PROFESSIONALISM IN THE FINANCIAL SERVICES INDUSTRY
WHY IT MATTERS MORE NOW THAN EVER BEFORE
By Dr Raymond Madden, CEO, Asian Institute of Finance
The global financial crisis that swept the world has dented the confidence of the financial
system including the professional conduct and accountability of those working in the
industry. The crisis had brought with it a number of challenges for economies and has
dramatically changed the way business is conducted. This seismic shift in the financial
landscape has placed new demands on finance professionals who are now expected to
possess a broad range of skills and competence.
According to a survey conducted by the Association of Chartered Certified Accountants
(ACCA) among 500 chief financial officers (CFOs) in the UK, Malaysia, Russia, China
and the UAE; top skills that finance professionals are expected to bring to the table include
managing risk, developing strategies for growth, driving financial insight and at the same
time ensuring both statutory and regulatory requirements are met. The report also concluded
that the mastery of these skills is no longer a nice-to-have but a pre-requisite for a
successful career. What intrigued me most was the fact that 94% of respondents said it
was important for finance professionals to have a good understanding of professionalism
and business ethics.
WHAT IS PROFESSIONALISM?
The meaning of professionalism has been defined in a myriad of ways. Traditionally,
professionalism was a characteristic associated with personal qualities of an individual
including personal moral conduct. The definition encompasses three key features:
specialised knowledge, a strong service ethic and a capacity to act autonomously.
With change being the new constant, the meaning of professionalism today extends itself
to include staying current with a strong focus on values, ethics and governance. In essence,
professionalism means more than skills and technical expertise. Professionalism should
reflect the on-going professional development that stimulates professional growth, creativity
and innovation without compromising integrity and professional ethics.
The two key strands of professionalism are standards and qualifications. Here, professional
standards are important as they are the first steps to building a more highly qualified
workforce as they ensure competency in a given profession. A key factor to professional
standards is on-going learning (so called continuous professional development or CPD)
which is important in building and maintaining a high degree of professionalism.
But to be effective, CPD must be seen to go beyond box-ticking and be made part
of standards of knowledge and behaviour.
Although education-based qualifications are essential, professional qualifications are
increasingly being recognised by organisations as an effective means to ensure employees
have relevant and up-to-date skills. The most overt feature of well-regarded professions
such as medicine, engineering, law and accounting is professional qualifications.
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Professional capability of these professions is built through four key areas:
On-the-job acquisition of skills and competence
Continuous professional development that enhance advanced technical knowledge
Inter-generational transfer of norms, ethics and behaviours either from working with or
being mentored by experienced professionals
Enforcement of codes of conduct in a weak regulated environment.
The financial services industry can take a cue from these industries. Such professional
standards and qualifications throughout the industry can only have a positive impact on its
reputation and long term standing in the eyes of consumers. An industry-wide professional
standard that encompasses best practices in ethics, codes of conduct and professional
development for those working in the industry will ensure the industry is seen to be fair and
endeavor is the
transparent. As nicely put by
The financial services industry has yet to mature into
a profession in the same way as other well-recognised professions. But it is high time that
measures are taken to professionalise talent within the industry and make it more akin
to the other great professions in society.
NEW WAVE OF PROFESSIONALISM
The global financial meltdown, which subsequently culminated in a crisis of confidence,
has shaken public confidence in the financial services industry. Finance professionals have
been subjected to intense public scrutiny and criticism. One of the issues that came to the
fore was the somewhat frivolous manner with which market players behaved and operated.
As corporate scandals and unethical conduct in the financial services industry continue to
make headlines, the degree of professionalism in the industry has been greatly undermined.
To say the least, such scandals and fraud have engulfed the industry and given finance
professionals a black eye . To get its house in order, the industry has undergone major
regulatory reforms that were aimed at improving the transparency, supervision and stability
of the industry at large.
The changing regulatory landscape also means that financial institutions, more than ever,
need practitioners who have industry-recognised capabilities and have the necessary
competence to stay abreast of international developments. It is high time for finance
professionals to demonstrate strong commitment to ethical behaviour and integrity. On its
own, regulation alone is not sufficient to deliver confidence in the market. Although greed
and hubris have been singled out as the main culprit that rocked the financial services
industry, much unethical behaviour boils down to an underlying issue lapses in trust of
professional standards. It comes as no surprise then that majority of CFOs that took part
in the ACCA survey attested to this fact.
Towards this end, the Asian Institute of Finance is committed to working with the industry
and stakeholders to develop a stronger future for the financial services industry based
on higher standards of professionalism which encompasses a strong code of ethics,
competency and integrity. We believe that a commitment to professionalism will drive
improved business integrity, promote higher standard of conduct and ultimately help shape
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a more trustworthy and consumer focused financial services industry. Together with our
affiliated institutes, AIF strives to develop gold standards in professionalism across all
sectors. This will subsequently translate into higher standards of training and development
of financial professionals across all levels. We see this as an important strategic initiative
in attracting and retaining high quality talent which will overtime improve overall industry
standards. An industry-led professional standards body could be the key to encouraging
the promotion of professionalism amongst practitioners and the adoption of higher standards
throughout the financial services industry.
Having world-class professional standards would not only enhance Malaysia’s position
as a leading financial hub in the region but contribute to consumer confidence and
strengthening of market share. In delivering the next generation of finance leaders, the
experience of others with particular reference to corporate scandals should give us food
for thought. Although the financial services industry in Malaysia has not been tainted with
similar high-profile financial failures, prevention is definitely much better than the cure.
The author is Chief Executive Officer of Asian Institute of Finance, www.AIF.org.my and
former board member of the Institute of Chartered Accountants in England and Wales.
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