weekends away, all expenses paid, give them tickets to corporate boxes at sporting events and gift vouchers. Ray Courts are owned by AAMC Bank. Xavier’s told you that a lot of his loans are now settled by AAMC Bank because for the most part their products are on par with other lenders that he has on his lending panel.

Xavier is encouraging you to contact Ray Courts in Sydney to see if you can get into a referral arrangement as well with the possibility of benefiting from these kinds of rewards. You ask Xavier if he has listed these gifts in his gifts, benefits and hospitality register and he says he listed half of them, so he’s still being honest by notifying that he gets gifts.

If you are unable to open the embedded Ethical Decision-making Frameworks document to assist you with answering the following questions, it is available for download from your Resources tab in your Learning Centre.

Knowledge questions

Answer whether Xavier is acting ethically or not and which include information on which Obligation/Rule he may need to analyse.

Click here to refer to RG 273 Best Interest Duty

Do not look at Section B ‘Acting in the consumer’s best interests’.

Using the Ethical Decision-making Frameworks embedded in the scenario, explain what you could say to Xavier to help him analyse whether his actions are ethical or not.

Reference which ethical framework(s) you have used to help you decide on what to say.

The minimum word count expected is 200 words.

Make your script conversational

Include questions you could get Xavier to ask himself

Using the ethical decision-making frameworks, what questions could you ask yourself:

regarding whether you should work with Ray Courts; and

to understand your motives for reaching out to Ray Courts

If you find your motives are pure, you see this as a great opportunity to broaden your referrer network, and you decide to reach out to Ray Courts to enter into a referrer relationship; what could you do to ensure your work ethics don’t shift to a reward focus?