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Royal Commission: Governance culture of ‘box-ticking’ over

Reinforcing a good culture based around ethical conduct and accountability as part of governance frameworks will be vital to acting on the Commission’s report

Tuesday, 5 February 2019 – The Governance Institute of Australia welcomes the release of the Banking Royal Commission’s final report, and especially its focus on fixing the sector’s failings of culture and governance.

“We thank Commissioner Hayne and his team for their hard work, and welcome a number of the recommendations within. It is excellent that the Commission has taken on board several of our recommendations, especially around board accountability and clarity of management responsibilities, advising the building in of ‘non-financial’ based incentives to remuneration structures, and focusing on corporate culture as the ‘root cause’ of the sector’s problems,” said Megan Motto, CEO Governance Institute of Australia.

“Commissioner Hayne and his team is right to highlight the important role of leadership embedding an ethical culture from the top down. Developing the right tools, training and recruitment programmes to encourage this conduct should be a priority, and a key part of any governance framework. It cannot be based around an attitude of it being a ‘box-ticking’ exercise for compliance purposes.

“The Governance Institute has long advocated for strengthening the regulators, and welcomes the proposed new oversight body, which will ensure ASIC and APRA work together better, especially around enforcement. If trust is to be restored in the sector, than those guilty of wrongdoing must be brought to account.”

“This should now be seen as a positive opportunity for the sector to fundamentally rethink their governance, especially around how boards hold themselves and their management accountable. I look forward to seeing how the industry responds to the challenge, and we are here to support them.”

“How these institutions respond to Hayne’s report will be vital, because building long term stability and performance of the sector will determine the health of the Australian economy as a whole. This is too important to get wrong.”

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