Chief Ethics Officers could address Banking Royal Commission recommendations
New metrics to measure success, incorporating culture and ethics, will be vital to restoring industry credibility
Friday, February 1, 2019 - The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will no doubt provide a sobering insight into the sector’s governance failings, driven by a culture of profits over service.
“This is the wake-up call the industry needs. The sector has seen a failure of leadership and accountability, especially around governance, reputation and risk management. The pursuit of short term profit above ethical conduct has hurt both customers, investors, and the community at large, and the damage will take some time to repair,” said Megan Motto, CEO, Governance Institute of Australia.
“The Royal Commission has highlighted just how badly we need to open up a discussion on how we measure business success, especially in terms of key intangibles such as business culture and ethical conduct. How do we create new ways of incentivising our business leaders to perform, beyond the current obsession with profit-based metrics?
“Overseas we’ve seen companies tackling these tough questions by creating new executive positions, such as a Chief Ethics Officer. These roles can provide independent feedback loops to the board, standing outside of traditional executive reporting lines, and working closely with auditors and regulators to ensure the company is compliant. Is it now time for the industry to consider these kinds of changes here too?
“The sector has already faced huge reputational and financial damage as a result of the Commission’s revelations. It makes sense for the industry to make the first move to fix these problems themselves, rather than wait passively for the added scrutiny that will follow from re-invigorated regulators.
“This should now be seen as a positive opportunity for the sector to do a hard reset, and look at new ideas to fundamentally rethink their governance, especially how boards and management interact. I look forward to seeing how the industry responds to the challenge, and we are here to support them.”
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Governance Institute of Australia
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About Governance Institute of Australia
With a membership of over 7500 chartered secretaries, governance advisers and risk managers from some of Australia’s largest organisations, the Governance Institute of Australia is the only fully independent professional association with a sole focus on whole-of-organisation governance. Our education, research, advocacy, and support networks have provided cutting edge governance and risk management advice to Australian business leaders.
Media Release (28/09/2018): Banking royal commission interim report highlights greed and unethical behaviour
Media Release (25/10/2018) Governance Institute of Australia announces Megan Motto as new CEO
Governance Institute’s Submission on the Royal Commission’s Interim Report [PDF]
Ethics Index 2018 [PDF available on request]