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Unethical behaviour in the financial industry has become something of a cliché in the years since the recession, when its misdemeanours were laid bare. Now, new research has found that workers in the financial advisory industry influence how likely their colleagues are to commit financial misconduct, with people who witness deviant behaviour more likely to behave badly themselves. The paper underlines how individual bad behaviour can become contagious within the culture of organisations.

The research analysed the propensity of co-workers to commit misconduct by looking at financial advisers whose co-worker groups had changed as the result of a recent company merger.

It found that an adviser is 37% more likely to commit misconduct if their new co-workers – introduced to the brand post-merger – have a history of misconduct, compared with an adviser working in the same firm who is merged into a branch with no history of misdemeanours. This result implies a social multiplier of 1.59 – when an ...