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Chief ethics officers are needed post-banking royal commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been a “wake-up call the industry needs”, and appointing chief ethics officers will be vital to restoring credibility, according to Governance Institute of Australia.
Jerome Doraisamy
The final report, delivered last week by Commissioner Kenneth Hayne and made public yesterday, provided a “sobering insight into the sector’s governance failings, driven by a culture of profits over service”, Governance Institute said.
“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?”
Answering her own query, Ms Motto said that, overseas, companies have tackled 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?” she asked.
“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.”
New metrics to measure success, incorporating culture and ethics, will be vital to restoring industry credibility, she added.
“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.”
Jerome Doraisamy
Jerome Doraisamy is the managing editor of Lawyers Weekly and HR Leader. He is also the author of The Wellness Doctrines book series, an admitted solicitor in New South Wales, and a board director of the Minds Count Foundation.
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