Ethical Principles of Banking
Ethics is the integral system of codes that question the values, norms and rules underlying the personal and social relations established by people in terms of moral angle, such as wrong or right, bad or good. While professional ethics governs inter-personal and intra-social relations of individuals making up a profession group whereas organizational ethics defines an intra-organizational behavior culture by setting specific rules for the resolution of the problems arising from the organization’s internal and external parties.
The fact that a bank should not compromise its profitability and efficiency principles when it plays a mediating and uniting role between those who demand funds and those who supply funds causes the bank to act in compliance with ethical principles in both professional and organizational terms.
Starting from the point of view that the banking system should be enhanced; that the service quality in the industry should be improved; that resources should be utilized in the most efficient manner and that unfair competition between banks should be prevented, banks are required to govern their relations both among themselves and with their clients, shareholders and employees in line with ethical principles.
II. General Provisions
Objective and Scope
Article l- The fundamental objective of Ethical Principles of Banking which are to be applicable to any and all affairs and transactions among banks themselves or between banks themselves, on the one hand, and their clients or shareholders or employees or other agents is to raise a sustainable awareness in the society about the industry’s high reputation and credibility; to further enhance that reputation and credibility which also passes as professional dignity and to maintain and ensure stability and trust in the banking industry.
The term “bank” shall refer to our members when it is used herein.
Article 2- These principles are based on second paragraph of Article 75 of the Banking Act (Law no 5411) and subparagraphs (c) and (e) of Article 80 as well as third paragraph of Article 81 thereof.
Article 3- Banks are required to act and operate in line with the following general principles to defend the rights and interests of small investors, to ensure stability and trust in financial markets, to secure the effective operation of deposit and credit systems without compromising the need to develop in economic terms, to prevent any transaction or practice that could be severely harmful to the economy and to protect the social benefits and the environment.
remain loyal to the principle of dignity and honesty in their relations with clients, employees, shareholders, group companies and other banks, institutions and agencies in the course of performance of their operations.
Relying on the principle that “the respect to people is essential to the success”, banks avoid prejudicial approaches, and do not make any discrimination among either their employees or their clients.
Banks do not make any discrimination in ethnical, national, religious, financial terms or with respect to social status or gender when they offer services to their clients.
Banks provide their clients with clear, understandable and correct information in a mutual sense of trust in all services and transactions, and perform those services on a timely and complete manner.
They update their clients about the rights and liabilities associated with those products and services offered to them and the related benefits and risks in a clear, understandable and transparent way.
e) Protecting Social Benefit and Respect to Environment
In all of their operations bank try their best to support and sponsor social and cultural events in the light of the principle to protect society’s benefits and to respect to the environment in addition to their efforts to pursue a profitable business.
f) Fight against Laundry of Criminal Proceeds and Assets
Banks strongly focus on the fight against the laundry of criminal proceeds and assets, irregularities and similar crimes in line with international norms and national legislation so much so that they try their best to cooperate with all other relevant agencies and competent authorities as well as to ensure collaboration among themselves. They also adopt certain measures in their internal organizations to address these crimes and organize training sessions for their personnel in this respect.
g) Insider Trading
Banks adopt all kinds of measures necessary to prevent the use of insider trading information.
III. Relations between banks and public agencies
Relations with public agencies
Article 4- Banks act in line with the principles of integrity, accountability and transparency in their relations with public agencies; they pay attention that documentation and information requested under the applicable legislation for audit and control purposes are provided correctly, completely and timely.
IV. Interbank Relations
Article 5- To the extent permitted by the applicable law, banks perform an exchange of information between themselves in every matter in a correct and systematic way.
Personnel Movements Article 6- Banks avoid all kinds of acts that could lead to unfair competition about the personnel employment.
While banks are free in respect to employment contracts and acts in employing staff members pursuant to the provisions of the Labor Code and the applicable legislation, they pay attention to the fact that staff recruiting will not be prejudicial to the service provision by other banks.
When a bank provides information requested by other banks about its former employees, it acts objectively and with integrity.
Article 7- Banks regard competition as a legal race among all banks in the banking industry to allow them to take economic decisions liberally. For this reason, they avoid any statements and acts that may constitute unfair competition in line with the following principles while they also defend their own interests in their operations within a free market environment:
a) A sustained confidence in banking industry overall;
b) Making efforts for the development of the industry;
c) Keeping an eye on common interests
This principle is not only applicable to the legal personalities of the banks but also extends to the statements and behaviors of bank employees. Banks may not solicit/ provide benefits to the employees of other banks in the course of their service provision.
Advertisements and Promotions
Article 8- A bank acts ethically and realistically without compromising its integrity in its promotions and advertisements for both its financial structure and its banking products and services and it does not violate applicable law and legislation. It also escapes any act or attitude that may be harmful to the banking profession.
A bank does not make any statement or remark in its advertisements or promotions that defame other banks or their products and services.
V. Relations of Banks with their Clients
Informing their Clients
Article 9- Banks always provide their clients with timely, correct and complete information about all kinds of products and services offered to them throughout all stages of their service relation and for all matters subject to the limitations set out in the applicable legislation.
Article 10- Banks are obliged to keep confidential any information and documentation of their clients and treat them with care without any unauthorized disclosure to any person other than competent authorities expressly authorized under the applicable law to seek and demand documents and information.
Article 11- Banks regard the service quality as a precondition to provide their clients with such quality service to meet their needs and expectations. They pay due attention that technological infrastructure and qualified human resources which are two basic elements of this concept are used in order to give a boost to sustainable development in service quality.
All clients are provided with the services with the same level of quality. Notwithstanding this fact, if a bank defines a target audience and differentiate organizational structure and product range according to that target audience or displays a different approach for clients in the same risk group, this should not be interpreted as a discrimination among clients or their categorization.
Article 12- Banks set up a system to reply all questions by clients related to the supplied services and communicate any information about such services to their clients.
They investigate into the underlying reasons of client complaints and adopt necessary measures in order not to reply justified ones. They talk to their staff to correct any erroneous practice that could result in complaints and to prevent them from repeating.
Article 13- Banks accept that the “security” concept extends to the prevention of any breach that could technically compromise the services offered to the clients in addition to measures to safeguard their service platform against all adversities in the banking industry.
They adopt all kinds of technical and legal measures to ensure that services evolving in parallel with technological developments and electronic banking are securely and safely provided in any service platform through ever-changing service channels. They also communicate to their clients these measures as well as those ones that their clients should take.
VI. Relations of banks with their employees
General qualifications of employees
Article 14- They pay due attention and care that their employees shall compromise such people with a sense of responsibility and a level of knowledge and experience necessitated by their positions. Banks may not employ such personnel who do not meet the legal requirements set out in the applicable law, including, in particular, the Banking Act.
Recruitment and Career Advancement
Article 15-Banks pay due attention and care that no discrimination is applied among the employees and that they are offered with equal opportunities both at the time of recruitment and during their career advancement. Relying on the principle that human resources should be managed in the best way, they provide their employees with such training sessions, courses, seminars and similar opportunities in order to elevate them to such level of knowledge necessitated by modern times and banking profession.
When promoting their employees, they take into consideration the knowledge, skills and personal successes of their employees as much as the loyalty that those employees show towards the Ethical Principles of Banking profession and the care displayed in implementing those principles.
Representation Principles and Work Environment
Article 16- Aware that their employees represent the banking profession and the bank in due proportion with the reputation of the industry, a bank brings about internal regulations requiring their employees to be clean and presentable.
They adopt such measures in all service departments to increase the motivations of employees and to offer services at better conditions so that a healthy and safe work environment is created.
Article 17- A bank shows due care that the number of employees is commensurate with the busyness of business. It organizes office hours to allow the employees to show maximum efficiency, and tries its best to prevent any work beyond those office hours and to ensure that its employees regularly take their annual leaves.
