Assignment 2

PERCENTAGE OF FINAL GRADE:       20% of the overall assessment

MARKS:                                              20 marks

RUBRIC:                                             A marking rubric is available on the CloudDeakin site

Learning Outcome Details

Assessment Feedback:

Students who submit their work by the due date will receive their marks and feedback within 15 working days after the due date.

Description / Requirements

Reading of all course content and wider research is required for this assessment. Note: Students must correctly use the Harvard style of referencing.

This assignment is broken into FOUR PARTS:

A.          Preparation – students must complete the Ethical Lens Inventory (ELI). Whilst no marks will be attached to completing the ELI students will not be able to submit their assignment until their ELI has been completed

B.          Case Study – Analysis – drawing on relevant theories of ethical decision-making students must present an analysis of five key stakeholder groups for the Commonwealth Bank of Australia (CBA).

C.           Case Study – Recommendation – make a recommendation that will achieve the goal of repairing the CBA’s reputation, and restoring trust in the bank

D.         Personal Reflection – drawing on the results of your ELI and a Motivation at Work career assessment students must reflect on how they would respond to an offer of a graduate position with the Commonwealth Bank.

A summary of requirements is provided in the table below:

PART A – ETHICAL LENS INVENTORY (ELI)                                         (Hurdle Requirement)

Completing the Ethical Lens Inventory (ELI, or “Ethics Game”) is a hurdle requirement for submitting Assignment 2.

You will not be able to submit Parts B, C, and D until you have completed the ELI and uploaded your completed ELI Lens report.

Due date and time:       Thursday, 30 November, 2017 (23:59) Marks:              nil (hurdle requirement)

Rubric:                           n/a (hurdle requirement)

Requirements:

1.     From the unit site on CloudDeakin (Assessment Resources, Assignment 2) download and read:

·      Introduction to the Four Ethical Lens Inventory

·      Overview of the Four Ethical Lens Inventory

·      Understanding the Four Ethical Lens Inventory

·      ELI Ethics Game Access Instructions and Registration

2.     Complete the Ethics Game (ELI) and extract your ELI profile.

3.     Submit your completed ELI report by uploading to the Dropbox on CloudDeakin.

PART B – Commonwealth Bank Stakeholder Analysis                                         (8 marks)

Introduction

A strong banking sector is critical to a strong economy. Many have argued that Australia was shielded from the worst effects of the Global Financial Crisis due to the strength of its banks. To be strong banks depend on the support of their shareholders, the trust of their customers, and an effective working relationship with government and regulators.

In terms of market capitalization, on 1 October 2017, the “Big 4” Australian banks were the largest companies on the Australian Securities Exchange, with the Macquarie Group Limited the 10th largest. Australia’s ten largest companies are included in the table below:

Source: Australian Securities Exchange (https://www.asx50list.com/)

However, banks have long been controversial in Australian society.

There has been a lively debate about whether the Australian government should initiate a Royal Commission into banking industry practices “Coalition MPs may cross floor to vote for banking royal commission” (David Lipson, ABC, 30 Oct 2017)

In August 2016 the Prime Minster announced that the heads of Australia’s big four banks must appear before the House of Representatives economics committee every year, saying the banks “operate under a social licence…they are built on a foundation of trust and they have to earn that trust through being open and accountable at all times.” (The Conversation,4 August 2016)

In May 2017 in his annual budget speech the Federal Treasurer announced that the government would apply an annual levy (a “bank tax”) that will only affect large banks in Australia. Despite protests from the banks the public has not raised significant objections to the tax.

In September 2017 all four of Australia’s largest banks announced they will stop charging a fee for customers of other banks to access their ATMs (automatic telling machines). Some have speculated that this move was, in part, motivated by a need to renew the banking industry’s “social licence”.

Commonwealth Bank of Australia Limited (CBA Bank)

Of all the Big 4 banks the Commonwealth Bank has perhaps been the most controversial in recent years.

