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The report, released by Chartered Accountants Australia and New Zealand, said modern financial institutions rewarded employees for delivering specific outcomes, often without taking into account the means by which they are achieved.
Many of those working in the industry perceived rules and regulations to be the main influence on their behaviour, it said.
But they were less aware of the powerful influence of cultural factors, specific to the banking and financial services industry, on deterring or encouraging unethical behaviour.
“Individuals in business cannot and should not delegate ethical choices to rules and regulations,” the organisation's New Zealand country head Kirsten Patterson said.
“As the report says, the challenge is to ensure ethical standards have an appropriate place in workplace decision-making and activities. And that applies to all businesses.”
The report said it was unlikely that many of those involved deliberately – or consciously – behaved badly.
“A good deal of unethical behaviour is unconscious," the report said.
"A more plausible explanation is that an industry-wide culture of tacit endorsement enabled wrongdoers to somehow justify their behaviour, irrespective of the ethical implications."
It also dismisses the idea that failings are down to a few.“Blaming the industry’s ethical failures on a few ‘bad apples’ conveniently deflects attention from the cultural issues affecting the industry as a whole. Would it not be more useful to address the culture or the system that grow ‘bad apples’ and allows them to thrive?”
It recommends providing a clear set of principles to guide decision-making, more diversity and inclusion in the workplace to counter "groupthink", including ethical considerations when calculating remuneration and incentives, establishing ethical key performance indicators (EKPIs), banning euphemisms and creating an ethical decision-making framework to help employees identify and navigate ethical dilemmas.
Even regularly discussing ethical considerations could help financial institutions' staff behave more ethically, it said.
The report cited the misrepresentation of finance company investments in New Zealand as a clear breach of ethical conduct.
It also said "clipping the ticket" was a questionable behaviour that advisers could be prone to.
"Often this takes place in the context of ‘preferred provider’ arrangements between companies, or, in a vertical integration model, between different functions within the same organisation. Clipping the ticket presents a potential conflict of interest among advisers who are more likely to sell or promote products for which they anticipate receiving a fee or commission."
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Does anyone remember that paragon of ethical virtue - Arthur Andersen & Co and a company called Enron? Or Ross Asset Management?