What is this Royal Commission about? What is it set up to achieve?
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on 14 December 2017 with public hearing commencing in March.
The Royal Commission has been asked to investigate whether any of Australia’s financial services entities have engaged in misconduct, and if criminal or other legal proceedings should be referred to the commonwealth.
It’s also been asked to consider if sufficient mechanisms are in place to compensate victims.
The Commissioner will submit an interim report no later than 30 September 2018, and will provide a final report by 1 February 2019.
Why is this relevant to AICD?
The Royal Commission is raising important questions about practices and governance in financial services. These are issues that every board in Australia should be focused on.
The AICD teaches that the ‘tone is set from the top’ - boards are responsible for the culture of their organisation.
What is the AICD’s view on the issues so far?
The Commission is uncovering important issues about governance and practices in Financial Services that every board in Australia should be aware of and discussing. AICD shares the concerns expressed across the community, with the behaviours and practices revealed in the Commission and have explicitly called out these behaviours as indefensible. We have emphasised that boards are responsible for culture and outcomes.
Read our response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services
We have advocated for significant increases to criminal and civil penalties for corporate misconduct as they are an essential part of a strong enforcement regime. Strong penalties are needed to act as a credible deterrent and to rebuild and maintain the community’s trust.
As a governance body, the AICD respects the importance of fair process and does not intend to pre-judge external processes. We anticipate that the Royal Commission will focus further on governance issues in the months ahead. The AICD will reflect on the Commission’s findings, when made, in terms of education and guidance for members as well as the conduct of individual directors and executives.
The AICD will cover some of the themes arising in the Royal Commission through articles including the magazine, and potentially events and tools.
What about those AICD members who have been named by the Royal Commission?
There have been members of the AICD named by the Royal Commission to date. This is not unexpected given AICD is the largest Director Institute in Australia.
As a governance body, the AICD respects the importance of fair process and does not intend to pre-judge external processes – or those members who have been named by the Royal Commission.
In no way is the AICD defending conduct being examined by the Royal Commission but we must respect the process.