Reviewed by Sep 30, 2020| Updated on
Code of ethics refers to a set of guiding principles for professional conduct and behaviour. Code of ethics could be a document detailing an organisation's or institute's objective, values and mission statement. Professional ethics include principles and standards documented for use by professionals under the respective governing bodies such as the Institute of Chartered Accountants of India.
Professional ethics cover different types of services and professions. In the banking and financial services sector, state laws govern the conduct of banking and financial transactions.
For example, in India, the Banking Regulation Act, 1949 and the Reserve Bank of India regulate all banking companies. The respective law states the dos and the don'ts, prohibited activities, and the manner of carrying on the business.
Code of ethics consists of ethical practices and guidelines to follow in order to carry out the profession with integrity and honesty to serve the interests of the society at large. An organisation may legally frame a code of ethics or may make its own set of rules or ethics. Any member of a professional institute or organisation who is found violating the ethical standards may be subject to disciplinary action by the respective governing body.
In general, the ethical matters which fall under business include management-worker relationships, anti-bribery guidelines, fair employment practices, and social and environmental considerations, to name a few.
A business house may develop its own code of ethics and values, suiting its vision and mission. A member or employee of the business organisation found violating the ethics or rules is liable to be dismissed from the organisation.
An organisation may prepare and train its employees to carry out work and responsibilities in accordance with the ethics or rules of the organisation. Employees should understand the laws and regulations governing the organisation's business and the impact of non-compliance. The organisation should also frame rules concerning the consequences of non-compliance.
Code of ethics could be based on legal compliances of a business or profession, standards of integrity and discipline, or on the vision and mission of an organisation. The code of ethics should clearly specify the behavioural expectations and professional expectations from employees or members of the profession.
Certain professional institutions require members to exercise reasonable care, professional judgment and act with integrity.