The dark side of the finance industry – part 1.

In my first post to this blog

( https://jimthegeordie.wordpress.com/2010/07/14/coming-from-and-going-to/ )

I tossed an idea into the ring, hopefully to start an ongoing discussion.  I would now like to expand a little on some of the issues generated by that idea.

Essentially, my thesis is that institutions and corporations of all kinds (called entities hereafter, for convenience) are essentially artefacts. They are created by people (either singly or in the mass) for various purposes, operated, modified and closed down when no longer required (or are otherwise unable to function).  Under the direction of those in charge of them, they interact with people, who will either benefit or be damaged by that interaction, according to the circumstances.  Where damage occurs, it may be relatively mild and can easily be consigned to history.  On other occasions, it can be absolutely devastating and ruin people’s lives. It is this last outcome which is the one which interests me because, unlike entities, people have to live on and deal with the consequences of that damage.  For this reason, there must be explicit contractual and implicit ethical behaviours imposed on entities of all kinds (including, of course, those who run them or are employed by them), to ensure that people do not suffer undeservedly from their activities

In this discussion, I will set out a few examples of inappropriate corporate or institutional behaviour (some of them from my own experience) which have had adverse consequences beyond the acceptable norm with a view to identifying behaviours required to minimise the damage done to people’s lives and fortunes and how they may be taught or enforced.

The betrayal of individuals (called clients hereafter for convenience) who need to interact with entities can take many forms.

  1. An entity may claim to have expertise or resources that it does not have.
  2. An entity may have the necessary expertise or resources to provide the goods and services on offer, but its processes are inadequate in various ways and are not acknowledged to be so.
  3. The entity (or an employee thereof) uses the processes and resources of the entity for its own benefit.  There are a number of possible outcomes; (a) the client may simply fail to derive the expected benefit from the interaction, or (b) if the client has provided an asset (or an asset has been obtained on behalf of the client), the asset or its value is lost, or (c) the asset or its value is lost and the client loses other assets because the terms of the transaction for which the asset was used, allow other parties to the transaction to claim the values of their losses from the client.
  4. The entity (or an employee thereof) uses the processes and resources of the entity deliberately to damage the client. The possible outcomes are in general the same as those in item 3.  The reasons for this behaviour may include (a) payback for depriving the entity or employee of expected benefits, or (b) payback for perceived damage done to the entity or employee (usually by way of complaint), or (c) a tactic to reduce the resources of the client and secure an advantage in a future commercial transaction.

Of course, this list is not comprehensive and there many variants, but it does identify some of the categories which I want to discuss, mainly because my own experiences, or those of people I know personally, give me a degree of authority to do so.  Most of the examples I will quote relate back to an earlier financial downturn in the early 1990s and to the decade following.  However, from what I read in the media, nothing much has changed, except that there appear to have been considerable increases in scale, rendering the need for greater regulation and insistence on ethical behaviour even more imperative.

Just to get things rolling (while I put together details of some more dramatic events) I will start by publishing a report that I deposited with various credit reference agencies in the early 1990s.  As a self-employed person, I was very vulnerable to the unconscionable conduct of various finance institutions, agencies and corporations that I did business with.  My accounts were often paid late (sometimes not at all), but fortunately, I always found paying work and everyone got paid in full, including all interest and late payment penalties. Nevertheless, I considered it prudent to tell my side of the story to prospective financiers and employers.

Here it is.

https://jimthegeordie.files.wordpress.com/2010/10/finance_report41.pdf’

Curiously, shortly after I had published this post, the following article appeared on the front page of The Age in Melbourne – and there was me thinking that financial organisations were adopting more civilised manners in their debt collection processes!   The fact that it was the NAB, who features prominently in my report, shows that all too often, behaviours of corporations are prompted by a cultural attitude and hence, even old examples like the ones I am publishing can flash warning signals to those who need to do business with them in the future.

http://www.theage.com.au/national/chase-for-debts-dramatised-20101001-16148.html

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About jimthegeordie

I was born in the north of England and am a Geordie. Geordies are celts who are noted for having long bodies with short arms and legs. After working in UK, Africa and Australia as a civil engineer and IT contractor I am now retired and living in a beautiful wine-making area. I am the patriarch of a wonderful family, of whom I am inordinately proud.
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