When banks go bad, who’s to blame?
In the wake of the revelations at the financial services royal commission, a natural response is anger: many Australians feel they have been treated with indifference and disrespect — even contempt — by powerful institutions that they trusted. Chances are, they're right.
But where should we direct this anger? Who, exactly, has wronged us?
Organisations can seem ineffable and untouchable. Blaming an organisation for deceit can feel like blaming the sky for rain: there's no person there to respond to our outrage.
And we can't blame the weather system itself, since it can't act or intend or be malicious.
Organisations are people, too
But organisations aren't like the weather. An organisation is a moral agent — it's a creature that can heed moral imperatives, even if it often chooses not to. And this means we should hold it accountable.
By this, I really mean we should hold the organisation accountable. It's tempting to think that AMP "just is" its chairperson, or "just is" whichever human beings happen to sit on the board at any one time.
And then you might think that replacing those individuals — or at least punishing them with fee docks — is censure enough. (This seemed to be the feeling at AMP's AGM on May 10, when the board members were told they were wanted "on a spit" and were given a rollicking by former NSW premier Nathan Rees.)
But this approach is reductionistic. It reduces a complex economic actor — AMP — to some of its component parts, without appreciating that the complex whole is more than just the sum of those components. The complex whole is an agent, with its own goals, beliefs, preferences, procedures, policies, and decisions.
Chances are, no individual at AMP ever sat down a single-mindedly cooked up and pushed through the fee-for-no-service practice.
Instead, that organisation-level decision emerged out of a complex bundle of minor decisions (and non-decisions) made by various humans, where those humans were structured, constrained, and guided by the incentive schemes, power structures, corporate culture, and informal expectations embedded in the institution.
These organisation-level features — the schemes, structures, culture, expectations, etc — cannot simply be attributed to the small collection of humans that happen to sit at the top at any one point in time. Those humans could have been replaced with almost anyone, and the organisation-level features would have been the same.
Instead, if we want to hold the organisation to account, we should look at the organisation as a blameworthy agent. This means attacking the procedures that produce the organisation's values, goals, beliefs, etc, and the cycles by which those features reinforce each other.
This approach is undoubtedly more daunting and time-consuming, but it more accurately reflects the locus of organisational agency.
Individual responsibilities to respond
Once we see that a wrong was done by AMP as a complex organisational agent, we can ask about the responsibilities — the duties or obligations — that AMP has.
Given that wrong was done by AMP itself, it's AMP itself that has a duty to accept punishment, or to reform itself, or to compensate, or at the very least to atone via apology (as it did, via interim executive chairman Mike Wilkins).
But that does not mean AMP's board members, executives, staff or even shareholders are off the hook.
When an organisation has a duty, that duty doesn't just sit at the organisation level. The organisation's duty has implications for members. After all, organisations can't act unless members act. So an organisation's duties — unlike its blame — percolate throughout the organisation.
It's a fallacy to think that the only way an individual can acquire an obligation is if they personally have done something wrong in the past.
By signing up to be part of an organisational actor, we take on the risk that one day we will be called upon to do our share in ensuring that the organisation fulfils its duties.
If our organisation does wrong, then its duties can be substantial — and our share in them can be hefty. This extends to directors who weren't there when the offences took place, to shareholders who (knowingly or not) financially backed the company, to employees who may not have known about the offences until they read about it in the news.
To be clear, these individuals are not blameworthy. But they do bear duties, where those duties are constituent parts of the organisation's duty to remedy the harm it has done.
These individual duties might extend to voting down a remuneration report (as 61.2 per cent of AMP shareholders did), to standing down from the board (as five of the 11 AMP board members have done), to — perhaps most importantly — using one's role as an employee, shareholder, or even customer to change those formal and informal organisation-level features that produced the harm.
If we blame the organisation — but pin duties on individuals — then we might just be getting the balance right.
Dr Stephanie Collins is a research fellow in Philosophy at Australian Catholic University. She is writing a book on Group Duties.