CHAPTER 2

BANKING ETHICS
2.1 The banking ethical system from
conventional point of view
 Course Learning Outcome
• explain clearly the importance of the code of
ethics implement by banks from conventional
and Islamic point of view, the internal control
and conflicts that may arise in a banking
system (C3)
 CONTENT
• 2.1.1 An abuse of position and misuse of information
• 2.1.2 The completeness and accuracy of record
• 2.1.3 The confidentially of communication and
transaction
• 2.1.4 The relevant treatments for:
a. unethical behavior
b. ethical behavior
c. test of ethical behavior
d. customer complaint
 2.1.1 An abuse of position and misuse of information

• Define misused of position

– Misuse of position is the improper use of official
time and authority, and of information and
resources to which an employee has access because
of his/her positions in the organizations. Eg: ‘CABLE’
• Define misused of information
– Misuse of information is the way use of
information from FI for illegal activities
– EG: Sell customer information
2.1.2 The completeness and accuracy of record

• Completeness and accuracy of records

– All the customers and organizations documents must be proper
completeness and accuracy for recording by FI
– EG: Make sure all the customers record are update and complete with
the prior documentation
2.1.3 The confidentially of communication and transaction

• A registered person should take every precaution to

protect and preserve the confidentiality of customer
information communicated to him in the course of
everything. He must not in any way use such
information for personal or another person's gain.
• Under this principle all customers communication
and transaction must be keep confidentially by FI
• Example : all staffs bank are prohibited to
communicate customers information to publics
 2.1.4 The relevant treatments for:

• Releveant Equitable treatment:

– Unethical behavior: Unethical behavior is any action that is
aimed at taking advantage of another without their knowledge
or consent. Most define this as manipulating someone without
their persmission. Unethical actions are not necessarily illegal.
– Ethical behavior : acting consistantly with the ‘personal values’
– Test of ethical behavior: to measure and to reveal the ethical
and unethical behavior. Eg:Audit
– Customer complaint : express of customers guts or feeling
regarding ethic and unethical behavior