Relations of their employees with clients
Article 18- A bank brings about internal regulations that prevent the following:
• An employee’s engagement with clients in a way that is not acceptable in the face of ethical principles, such as credit-debit relations with clients, suretyship relation and opening joint accounts;
• Acceptance of gifts from present or potential clients;
• Securing a personal interest from their own work platform or by using the business means of their clients with the help of his position.
Article 19- A bank pays due attention that employees are provided with timely and complete provision of their rights arising from the applicable legislation governing them.
VII. Professional Rules and Ethical Principles that bank employees should observe
Professional Rules and Ethical Principles that bank employees should observe
a) To comply with the applicable legislation in the course of performance of their tasks;
b) To inform their clients about the benefits and risks expected from such products and services offered to them;
c) To provide their clients receiving the same service with the objective and fair service;
d) To keep confidential any client or bank secrets that they may come to know due to their positions, and not to disclose them to any third person other than authorities expressly authorized by the applicable law;
e) Not to cause a loss in the reputation of the bank in their attitudes and works;
f) To avoid any operation that would qualify them as a “business” or “tradesman”;
g) To avoid any act that would be in breach of the principles of justice, integrity, honesty, trustworthiness and social accountability;
h) To cooperate with other employees for common interests based on respectful and careful communication in the performance of their tasks;
ı) Not to use bank assets and resources in an inefficient manner and beyond their intended purposes;
j) To bring about personal interests from their own work environments and with the help of client means by relying on their positions and capacities;
k) To promptly reject any solicitation made to them to raise a benefit; to report such offer to competent authorities and their superiors.
l) To refer potential clients to their bank before anyone else;
m) To avoid any debit-credit, suretyship or joint account relation with their clients in a way that is adverse to ethical principles;
n) Not to accept presents from present or potential clients other than customary ones;
o) To remain accountable for the tasks that they have assumed in the course of the provision of services;
p) Not to assume any position in any private or public company without the bank’s prior approval except for associations, societies and etc
Improving ethical principles of banking
Article 21- Banks may communicate advises and suggestions to Boards of their Associations from time to time at their discretion to improve ethical principles and to amend them as and when necessary.
VIII. Application Procedures and Rules
Application Right and Time
Article 22- A bank, its employees or its clients may make applications. An application is not accepted in case an allegation of violation against the Association’s Ethical Rules is filed against acts and movements governed and sanctioned in the Banking Act and other applicable legislation, including disputes already pending with or finalized by judicial authorities.
Applications that are not made within one year from the date of occurrence are not acceptable.
Article 23- Applications are made to the Association in writing. Documents and information corroborating the alleged act in breach of the ethical principles are attached clearly and in detail. Alleged act underlying the application is substantiated with the indication of person, time and place.
Acceptance and Review of the Application
Article 24- Applications are controlled by the Association in terms of their nature, information and documents. Any application that is not in agreement with the nature, details and documents it should come up with is rejected. This is notified to the applicant. Accepted applications are forwarded by the Association to the Association’s Ethical Commission.
The organization of the Association’s Ethical Commission and its working principles and rules are defined by the Association’s Board of Directors.
Actions to be taken upon the decision by the Association’s Ethical Commission
Article 25- Board of Directors is provided with the decision in relation to the application for which the Association’s Ethical Commission decides that it is the Board of Directors which should consider if the act is against the ethical principles.
Decisions about any application that is not deemed in breach of ethical principles is notified to the relevant parties in writing.
Identification of Non-compliances and Sanctions
Article 26- With respect to applications forwarded by the Association’s Ethical Commision to the Board of Directors, the Board of Directors gives the final decision if there is a breach of those principles. In the event that the Board identifies any breach, banks and/ or their employees who act in breach of those principles are reported to the Banking Regulation and Supervision Agency.
Article 27- The present ethical principles of banking are enforced by the Association’s Board of Directors.
Article 28- These ethical principles of banking are effective upon their publication.