Financial Planning

In July 2014, under the heading Commonwealth Bank CEO Ian Narev apologises to customers, news.com.au reported “for a decade, CommBank has been embroiled in a scandal involving forged signatures and dodgy financial planning. They’re finally saying sorry” (Wenlei Ma, Victoria Craw & Wires, news.com.au, 3 July 2014).

CommInsure

In March 2016, Ruth Fogarty from the ABC reported “CommInsure, one of Australia’s biggest life insurers with about 4 million policy holders, has been caught out using unscrupulous practices buried in the conditions of the fine print of its contracts to deny, delay or avoid paying claims” (Ruth Fogarty, ABC, 8 March 2016)

AUSTRAC

“The Commonwealth Bank is facing another scandal as the Australian Transactions Reports and Analysis Centre (AUSTRAC) launches civil proceedings accusing the bank of being complicit in money laundering. This exposes a deeply worrying prospect, that the Australian public are vulnerable to crime and terrorism directly funded through the Australian banking system.

AUSTRAC alleges CBA breached the Anti-Money Laundering and Counter-Terrorism Financing Act (2006) 53,700 times since 2012, where transactions were not reported by the bank, or reported too late. The bank faces a potential penalty of A$18 million per breach, which could amount to billions of dollars (Thomas Clarke, The Conversation, 5 August, 2017).

CEO Resignation and senior executive remuneration

In August, 2017 the Commonwealth Bank announced that its Chief Executive Officer, Ian Narev, would be leaving the bank. Mr Narev’s remuneration was reduced by more than 50%, “partly as a result of the money laundering scandal”. Additionally, the bank’s Board of Directors “decided to eliminate the short-term bonuses of all senior executives for the 2017 financial year” (Michael Janda, ABC, 14 August, 2017).

Class Action

“On 9 October 2017, Australia’s leading class action law firm, Maurice Blackburn Lawyers…filed a shareholder class action on behalf of aggrieved Commonwealth Bank of Australia (ASX:CBA) investors. The class action was filed on behalf of investors who suffered losses due to the share price fall following the institution of legal proceedings by AUSTRAC against CBA” (Andrew Watson, Ronald Koo, Maurice Blackburn, 9 October, 2017).

Requirements

Consider the position of five key stakeholder groups of the Commonwealth Bank:

a)    Directors and management

b)    Shareholders

c)     Customers

d)    Employees

e)    Government/regulators.

1.     For each group identify their primary “stake” in the CBA. For example:

·      what do they contribute to the bank?

·      what do they expect from the bank in return?

(suggested: 200 words)

2.     For THREE of the stakeholder groups, discuss their behaviour in the context of established ethical models, such as:

·      The hierarchy of ethical decision-making

·      Stakeholder theory

·      Normative theory

·      Descriptive theory

·      Kohlberg’s six stages of ethical reasoning

You do not need to consider each stakeholder group relative to all the models. Please make sure you cover at least three models in your answer.

(suggested: 600 words)

PART C – Commonwealth Bank – Recommendations                                           (8 marks)

Put yourself in the position of a consultant engaged by the Commonwealth Bank to advise on repairing the CBA’s reputation, and restoring trust in the bank.

Having completed some preliminary research you (as consultant) have identified five possible areas for remedial action:

a)    The Board in relation to key changes to the bank’s corporate governance

b)    Management regarding implementing the Board’s strategy

c)     Human Resources Department in relation to employment practices

d)    Employees in relation to professional behavior toward colleagues and customers

e)    The overall culture of the organization

The Board welcomes the findings from your preliminary research. However, they take the view that implementing corrective action across all five areas at once has the potential to introduce too much change too quickly. You are directed to advise the Board to select the three highest priority areas and present recommendations.

Requirements

Prepare a memorandum, addressed to the CBA’s Board of Directors that:

1.     Identifies the THREE highest priority areas, and

·      explains why they are highest priority areas, and

·      why a focus on that area will contribute most to “repairing the CBA’s reputation, and restoring trust in the bank”.

