Ethics versus Compliance


Ethical behavior is an internal mechanism -- as individuals we perceive "right and wrong" in a particular situation and act accordingly.  Compliance, on the other hand,  is "external".  There are rules, promulgated by others, and we choose to comply with those rules or not.  The rules may or may not reflect our perception of right and wrong -- but they represent a consensus of what society feels is "right" or "wrong".   So there is a major distinction between ethics and compliance.  Simply following the rules does not make an action ethical -- at least that's the lesson of the Nurnburg war trials.  Nor is violation of an unjust law or rule necessarily unethical -- for example, Ghandi's march to the sea to evade the British salt tax, or Rosa Parks taking a seat at the front of the bus may have been illegal, but not necessarily unethical.

When we talk about compliance, we are ideally talking about particular rules of conduct  that are designed to promote the interests of all of the parties to a transaction.  Although it is certainly possible to act in a compliant way without being ethical, there is a direct connection between the two concepts.  If ethics, as the foundation of integrity and honesty, gives us optimum standards of conduct, compliance gives us minimum requirements of conduct.  If ethics tells us what we ought to do, compliance dictates what we must do.

So, although compliance certainly has its basis in ethics, it is not the same thing.  The person who acts ethically does the right thing; the person who is compliant stays out of the courtroom.  Ethical or professional conduct beyond what is required by the law is optional with the individual.  Compliance is a legal requirement.  

Agents make ethical decisions every day when they choose what sales tools and practices to employ, the disclosures they chose to make or omit, how they interact with prospects, clients, insurers and fellow agents.  Although avoiding unethical sales practices is certainly important, ethics includes far more than just sales practices -- it extends to the agent's entire practice.  One of the important results of increased ethical awareness is a favorable change in the public perception of the insurance agent and the stockbroker.