Ethical Behaviour in Business

The Insurance Distribution Directive (IDD) requires insurance intermediaries to demonstrate the minimum necessary knowledge required for their role across eight core competencies – one of which is ‘business ethical standards’.

So, what do we mean by business ethics? And why is it important?

Business ethics refers to the moral principles influencing the way that a business behaves in relation to the society in which it operates. This is important because the decisions and actions made by businesses can affect people’s lives in both positive or negative ways.

Therefore, if a business behaves unethically this can have a negative impact on its customers, its staff and on wider society.

Ethics can be a hard concept to define, so let’s look at some examples of what unethical behaviour might look like for a business…

  • Exploiting customers e.g. through artificial price increases
  • Treating employees or customers unfairly
  • Failing to ensure products are safe/meet the customer’s expectations
  • Failing to accept social responsibility

This is not an exhaustive list – there are many ways in which a business may behave unethically, particularly where profit is prioritised over the customer’s best interests.

Behaving unethically can have repercussions for a business. It can cause reputational damage, damage to the company brand, loss of sales and customers, high staff turnover and even legal issues in serious cases. Behaving ethically, on the other hand, can have the opposite effect – a positive impact on the company brand and reputation, increased sales, satisfied customers and increased staff morale.

A business could consider the following simple questions when deciding if their behaviour is ethical – who do our practices impact upon? Are we harming others? Simply being honest, fair and transparent goes a long way in ensuring ethical behaviour is being practiced.

But who in the business is responsible?

Everyone. Ethical behaviour should be present at all levels of an organisation from board-level to the newest employee. It should be part of an organisation’s culture.

The FCA has made transforming culture in financial services a priority. Improving conduct across the financial services sector was one of the key aims of the Senior Managers and Certification Regime (SM&CR), which was extended to FCA solo-regulated firms in December 2019. Ethical behaviour has a big role to play in the culture of a firm and is an important consideration for leaders when setting the ‘tone from the top’.  

For users of the Aviva Development Zone, our Course of the Month for September is ‘Business Ethical Standards’, which explores the importance of ethical behaviour in business in more detail.

If you’re not signed up to the Development Zone, you can visit for a free 14-day trial.

About the author

Lisa joined RWA in 2014 as an e-Learning Assistant and now heads up RWA’s Design and Content Team. Her role as Head of Content and Communications involves managing content creation and curation on the Aviva Development Zone platform and serving as editor of RWA Insight.

Lisa has diverse creative and technical writing experience. She holds a first class honours degree in English and Creative Writing from Swansea University and graduated from Cardiff Metropolitan University with a Distinction in Creative Writing in 2016.

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