A white paper calling for an overhaul of the codes of conduct of professional bodies, trade associations and standards boards operating across financial services has been published.
Initiated by the Transparency Task Force (TTF), the paper looked at reforming the way firms approach their conduct obligations and encourage good behaviour.
The taskforce carried out a review among 50 bodies identified as being potential code-making bodies from July 2017 to February 2018.
The white paper, which was published today (11 July) and sums up the firms' responses to the review, calls for the financial sector to take a "whole system" approach to conduct risk by using the codes and guidance recently developed in banking, and applying it across the whole of the industry.
It also recommends that firms identify the core ethical values of their organisation and consider making their staff take oaths in a bid to implement fiduciary standards.
The paper stated codes of conduct must engage and inspire better behaviour rather than take a strict compliance approach.
This is needed more than ever at a time when litigation, fines and compensation payments are very much in the spotlight; and when the levels of trust and confidence in the sector are at worryingly low levels, it stated.
The paper, which will be presented at a Transparency Symposium in London in October, stated: “A well-designed ethics code should inspire and promote ethical values, and not just consist of a set of constraints, rules, and violations.
"It should focus on all stakeholders who are affected by the company’s objectives. It will also be supported by guidance, such as scenarios of common ethical dilemmas that employees may face, ethics training, and a system for feedback and questions.”
Andy Agathangelou, the taskforce's founding chairman, said: “It has become clear that many of the sector’s failings have their root in a lack of market integrity, and that’s a dangerous and systemic risk that needs to be mitigated.
"The Market Integrity team’s white paper shines a light on this issue in a constructive way, because it only takes a few ‘rotten apples’ for the well-being of the whole market to be damaged."
The report recognised the progress made in some sectors, most notably the banks in the wake of the global banking crisis.
It stated exemplary codes and guidance had been put in place through the efforts of organisations such as the Chartered Banker Institute and the Chartered Banker Professional Standards Board.
Mr Agathangelou said: "We seek to continue to work collaboratively with all interested parties including the regulators to help make it increasingly difficult for substandard behaviour to go un-noticed.”
Steve Conley, founder at Values Based Adviser, said the financial services sector was profoundly important to the wellbeing of society, economic success, and political stability, but too often got it wrong.
He said: "Financial services needs to behave in a manner that engenders trust and confidence but we all know that it has had a predisposition to disappoint on a too-frequent basis, over decades.