IIBF Ethics in Banking key terms

The quality of consistently matching one's actions to stated ethical principles, even when dishonesty would be easier or more profitable. In banking it means honesty in dealings with customers, colleagues, and regulators.

A situation in which two or more legitimate obligations pull in opposite directions, so any choice sacrifices something of value. Resolution requires weighing duties, consequences, and stakeholder harm transparently.

A structured sequence of steps used to resolve a moral problem: identify the facts, the stakeholders, the applicable rules and values, the options, and the least harmful defensible course, then document and review it.

A circumstance where a personal, financial, or family interest could improperly influence a professional judgement or duty owed to the bank or customer, whether or not bias actually occurs.

A legal and ethical obligation to act solely in another party's best interest, placing their welfare above one's own. Banks owe aspects of this duty when advising, safeguarding assets, or managing client money.

The signals senior leadership sends through its own behaviour, priorities, and consequences about how seriously ethics and compliance are taken. It shapes whether staff feel safe to raise concerns.

The tendency to take greater risks because someone else bears the cost of failure, such as a borrower who over-borrows knowing collateral is weak or a trader shielded by an implicit bailout guarantee.

A formal written statement of the standards of behaviour expected of employees, covering integrity, confidentiality, conflicts of interest, fair treatment, and use of bank assets, usually with disciplinary consequences for breach.

A high-level statement of the bank's core values and moral principles, broader and more aspirational than a code of conduct, which translates those values into specific rules and expected behaviours.

The rules limiting what employees may receive from customers, suppliers, or counterparties. Gifts beyond a defined nominal value must be declined or declared in a register to prevent improper influence.

The internal standard setting monetary thresholds, approval requirements, and disclosure obligations for hospitality and presents offered or received, so that legitimate relationship-building is separated from inducement.

Dealing in securities, or tipping others to deal, on the basis of material non-public information obtained through employment. It is a serious market-abuse offence and a breach of confidentiality.

The duty not to disclose customer or bank information to unauthorised parties except where law, regulation, or explicit consent permits. It underpins trust and is protected by data-protection and secrecy rules.

An information barrier separating teams whose work could conflict, such as corporate advisory and trading, so that price-sensitive knowledge held on one side is not misused on the other.

The principle that customers should receive clear information, suitable products, fair pricing, and prompt redress throughout the product lifecycle, regardless of their bargaining power or sophistication.

Disclosing all fees, interest rates, penalties, and foreign-exchange margins in plain language before a customer commits, so that the true cost of a product is understood and comparable.

A short, standardised summary given to a borrower or depositor showing essential terms: amount, rate, tenure, instalments, fees, and penalties, enabling informed comparison and consent.

Selling a product by misrepresenting its features, risks, or returns, or by pushing it onto a customer for whom it is unsuitable, often driven by commission incentives rather than customer need.

The requirement to match a product's risk, tenure, and complexity to the customer's objectives, financial capacity, and experience, assessed through documented profiling before a recommendation is made.

Agreement given by a customer who has received and understood the material facts, risks, and costs of a transaction, free from coercion or misleading presentation.

The formal process by which a customer complaint is logged, investigated, resolved within a stated timeframe, and escalated to an ombudsman or regulator if unresolved.

A customer whose personal circumstances, such as age, disability, bereavement, low literacy, or financial distress, reduce their ability to understand or act in their own interest, requiring extra care.

The independent assessment of a borrower's repayment capacity, credit history, collateral, and purpose of borrowing before a loan is sanctioned, forming the factual basis for a lending decision.

Granting credit only after assessing that the borrower can repay without undue hardship, with transparent terms and no pressure to over-borrow, balancing bank profit against customer welfare.

Lending designed to exploit borrowers through hidden or excessive charges, aggressive collection, or terms that trap them in repeat borrowing, often targeting those with limited financial options.

Credit granted to directors, senior officers, their relatives, or entities they control. It requires arm's-length appraisal and disclosure to prevent preferential terms and diversion of funds.

The practice of granting fresh credit or restructuring a weak loan to a struggling borrower mainly so that the original exposure is not classified as non-performing, concealing true asset quality.

The standards governing advertising and promotion: claims must be accurate, balanced about risk, not exploit inexperience or fear, and not create unrealistic expectations of returns or approval.

The structure of board oversight, committees, delegated authority, and accountability lines through which an institution is directed and controlled, including how ethical standards are set and enforced.

A control model in which business units own and manage risk, a separate compliance and risk function monitors it, and internal audit provides independent assurance to the board.

The second-line team that identifies applicable laws and regulations, advises the business, monitors adherence, and reports breaches and emerging risks to senior management and the board.

The freedom of the audit function from operational responsibilities and management pressure, reporting functionally to the audit committee so that findings are objective and can be escalated without obstruction.

Safeguards, including confidential reporting channels and legal or employment protection against retaliation, that enable staff to report suspected wrongdoing in good faith without fear of reprisal.

The disclosure by an employee or insider of suspected illegal, unethical, or unsafe conduct within the organisation to an internal authority, regulator, or other appropriate body, made in the public interest.

The set of preventive, detective, and corrective controls, including segregation of duties, authorisation limits, reconciliation, and staff screening, used to reduce the likelihood and impact of fraudulent acts.

The due-diligence process of identifying a customer, verifying identity and beneficial ownership, and understanding expected transaction patterns, forming the first defence against fraud and money laundering.

A warning indicator that raises suspicion of fraud or wrongdoing, such as unusual transaction volumes, reluctant document provision, or a customer who cannot explain the source of funds.

The internal system of alerts, reporting channels, and reviews, often overseen by a designated officer, that detects and escalates suspected fraud, corruption, or misconduct for investigation.

Offering, giving, demanding, or accepting an undue advantage, whether money or kind, to influence a decision. Banks must prohibit facilitation payments and apply risk-based due diligence to third parties.

Presenting financial or operational figures in a misleadingly favourable light, for example by temporary transactions around reporting dates, so that the true position is concealed from stakeholders.