(suggested: 200 words)

2.     For each of the three priority areas make one/more recommendations that will serve the objective of “repairing the CBA’s reputation, and restoring trust in the bank”.

In drafting your recommendations consider including one/more of the ethical decision- making models:

·      A descriptive model of ethical decision-making; and/or

·      The AAA 7-step ethical decision-making model

·      Rest’s four-component model

(suggested: 600 words)

PART D – Personal Reflection/Ethical Lens Inventory (ELI)                                (4 marks)

Introduction

At this stage of the unit we have considered:

·      some key ethical theories

·      some case studies of ethical failure

·      professional ethical obligations; including some key areas of ethical sensitivity, such as:

·      fraud

·      conflicts of interest; and the

·      corporate environment

Ethical Lens Inventory (ELI)

You have also completed your individual Ethical Lens Inventory, and had the opportunity to consider it in the light of the ethical theories, case studies, professional obligations, and key areas.

Motivation at Work (MaW)

To provide another perspective on your career aspirations please complete a “Motivation at Work” career assessment. To access the assessment please copy and paste the following link into your browser:

https://www.abintegro.com/Shibboleth.sso/Login?entityID=https://signon.deakin.edu.au/idp/shib boleth&target=https://www.abintegro.com/secure/

·      enter your Deakin username and password

·      move your mouse to hover over the “Career Assessments” tile

·      select “Motivation at Work” from the drop-down menu which appears Complete the career assessment and download the report.

There is no need to submit the MaW career assessment report. However, please consider the report and compare/contrast with your ELI, and other unit content.

Put yourself in the position of being offered a graduate role with the Commonwealth Bank.

Requirements

In the form of a letter addressed to:

The Manager Human Resources

Commonwealth Bank of Australia Respond to the offer that you have received.

In effect you must answer the question “Would you accept a graduate role with the Commonwealth Bank, or reject the offer?”

In your letter explain your reasoning and, if appropriate, make reference to your:

·      Ethical Lens Inventory (ELI) feedback

·      Motivation at Work career assessment

·      research into the Australian banking industry; and

·      understanding of the Commonwealth Bank case study

(suggested: 400 words)

Note:

When writing a reflective piece please remember that it is expected that you write in the first person (e.g. “I believe that I can make a meaningful contribution to the Commonwealth Bank because…”).

More information about reflective writing can be found here:

<http://www.deakin.edu.au/students/studying/study-support/academic-skills/reflective-writing>

Submission Instructions

You must submit this assignment into the electronic dropbox, by the due date and time.

You must keep a backup copy of every assignment you submit, until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.

Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.

When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment dropbox folder after upload, and check for, and keep, the email receipt for the submission.

Notes

·    Penalties for late submission: The following marking penalties will apply if you submit an assessment task after the due date without an approved extension:

o   5% will be deducted from available marks for each day up to five days,

o   assignments submitted more than five days after the due date will not be marked. You will receive 0% for the task.

o   ‘Day’ means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.

·    For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in the first folder next to the Unit Guide of the Resources area in the CloudDeakin unit site.

·      Building evidence of your experiences, skills and knowledge (Portfolio) – Building a portfolio that evidences your skills, knowledge and experience will provide you with a valuable tool to help you prepare for interviews and to showcase to potential employers. There are a number of tools that you can use to build a portfolio. You are provided with cloud space through OneDrive, or through the Portfolio tool in the Cloud Unit Site, but you can use any storage repository system that you like. Remember that a Portfolio is YOUR tool. You should be able to store your assessment work, reflections, achievements and artefacts in YOUR Portfolio. Once you have completed this assessment piece, add it to your personal Portfolio to use and showcase your learning later, when applying for jobs, or further studies. Curate your work by adding meaningful tags to your artefacts that describe what the artefact represents.

