[Inside Chodong] Do You Need an 'Ethics Certification' to Work at a Bank?

[Asia Economy Reporter Song Hwajeong] In June, a bill to introduce a Financial Ethics Qualification Certification System was proposed in the National Assembly. The bill aims to impose the duty on financial product salespersons, etc., to maintain professional knowledge and ethical conduct capabilities, and requires that the financial product salespersons themselves or their executives and employees registered with the Financial Services Commission must hold a financial ethics qualification certification.

The reason for proposing such a law is that financial accidents such as embezzlement have continued to occur recently, highlighting the need to improve ethical management in financial companies. Although financial companies specify through codes of ethics that ethical management is their highest value, frequent financial accidents mean that, to gain consumer trust, not only strengthening internal control systems but also establishing a qualification certification system to enhance the financial ethics capabilities of financial personnel is necessary. This is the purpose of the bill.

The financial industry has been subject to various regulations due to its importance and public nature, but despite these regulations, financial accidents such as embezzlement, financial fraud, and incomplete sales have not ceased. Especially after experiencing the 2008 global financial crisis, the importance of financial ethics was further emphasized. Since one of the causes of the financial crisis was pointed out as the unethical behavior of financial companies, calls for imposing high-level financial ethical responsibilities increased. Accordingly, countries like the United States and the United Kingdom pursued financial regulatory reforms after the financial crisis to restore trust in the financial industry and protect financial consumers, institutionalizing ethical certification by including financial ethics in major qualification systems and mandatory education subjects. In the UK, almost all financial sector workers regularly participate in training required by regulatory authorities, and financial companies evaluate whether their employees possess the professionalism and ethics suitable for their duties and report annually to the regulatory authorities. In the US, regulatory authorities present regulatory standards that all financial companies, their executives and employees, and individual financial agents must comply with, and regulated institutions and individuals must register with the regulatory authorities, meet qualification requirements, obtain licenses, and then start their work. Additionally, they must periodically complete education to maintain their qualifications.

The ethical management systems of domestic financial companies vary by company but generally consist of ethical charters, codes of ethics, and ethical management implementation programs. However, the financial sector’s principle of prioritizing customer interests is often neglected due to a management environment focused on short-term performance. Moreover, unlike the UK and the US, where the professionalism and ethical capabilities of financial personnel are regulated in the form of qualification certification systems, in Korea, it is left to the voluntary management of financial companies. Financial ethics education that can help understand and induce the practice of financial ethics is urgently needed, but domestically it is only conducted formally.

In many fields, cases of professional ethics being compromised due to individual deviations occur. However, the financial sector must be held to particularly strict standards because it deals with money entrusted by customers. Since embezzlement, which fills personal gains with customers’ entrusted money, continues to occur, calls for measures to prevent this are inevitably growing louder.

A recent employee working at a bank where embezzlement occurred said that after the incident, a long-time client who had entrusted money to them asked to withdraw all funds, saying, "How can I entrust money to that bank?" The employee felt as if all the efforts made to manage that client were wasted in an instant. Due to one individual's deviation, the hard work of other diligent colleagues was nullified, and they even faced cold stares. Another employee said that reading comments on articles related to embezzlement, which disparaged bankers as if they were all thieves, made them feel disheartened.

If voluntary management fails and incidents continue, eventually coercive measures such as regulations will have to be employed. To prevent ethics from being enforced through laws and regulations, banks must first take the lead in self-purification efforts to restore customers’ trust.