I was prompted to write this post after following the Commonwealth Bank's(CBA) financial advisory scandal and most recently watching the Lateline story on Macquarie Bank, who seem to have so neatly emulated CBA’s bad example. I’m not sure who fired the first shot but it’s not important to find the smoking gun as there are plenty of wounded bodies lying around.
If the reported figures are to be believed we’re talking about a combined population of 560,000 people that have been lied to, intimidated, bullied, pressured or manipulated in some way. A reported 400,000 CBA customers and 160,000 Macquarie Bank customers.
I don’t want to dwell on the many corporate level failings that allowed these unscrupulous 'selling' behaviours to flourish but I do want to explore the mindsets of the individuals involved. Are we to believe that the Financial Advisers delivering their flawed ‘advice’ were simply following orders? That even if they wanted to do the right thing they were being controlled to such an extent they were unable to prevent their customers from be so abused.
It’s easy to lay all the blame for this carnage at the door of these faceless corporate giants but that wouldn’t be entirely accurate. Although they no doubt carry the burden of responsibility for what happened in their name. Each one of these 560,000 customers received advice from a human being, a real person, with a brain and at least some level of training and most definitely with an appreciation for what’s right and what’s wrong.
As unpalatable as it may be do we have to accept that these people simply made a choice? A choice to advance their own interests, careers and pay packets at the expense of their unsuspecting customers. In much the same way as Oscar Wilde's Dorian Grey would give anything, even his soul, to stay as young and beautiful as his portrait. It seems these advisers would give anything, even bad advice, to make the sale.
If that’s true then this deception is made even more dastardly when you consider the fact that every Financial Adviser has what are known as ‘Best Interest Duty’obligations.
The best interest’s duty (and associated obligations) are contained in Division 2 of Part 7.7A of the Corporations Act 2001 (Cth), and require advice providers when providing personal advice to retail clients to:
- act in the best interests of their clients (section 961B)
- provide appropriate advice (section 961G)
- warn the client if advice is based on incomplete or inaccurate information (section 961H), and
- prioritise the client's interests (section 961J).
So where did it all go wrong? Why did so many people who had a professional as well as moral obligation to do the right thing do precisely the opposite?
There’s a famous quote from Edmund Burke, who was an Anglo-Irish statesman, author, orator, political theorist, and philosopher back in the 1700’s that seems to fit this situation. He said “The only thing necessary for the triumph of evil is for good men to do nothing.”
Ian J Lowe is the CEO of Go-Givers Australia a sales transformation, coaching and consulting organisation offering a unique culture-defining philosophy and framework that makes giving value the cornerstone of a refreshingly open and authentic approach to selling.
Image Credit: The Devils Advocate movie - 1997 Warner Bros.