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Customers, brokers question bank ethics and culture

The importance of ethical practices in the finance sector is coming more to the fore as brokers and clients increasingly question the actions of banks.

That’s according to Mark Middleton, head of third party at Teachers Mutual Bank (TMB) and its partner banks, UniBank and Firefighters Mutual Bank. Speaking to Mortgage Business, Mr Middleton said that TMB has a focus on community involvement and sustainability.

“There are more and more people out there that are now looking for a financial institution which has those behaviours in the DNA of what that organisation stands for,” Mr Middleton said.

“It's something that I think — as I'm getting older, with my kids — you want to leave the world in a better place so . . . people are starting to look for banks or financial institutions or suppliers that . .  . adopt better practices, rather than just [focus on] price.”

He added that the benefit of a mutual bank is that their shareholders are their members. “There is no conflict there,” he said. However, when shareholders, customers and employees are added to the mix, “sometimes the lines can get a bit blurry”.


“When you've got to answer to shareholders about dividends . . . and they look for returns on that, when are some of these organisations going to decide what is the right thing out there to do out in the market, by their ethical practices?”

Investing in coal operations is something that could be questioned in the future, Mr Middleton said, predicting that banks will want to “get across” those questions if they want to win more customers.

“It may be that they will readjust their policies accordingly.”

Corporate responsibility

Questions of corporate responsibility have emerged in the wake of CBA’s money-laundering scandal; research agencies have slammed the bank’s “hubris”; and Greg Medcraft, chairman of the Australian Securities and Investments Commission, has slammed an industry-wide culture of silence.


CBA and its board have accepted responsibility and a docking of short-term bonuses. Ian Narev, CBA CEO, has also announced his resignation, although the bank claims his stepping down is unrelated to the scandal.

Speaking of the proposed BEAR (Bank Executive Accountability Regime) that would tie executive bonuses to performance, Mr Middleton said that it comes down to personal integrity.

“If you think something's wrong then you should say something. That's my position.

“I would always say if I don't believe that something's right. That then creates the debate within the executive level, [which is] is what should happen.”

He added that reputational damage for a bank can mean a loss of traction in the market and falls in share prices, as what occurred with CBA.

As such, it’s in the best interests for banks to protect their reputation.

Mr Middleton said: “I believe that we always, as an organisation, are very careful in ensuring that the right thing is done out there.”

[Related: Banks commit to responsible lending reform]

Customers, brokers question bank ethics and culture

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