Financial Management Policies and Practices

 

Required
Critically evaluate CBA’s financial management policies and practices with respect to
their social responsibility and social outcomes of their actions. Do you think CBA has
considered the ramifications of their financial decisions on sustainability and social
responsibility? Ensure that your analysis is carried out with reference to corporate
social responsibility principles, corporation’s objectives, code of ethics and ethical
principles and theories. Specifically answer the following questions:
i. Critically evaluate CBA’s practices and financial decisions described above vis-
à-vis the Corporate Social Responsibility (CSR) principles.
ii. Do sustainability and socially responsible outcomes really matter for CBA?
Discuss.
iii. Identify ethical principles breached by CBA.
iv. Discuss those ethical violations with reference to relevant ethical theories.

 

 

Introduction

 

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    This study deals with understanding the Corporate Social Responsibility practiced by Commonwealth Bank of Australia. In this particular assignment, proper emphasis has been given on discussing on the practices of CBA through Corporate Social Responsibility principles. CommInsure is one of the insurer providers in Australia and insurance arm of Commonwealth Bank of Australia. The current segment highlights that Commonwealth Bank of Australia was engaged in different deceitful practices like misusing of medical reports that takes into account deleting of files as well as forcing doctors so that there is change in opinions and the opinion of the client regarding the claim gets rejected. This overall will change the definition of diseases as well as delaying payouts at the same time. This study evaluates the scandal of CommInsure and provides an overview of the case in the assignment by collecting the information from secondary sources (YouTube videos) (Money for Nothing - Four Corners 2018). Commonwealth Bank of Australia has become one of the most inclusive as well as innovative organization by taking into account gender and social diversity. The bank had achieved customer satisfaction ratings by constant investment in its people and advancement of technology usage in their practices (Commbank.com.au, 2018). 
Critically evaluate practices of Commonwealth Bank of Australia and financial decisions described through Corporate Social Responsibility principles 
    After watching the video on (Money for Nothing - Four Corners 2018), it was quite easy to understand that Commonwealth Bank of Australia is engaged in unethical practices. This bank had involved in conducting unethical practices and destroyed the world economy. Even the government are supporting the bank and degenerating billions of dollars of tax payer’s money. Commonwealth Bank of Australia employs 46000 employees and generates annual revenue of more than $23 billion (Money for Nothing - Four Corners 2018). It is quite obvious that this bank of this size will suffer scandals. In most of the scandals, it is viewed that Senior Staff members informed management about the malpractices. As far as advice scandal was concerned, CBA had to be dragged screaming to a compensation scheme for its victims after trying ways to change it. CBA had promised to bring changes but there is still occurrence of unethical as well as fraudulent behavior continuing (Commbank.com.au, 2018). Commonwealth Bank of Australia designs own compensation scheme. This bank is involved in illegal logging, inadequate compensation as well as forced evictions and child labor. The bank have more than 20 billion worth of investments in the business overseas and this can be treated as big exposure in both managing financial constraints as well as reputational risk (Uddin, Siddiqui and Islam 2016). 
On 7th March 2016, Chief Medical Officer of CommInsure had blown whistle on unethical practices (Chan, Watson and Woodliff 2014). This insurer company makes claims on matters relating to culture of dishonest as well as unethical practices in order to avoid payouts to sick and dying people. Addition to that, the Chief Medical Officer had even asked doctors to pressurize the patients to change their opinions and give outdated medicine that were used to deny payments. The insurer had involved in manipulating the medical files and find ways to get rescued from internal filing system (Money for Nothing - Four Corners 2018). The Chief Executive of Commonwealth Bank of Australia had discussed the individual cases where the outcomes that the customers had received the policies that they are not well aware off. The bank was put into allegations that they have deleted files and that would treat completely inconsistent with the culture that the bank going to build and inconsistent with the way the bank run during that course of time (Stohl et al. 2017). 
On 2nd February 2016, Commonwealth Bank of Australia had offered more than $3 million compensation for financial advice till date (Commbank.com.au, 2018). On 21st April 2015, Commonwealth Bank of Australia announced that they have reported to 12 advisors to police for fraud cases. Two of the Commonwealth companies find ways to handle client money. The bank agreed to $136 million for compensation over Storm Financials. The bank even accepts enforceable undertaking because of credit limit concerns. The bank was fined $1, 00,000 for violating continuous disclosure obligations (Sethi, Martell and Demir 2017). 
Discussing whether sustainability and socially responsible outcomes really matter for Commonwealth Bank of Australia 
    From the Corporate Social Responsibility Report of Commonwealth Bank of Australia for the year 2017, it is noted that both sustainability and socially responsible outcomes is becoming serious matter of concern for CBA (Montague, Larkin and Burgess 2016). The bank is showing continuous progress in and across a range of initiatives that is being delivered by the bank in order to excel at securing as well as enhancing the financial wellbeing of business, communities and people. The CEO of CBA had mentioned that the bank provides transparent and detailed update on the work that had been done and that will benefit number of people that include employees, customers as well as shareholders and Australian communities (Commbank.com.au, 2018). For this bank, it is more essential to have corporate responsibility at the heart of what the bank actually commits. CBA demonstrates ways on how to put principles into practices and that eventually benefits all the stakeholders. CBA has a refreshed roadmap on corporate social responsibility that has strategic importance to the business and it even covers areas such as innovation, education and good business practice (Mazodier et al. 2015). Therefore, Commonwealth Bank of Australia is finding ways so that they can recognized socially as it will give rise to accessing social outcomes in the near future. 
Identifying ethical principles breached by Commonwealth Bank of Australia 
    Commonwealth Bank of Australia allegedly breached money laundering rules that had give rise to poor cultural practices as well as viewed in such instances that provides low quality financial advice (Dell'Atti et al. 2017). In the year 2017, the Board of CBA had decided to cut the short-term bonuses of their Executives and that had led to accusations of money laundering activities. CBA dominates household lending as well as play an important role at the time of providing financial advice in and across Australia. It is noticed that large amount of financial advice given by CBA financial planning offices failed to meet regulatory standards and put some of the clients in a worse financial position (Commbank.com.au, 2018). CBA was fined for $1.9 million for compensating 3500 clients for advice provided to them by 5 former financial advisors. Commonwealth Bank of Australia was found that they were involved so many unethical practices and that led to bad reputation as a whole (Klettner, Clarke and Boersma 2014). This section properly identifies the ethical principles that had been violated by Commonwealth Bank of Australia for given financial years. 
Discussing ethical violations with reference to relevant ethical theories 
    In this section, ethical violations will be discussed about Commonwealth Bank of Australia and link it with suitable ethical theories (Du Plessis, Hargovan and Harris 2018). The selected ethical theory will be Utilitarianism that is based upon looking at the ability of the individual that is needed to predict the consequences of an action. The selection is done based on understanding the fact whether what is the greatest benefit to the most people and what is ethically correct even. There are number of ethical violations faced by CBA and for this reason Utilitarianism can be best suited ethical theory that can link with the case as the theory takes into account the law as well as dealt with fairness of activities (Commbank.com.au, 2018). The principle rule of this ethical theory is to make sure that most people are treated fairly and given added benefits of rules that take into account beneficence in the most appropriate way. This ethical theory actually deals with achieving the maximum good. It is based upon understanding the rights of the individuals that needs to be infringed and benefiting greater number of people as a whole. However, the ethical theory does not always mean justice as well as beneficence or in that case autonomy that provides benefits to maximum people (Gordon, Zainuddin and Magee 2016). 

