Compliance & Regulation

Improved director performance methods needed

The revelations of the banking royal commission have highlighted the need to find more effective methods to enable boards of directors to ensure good governance is practised within organisations, a senior research executive has said.

Speaking at the Australian Shareholders’ Association 2018 Conference in Sydney recently, Investment Trends chief executive Michael Blomfield told attendees the assessment of the performance of company directors has perhaps been too simplistic.

“It’s not the case I think that members of boards in this country sat around knowing bad advice was being given and so what,” Blomfield said.

“There is an available criticism that they weren’t aware enough that bad advice was being given, that action wasn’t taken, that an institution whichever it was had a culture that looked the other way, those things are not acceptable.

“But I think there has been simplification of the role and the opportunity of directors to provide supervision over issues that are really, in the scope of managing an entire bank, very hard to observe.

“So we’ve got to find ways of making the hard to observe more observable.”

He pointed out financial advice was a difficult area to manage because its consequences often take a long time to become clear.

“The challenge that we all have, both as consumers and an industry, is the wrong advice, for example, can take a long time to play out,” he noted.

“It’s not always known as wrong advice. I can tell you about individuals who gave themselves their own advice, and gave themselves crazy advice, but turned out to be incredibly successful.”

This situation has though clarified the challenge the banks will have to properly address in the future, he said.

“The challenge for the banks, when we think about the wealth management and the advice side, is that you want as a director to know there is a set of methods, processes and procedures [to ensure] the right things have been done,” he suggested.


Our Story

selfmanagedsuper is the definitive publication covering Australia’s SMSF sector. It uniquely offers online content tailored separately for SMSF professionals and individual trustees participating in the fastest growing and largest sector of the superannuation industry. As such, it is a must read for those wanting to stay informed about the latest news, regulatory developments, technical strategies, investments, compliance, legal and administration issues concerning SMSFs.

Copyright © SMS Trustee News 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital