Grey matters ethical dilemma: Unexpected rewards – the verdict

A new bank loyalty scheme has wrongly credited millions of travel miles. Staff have taken advantage. What should the bank do?

Fran is a senior member of the team in her bank which works on providing  a ‘reward programme’ to account holders who meet various levels of activity on their bank account and related credit cards. She has recently been responsible for introducing a new reward scheme to her bank customers, in partnership with a well-known airlines group.

Shortly after the fanfare of the launch it transpires that the amount being credited to customers’ loyalty reward accounts has been wrongly programmed by a factor of 100. As a result, millions of travel miles have been wrongly credited to account holders.

News of this has spread like wildfire, particularly within the bank, where a number of members of staff appear to have taken advantage of the error to book extensive and expensive overseas travel. The cost to the bank and the airline of honouring all of these unearned ‘miles’ could run into many millions of pounds.
As soon as Fran is made aware of the problem, she contacts the administrator of the scheme, who quite quickly identifies a ‘computer operator error’ as the cause and asks Fran what they should do.

The amount being credited to loyalty reward accounts has been wrongly programmed

Fran feels that she must lose no time in informing her superiors of the problems with the incentive programme but that she must offer them solutions to the problem at the same time.

Fran suggests to the administrator that they suspend the scheme immediately, but is told that they could only accept such an instruction in compliance with the terms of their contract with the bank. Accordingly Fran would have to get the agreement of a senior executive of her bank to amend the contract.

Knowing that she will be unable to avoid raising the matter at the highest level in her bank, Fran considers some recommendations on how to proceed. Recognising that there are a number of parties involved, including customer, bank and reward provider, she feels that any recommendation that she makes must take each of them into account.

Start againHer initial thought is that the most straightforward course of action would be to cancel the scheme and start again, crediting everyone with the correct miles.

Unfortunately, when investigating who within the bank had used the reward scheme, Fran is surprised to see her own boss, a number of other senior executives and even two directors. Accordingly, she feels that she had no alternative other than to report the matter directly to the Chief Executive.

The Chief Executive has already been made aware of the problem by his opposite number at the airline and thanks Fran for bringing him the details. However, on reading the list of names, his immediate response is to ask his PA whether the Chairman is in the office, as he must see him immediately. Taking Fran with him, he hastens to the Chairman’s office.

The Chairman listens with increasing dismay as the CEO recounts what has happened and the potential cost. He is even more concerned to hear the names of those bank personnel who have taken advantage of what was, manifestly, a mistake. In his anger, his initial response is to suggest that the bank should dismiss all those staff who have taken advantage of the mistake.

At this, the CEO interjects and says that he thinks that might cause more problems than it solves and so offers the Chairman a number of potential ways forward:

• Offer all staff the chance to reimburse the bank for the equivalent value to the travel booked using the rewards.
• Tell staff that their actions have breached their responsibilities to their employer who will take disciplinary action against them, commensurate with the seniority of the member of staff.
• Dismiss all those staff involved, irrespective of the impact that it may have on the operations of the bank, on the basis that their behaviour amounts to dishonesty.
• Accept that the bank was partly responsible and offer to share the cost of any use made of the Rewards with the individual concerned.

The CISI verdict

The dilemma revolved around what might be an appropriate response for the bank to take towards those of its staff who had taken advantage of the error and used the unearned rewards.

The main events of the dilemma were based upon an actual event that took place in a foreign country, and so the responses of readers were more than usually interesting.  This is particularly the case in as much as three quarters of those who responded, did so in equal measure, but were divided into entirely different camps:

Answer A, which might be thought of as the ‘emollient response’, saw the bank offer staff the chance to reimburse it for the value of the travel booked. This attracted 37% of respondents.

Answer B was diametrically opposite, in that it took a hard line, saying that staff had breached their responsibilities to the bank and would be subject to disciplinary action. This also attracted 37% of the vote.

Answer C, which supported dismissal for all of those involved, garnered only 4% of the vote; and

Answer D, where the bank accepted a share of the blame and offered to split the cost of the rewards used with the staff member concerned, attracted 22% of respondents.

In reality, a number of the options posed might be viewed as appropriate, depending upon the actions of the staff involved and their apparent motivation. Since the error was not of the customers’ making, Answer D does seem appropriate. Answer A also has merit, although it does leave open the question of the integrity of staff who took advantage of what was, fairly obviously, an error. This then leads to Answer B. If you believe that staff knowingly took advantage of an obvious error, then why would disciplinary action not be obvious, unless it would undermine the operational effectiveness of the bank?

The significant issue in this, as with other decisions of this nature, is that what is deemed to be the ‘right’ answer in the circumstances will depend upon the culture of your firm and the message that you are sending.

This article appears in the June print edition of the Review. The results of the survey and the opinion of the CISI appear in the September 2015 print edition of the Review.
Published: 07 Sep 2015
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