I have never known ethics to be talked about so much as in the last year or two and we all know why. However, I was intrigued the other day when the Chartered Institute of Investment Services (CISI) (of which I am a founder member having been grandfathered
in through my Stock Exchange membership) sent me an email stating that from next year all members have to undertake a mandatory online ethical test. Presumably multiple choice questions to, I guess, prove that they are ethical?
I certainly applaud the initiative of the CISI to not stand passively by whilst the ethics of the City burn but I doubt if in fact if this test actually proves anything or has any real value.
Ethics is about behaviour not what you know or how to answer questions to prove that ethical behaviour is understood. The smart non-ethical individual (they all tend to be smart) will know how to fudge any test and carry on regardless.
Testing ethics has little value but managing behaviour is really where the value lays. In the days when the London Stock Exchange regulated its members any bad behaviour was dealt with rather publically with naming and shaming of firms and people providing
ample deterrent. That’s not to say there was not bad behaviour but the majority enforced the ethical code and thereby ensured once caught there was no return. Apart from the market striking off ethical miscreants the major deterrent was criminal prosecution
and time in jail. Hardly anyone ever recovered from that shame with their name forever tainted.
The problem with treating the majority as though they are unethical against the very few that actually do act in a non-ethical manner is that it could promote a completely false picture of what the City is all about. So although the City must prove it is
capable of being ethical and deal severely with those that are not. Ethics first and foremost must be practiced by the corporate and be a condition of employment. Breaks in ethical behaviour should be published perhaps by the CISI along with cancelled or suspended
membership. Firms should only employ people that have a CISI membership. In this way the ethical behaviour has a registration based on on-going performance not an annual test.
I totally buy in to the ‘My word is my bond’ mantra but firmly believe that the CISI should trust their member’s integrity until there is a reason not to. After all if the CISI does not show trust how can society.