In this article we explain the main issues with ethics and how to address them.
Wealthtek is the latest financial institution to fall because of allegations of fraud and money laundering brought against it’s owner, John Dance. His assets were seized, including his racing horse, which was barred from competition, as authorities raced to protect the stakeholders.
While issues with ethics could have brought Wealthtek down, we need to examine where authorities went wrong when a whistleblower came forward two years ago and filed a report against the wealth management firm. The whistleblower was dismissed, and today we have £81.4 million of stakeholder money missing, showing the consequences of not solving the problem early on.
Whistleblowers help monitor compliance and issues with ethics, and in this case, when he was ignored, the stakeholder concerned with more than the company that is under Dance’s ownership will pay the consequences. It is important to listen to whistleblower’s not only because they protect the integrity and transparency of financial institutions but also because it takes bravery to be willing to risk your career and reputation to tell the truth, and it can encourage other whistleblowers to come forward should something prove to be wrong. In this case, other company employees would have been too concerned to come forward because of the way the first whistleblower was treated.
What Are the Biggest Issues With Ethics When It Comes To Wealth Management Leaders:
Wealth managers are often faced with the dilemma of either generating more profits for the client or themselves, and this can help them get carried away when it comes to dealing with other people’s money. They can risk the money to make a profit for themselves, while planning to pay the money later on, only to fail in the expenditure and find themselves short on money for their clients. The issues with ethics in this case involve knowing when to limit your risk taking when dealing with clients money, and allowing those that identify fraud to report it without retaliation.
In the case of Dance, the police are investigating money laundering and fraud. These two issues with ethics in wealth management are important because financial fraud is usually used to legitimise criminal money, and in this case, it might be that WealthTek was a means for individuals to legitimise their money. Another fraud common with wealth management firms is churning, where client money is used excessively to trade securities, which can generate profit for Dance but result in losses for clients.
Whistleblowing As A Tool To Fight Issues with Ethics and Compliance Within Wealth Management Firms.
Many whistleblowers within the financial sector don’t report fraud and other misconduct because they are looking for reward, but because they are trying to protect stakeholders and investor’s money and assets. That is why an important part of company culture has to be the protection of whistleblowers and encouraging them to come forward.
Whistleblowers also protect an organisation’s reputation, for they help address issues before they become public, like in this case, where the company could have had changed leadership much earlier on to protect it. While new members have been appointed to the company’s board, it will probably take a lot of effort to convince current stakeholders to stay.
In today’s financial world, having a whistleblowing system like Aranea does not only protect you from issues with ethics and misconduct, but can also help your company stay up to date with the latest compliance regulations. New rules being put in place to have financial institutions set up whistleblowing systems in order to protect stakeholders and make them more compliant with the rules and regulations of their sectors.
Benefits of Aranea In solving Issues With Ethics And Protecting the Company’s Reputation.
Many whistleblowers are afraid of coming forward because they are not able to get into contact with senior leadership to report the problem they have witnessed, or because they are afraid of retaliation. Because our team at Aranea helps connect various organisation members together to solve the problem more effectively and quickly, or by connecting you to relevant authorities should there be no change or resolution, we understand that some whistleblowers are unsure of whether what they witnessed is misconduct or simply routine business for the company. Additionally, because Aranea is a third party app, the whistleblower can feel confident that he will not face reprisals because, as an independent organisation, our interests are those of the company and the employee, and his protection and anonymity are our top priorities. Click here to learn more about Aranea.