Please note, this is not a mandatory element of the assessment, rather portfolios are a helpful tool for you to track your development, and promote your value to employers.

References

Commonwealth Bank ‘truly sorry’, but independent review doubts (Dinny Navaratnam, The Conversation, 3 July, 2014) https://theconversation.com/commonwealth-bank-truly-sorry-but-independent-review-doubts-28770 Commonwealth Bank of Australia chief Ian Narev has apologised for breaching customer trust after evidence emerged of serious misconduct by the bank’s financial planning arm, Commonwealth Financial Planning Limited (CFPL)

Commonwealth Bank CEO Ian Narev apologises to customers

(Wenlei Ma, Victoria Craw & Wires, news.com.au, 3 July, 2014) http://www.news.com.au/finance/business/banking/commonwealth-bank-ceo-ian-narev-apologises-to- customers/news-story/496bdd1c966dbf8e1ff87f91d97b961d

For a decade, CommBank has been embroiled in a scandal involving forged signatures and dodgy financial planning. They’re finally saying sorry.

Do the crime, do the time? Not if you’re a banker in Australia (Philip Soos, Deakin University, The Conversation, 30 October, 2014)

https://theconversation.com/do-the-crime-do-the-time-not-if-youre-a-banker-in-australia-33548

Recently, the head of the Australian Securities and Investments Commission, Greg Medcraft, called Australia a “paradise” for white-collar criminals. Soon after he recanted, claiming he didn’t want the country to become a haven for financial fraudsters. This rephrasing likely followed when Finance Minister Mathias Cormann leaned on Medcraft.

Commonwealth Bank compensation scheme for victims of financial planning scandal ‘a joke’, Senate inquiry hears?

(Stephanie Ferrier, ABC, 28 Oct 2015)

http://www.abc.net.au/news/2015-10-28/cba-denying-compensation-to-victims-of-financial-planning/6892624

A Senate inquiry has heard “explosive” evidence from a whistleblower who has accused the Commonwealth Bank of Australia (CBA) of continuing to deny justice to victims of its financial planning scandal.

Money for Nothing (Four Corners, ABC, 7 Mar 2016) http://www.abc.net.au/4corners/money-for-nothing-promo/7217116

The Commonwealth Bank’s unscrupulous tactics in the life insurance industry.

Who’s who in the Commonwealth Bank’s life insurance scandal? (Ruth Fogarty, ABC, 8 Mar 2016) http://www.abc.net.au/news/2016-03-07/comminsure-scandal-whos-who-four-corners/7226576

CommInsure, one of Australia’s biggest life insurers with about 4 million policy holders, has been caught out using unscrupulous practices buried in the conditions of the fine print of its contracts to deny, delay or avoid paying claims.

CommInsure proves the need for a banking royal commission (Pat McConnell, The Conversation, 18 Apr 2016) https://theconversation.com/comminsure-proves-the-need-for-a-banking-royal-commission-57954

Last week, Commonwealth Bank announced the creation of a Blue Riband panel to “provide an additional layer of assurance for complex claim assessment and decision-making processes” at its troubled CommInsure subsidiary.

Bank executives forced before parliamentary committee for ‘regular health check’ (Michelle Grattan, The Conversation, 4 August, 2016)

http://theconversation.com/bank-executives-forced-before-parliamentary-committee-for-regular-health-check-63513 Malcolm Turnbull has announced that the heads of Australia’s big four banks will be grilled annually by the House of Representatives economics committee, as the government hits back at the banks’ refusal this week to pass on the full interest rate cut.

ASIC’s CommInsure pass shows why badly behaving bankers will never fear jail time

(Pat McConnell, The Conversation, 24 Mar 2017

https://theconversation.com/asics-comminsure-pass-shows-why-badly-behaving-bankers-will-never-fear-jail-time- 75059

In October 2014, the Australian Securities and Investments Commission (ASIC) Chairman, Greg Medcraft, was pretty forthright