It was hardly a revelation to hear Hayne’s declaration that primary responsibility for misconduct in the financial services industry, and the consequences that followed, lies with the entities themselves and their boards and senior management. Hayne’s advice? Every entity must look to its culture and governance and how it manages regulatory, compliance and conduct risk, he says.
But it is clear that this introspection will be hard, and the changes required will not make themselves. So, whose job is this anyway? An entity, like Newton’s object at rest, can scarcely effect change unless acted upon by a force.
This force must be leadership.
Hayne does not address specifically what he expects of leaders of financial services entities. His messages are more implicit. The APRA-commissioned Prudential Inquiry into the Commonwealth Bank was perhaps more instructive. The APRA report alluded to the importance of ‘broader leadership repertoire of skills and traits’ including reflection, humility, learning and adaptive capacity and the practical experience of managing throughout business cycles that comes with experience.