22 April 2013

Last Friday the New Zealand chapter of Transparency International presented a progress report on Integrity Plus, a supercharged version of the National Integrity Survey conducted by TI in almost every jurisdiction. TINZ has been conducting this update to its initial 2003 NIS over the last six months.  Integrity Plus will be published in early May.

In her summary the Executive Chair commented that the willingness of government agencies to support work to upgrade the NIS has not been replicated by the commercial sector.  Top rating for having the least corrupt public sector has been acknowledged as “…New Zealand’s most important advantage in the international marketplace…” But that has not generated buy-in from those who derive direct benefit when trading offshore because New Zealand has infrastructure that operates in a prompt, efficient, effective and transparent way.

Yet issues facing the private sector are not substantially different from the integrity challenges of government.  This is borne out in the Chartered Financial Analysts Survey of Market Sentiment.  The survey which assesses perspectives on the state of economies in various economic regions and whether there is likely to be an expansion in the global economy this year, also looks at market integrity issues.  As part of the CFA mission of promoting ethical and trustworthy investment markets, the concerns identified and remedial behaviour advocated are those that are well known to the public sector.

The survey shows that 98% of respondents acknowledge that there isa lack of trust in the financial industry, with 56% indicating that this reflects the lack of ethical culture within financial firms. The change in culture needed to improve investor trust requires the encouragement and example of top management according to 40%, and 26% see the necessity for increased adherence to ethical codes and standards.

In what is a reflection of public sector surveys the CPA found that leading financial institutions all have codes of conduct to foster ethical conduct, but it takes active leadership to make this promise a reality .

The following programme for improvement seems to incorporate many aspects of the “6 trust elements” promoted by the State Services Commission as the pathway to strengthening trust in government.

  1. Commit to a gold standard code of ethics and professional conduct.
  2. Require training on ethical decision-making for yourself and your firm.
  3. Place the client’s interests before your own.
  4. Name and shame unethical behaviour.
  5. Recommend products with transparent payoffs, costs, and risks.
  6. Help clients focus on risk as much as they do on performance.
  7. Disclose your educational achievements and how you improve professional competence.
  8. Strive for a conflict-free business model.
  9. Advocate for stronger regulations that protect investors.
  10. Act with integrity 24/7 – not just at the office.


The 6 trust elements

1. Agencies have standards of integrity and conduct.

2. Agencies promote the standards of integrity and conduct.

3. The standards of integrity and conduct are integrated into the behaviour of State servants.

4. Managers model the standards of integrity and conduct in their behaviour.

5. Consequences for behaviour that breaches the standards of integrity and conduct are known by State servants.

6. Agencies act decisively when breaches occur.