 

Conclusion     

 


    At the end of the study, it is concluded that Commonwealth Bank of Australia need to work upon attainment of becoming responsible bank in the near future. There are several scandals associated with the bank and it has to be managed as soon as possible. The above study evaluates the financial management policies as well as practices undertaken by Commonwealth Bank of Australia in respect to their social responsibility and social outcomes of their actions. The above analysis explains how far CBA had considered the ramifications of their financial decisions especially on activities such as sustainability as well as social responsibility. The analysis for this study had been done with reference to corporate social responsibility principles, ethical principles as well as ethical theories and ethical code of conduct. The overriding consideration of Board of members at CBA was treated as collective accountability of senior management to look at the overall reputation of the group as a whole. 

 

Reference List

 


Chan, M.C., Watson, J. and Woodliff, D., 2014. Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), pp.59-73.
Commbank.com.au. 2018. Personal banking including accounts, credit cards and home loans - CommBank. [online] Available at: https://www.commbank.com.au/ [Accessed 6 Apr. 2018].
Dell'Atti, S., Trotta, A., Iannuzzi, A.P. and Demaria, F., 2017. Corporate Social Responsibility Engagement as a Determinant of Bank Reputation: An Empirical Analysis. Corporate Social Responsibility and Environmental Management, 24(6), pp.589-605.
Du Plessis, J.J., Hargovan, A. and Harris, J., 2018. Principles of contemporary corporate governance. Cambridge University Press.
Gordon, R., Zainuddin, N. and Magee, C., 2016. Unlocking the potential of branding in social marketing services: utilising brand personality and brand personality appeal. Journal of Services Marketing, 30(1), pp.48-62.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), pp.145-165.
Mazodier, M., Plewa, C., Palmer, K. and Quester, P.G., 2015. Achieving corporate social responsibility through sponsorship. Routledge Handbook of Sports Marketing, p.317.
Money For Nothing - Four Corners. 2018. Money For Nothing - Four Corners. [online] Available at: https://www.youtube.com/watch?v=MjtLq73aVzU [Accessed 6 Apr. 2018].
Montague, A., Larkin, R. and Burgess, J., 2016. Where was HRM? The crisis of public confidence in Australia’s banks. In Asia Pacific Human Resource Management and Organisational Effectiveness (pp. 67-86).
Sethi, S.P., Martell, T.F. and Demir, M., 2017. An evaluation of the quality of corporate social responsibility reports by some of the world’s largest financial institutions. Journal of business ethics, 140(4), pp.787-805.
Stohl, C., Etter, M., Banghart, S. and Woo, D., 2017. Social media policies: Implications for contemporary notions of corporate social responsibility. Journal of Business Ethics, 142(3), pp.413-436.
Uddin, S., Siddiqui, J. and Islam, M.A., 2016. Corporate social responsibility disclosures, traditionalism and politics: A story from a traditional setting. Journal of Business Ethics, pp.1-20
 
 

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