IIBF Ethics in Banking flashcards
IIBF Ethics in Banking · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Ethics versus law
- Law is the enforceable minimum standard set by the state; ethics is the wider duty to act fairly and honestly even where no law compels it.
- Fiduciary duty
- The obligation of a bank acting for a customer to place that customer's interest above its own, especially when advising on investments or acting as agent.
- Integrity
- Consistency between stated values and actual conduct, including admitting errors and refusing to gain from dishonesty or from another's mistake.
- Conflict of interest
- A situation where personal, financial or outside interest could bias professional judgement; it must be disclosed and the person must abstain from the decision.
- Publicity test
- An ethical decision test asking whether the decision and its full reasoning could be openly published with the decision-maker's name attached.
- Code of conduct
- A documented set of mandatory behavioural rules with defined sanctions, distinct from a code of ethics, which states broader principles and values.
- Gift register
- A record in which staff log hospitality or gifts above the permitted value; cash and cash equivalents are refused at any amount.
- Insider trading
- Dealing in securities while in possession of unpublished price-sensitive information, or passing such information to another person, known as tipping.
- Annual attestation
- A yearly certification by staff that they have read the code of conduct and declared outside interests, directorships and related-party relationships.
- Confidentiality after employment
- The duty to keep customer and bank information secret that continues after leaving the organisation, subject only to legal or regulatory compulsion.
- Mis-selling
- Selling a product that does not meet the customer's needs, risk profile or capacity, or misrepresenting its features, costs or risks.
- Suitability assessment
- The pre-sale evaluation of a customer's income, risk appetite, age and repayment capacity to confirm a product is appropriate before selling it.
- Total cost of credit
- The full amount a borrower pays, comprising interest plus fees, insurance, taxes and other charges, not only the headline nominal rate.
- Vulnerable customer
- A customer whose circumstances, such as bereavement, illness, disability or financial distress, reduce their ability to understand or decide, requiring adapted treatment.
- Complaint redressal
- The process of acknowledging a customer complaint, investigating it, giving written reasons and escalating it if the customer remains dissatisfied.
- Bundling
- Tying access to one product or service to the purchase of another, which restricts customer choice and is treated as an unfair practice.
- Data minimisation
- The principle of collecting and using only the customer data actually necessary for a stated purpose, and protecting it from misuse.
- Repayment capacity
- The verified ability of a borrower to service debt from regular income or cash flow, which must be assessed independently of the collateral offered.
- Redlining
- Refusing credit to an entire group or locality on grounds unrelated to individual risk, which is discriminatory and an unethical business practice.
- Predatory lending
- Lending that relies on borrower ignorance or distress, with hidden or excessive charges and terms the borrower cannot realistically meet.
- Misleading marketing
- Advertising that omits a material exclusion, cost or risk, or makes claims that cannot be substantiated, even if no statement is literally false.
- Evergreening
- Renewing or restructuring a non-performing loan mainly to avoid classifying it as bad debt, thereby misstating the bank's asset quality.
- Third-party distributor risk
- The principle that a bank remains responsible for the conduct of agents, brokers and outsourced sellers acting on its behalf.
- Enhanced due diligence
- Extra scrutiny applied to high-risk customers such as politically exposed persons or those in high-risk jurisdictions, covering source of funds and wealth.
- Three lines of defence
- Business manages risk, compliance and risk functions set and monitor frameworks, and internal audit provides independent assurance to the board.
- Tone at the top
- The signal sent by senior management and the board through their own conduct, risk appetite and remuneration decisions about acceptable behaviour.
- Whistle-blower protection
- Safeguards giving a person who reports wrongdoing in good faith a confidential channel and immunity from retaliation, dismissal or victimisation.
- Protected disclosure
- A good-faith report of wrongdoing made through an authorised channel, which qualifies the reporter for legal and employment protection from retaliation.
- Fraud triangle
- The three conditions enabling fraud: opportunity, pressure or motive, and rationalisation; controls mainly reduce opportunity through segregation and oversight.
- Segregation of duties
- Splitting tasks so that no single person can initiate, authorise, record and reconcile a transaction, reducing the opportunity for internal fraud.
- Maker-checker control
- A control requiring a second authorised person to review and approve a transaction or entry before it is processed or released.
- Non-retaliation
- The rule that a person who reports suspected fraud, bribery or misconduct in good faith must not suffer demotion, harassment or any other detriment.