Banking & Financial Services Royal Commission: Interim Report statement

Corporate governance continues to be a focal point of the final round of Royal Commission hearings, with accountability in particular being considered through various lenses.

Revelations in testimony at the Commission about misconduct have been confronting and disturbing.

The Commissioner’s Report observes that misconduct was driven by personal and institutional profit, that remuneration frameworks responded to those drivers, and that governance frameworks did not prevent misconduct.

The AICD is committed to leading the governance community in now taking stock. Strong governance can and should be an enabler for good in our communities.

The AICD will reflect on the interim report and make a submission for the Commissioner to consider. It is important that we hear from you as part of this process. I encourage interested members to contact us with your feedback. A document with consultation questions will be available on our website next week.

Responding to the challenge

It is important to note that the Royal Commission delivers its final report next February. The Interim Report does not cover the recent superannuation and insurance hearings and there is another round of hearings scheduled for November.

But already as the Commissioner says, we need to ask, “What can be done to prevent this conduct happening again?” Directors across all sectors should reflect on their governance practices and ask ‘are we serving our customers and stakeholders honestly and fairly? Are we acting lawfully and ethically?’

Our policy team is currently analysing the Interim Report and a summary of what it means for governance will be made available for members next week. We will add this to our existing Royal Commission resources, available here. This hub includes regular analysis and commentary from Company Director, guidance for directors from the AICD policy team and a series of webinars to assist directors with the questions raised by the Royal Commission.

As part of this program, we will hold a webinar on 10 October to update members specifically on the implications of the Interim Report for governance broadly. A recording of this webinar will also be available for members after that date.

As the Royal Commission continues its work, we will update our education programs and resources accordingly to make sure that our members are able to respond to the governance challenges it has raised.

I am confident the 43,000 strong membership of the AICD is committed to meeting the highest standards of governance. As part of that commitment, the messages of the Interim Report are ones we must hear.

The misconduct revealed by the Royal Commission has contributed to the historically low levels of trust in our institutions. The task of restoring that trust is one that the AICD community will play a vital part in.