A new book co-authored by Professor Paul Kofman, Dean of the Faculty of Business and Economics, explores how the finance sector can stand as a true profession.
A Matter of Trust by Professor Kofman and Clare Payne provides a timely and practical guide to making everyday business decisions in an ethically sound way.
At his speech during the book launch this week, Professor Kofman outlined how upholding ethical standards in the finance sector is everyone’s responsibility:
“…Over 450,000 individuals work in Australia’s financial services sector, and there are many good people amongst them, who share our concern about the lack of trust. These individuals should be empowered and motivated to serve Australians and help to grow their wealth and prosperity. Our book, A Matter of Trust, provides a practical guide for those in the sector and those wishing to join, so that they can raise the standards and ensure an ethical finance system that benefits all.
We believe that industry and academia can and should work together in rebuilding the trust in finance. Unlike accountants and actuaries, no generally accepted accreditation standards apply to finance practitioners. That needs to change, but it can only be achieved if the finance industry supports it.
Training students of finance needs to include an understanding of the nexus between ethics and trust. By putting students and practitioners in training situations where they face typical ethical dilemmas will enable them to first recognize an ethical issue, and then make an informed response based on a good decision making model.
Fintech presents the opportunity to design fair and transparent markets and platforms from ethical principles. My colleagues in the Economics and Finance Departments design market experiments and test financial service scenarios in a Behavioural Laboratory. This is an exciting new area for the social sciences that brings together the disciplines of finance and economics, with information science, sociology, psychology and even neuroscience.
Beyond the classroom, we need to work together on improving financial literacy throughout society. Despite the plethora of financial literacy programs offered over the years by banks and regulators, we seem to make little progress. Too often, we find that financially literate people are making poor financial decisions. The problem is a mechanistic ‘rule-and-skill’ based approach to financial literacy that ignores ingrained behavioral biases. There is a role for academia to offer independent financial literacy training that includes a behavioral bias module.
And then there is a duty on us, the engaged academics, to explain the role and inner workings of the financial system to the public. When the system is under threat – as it has been in the wake of the Global Financial Crisis – it is our duty to scrutinise its failings, and reconnect the public to the long-term benefits of a fair and transparent financial system to economic growth and prosperity. That requires a realisation that finance serves society, rather than just its customers and shareholders. And that involves translating heightened community expectations into ethical business practices that work for our financial sector.”
– an excerpt from Professor Paul Kofman’s speech at the launch of A Matter of Trust.