The final report for the Royal Commission has landed and the commentary is running on overdrive as the government, opposition, the banks and key industry players put their spin on the results. I use the word ‘spin’ deliberately, as it seems to me that the PR teams are carefully crafting the key messaging around the findings. I find this repugnant and was particularly disappointed to sit through Andrew Thorburn’s train wreck Sky interview explaining his need to take his poorly timed long service on the grounds of maintaining his mental and physical health.
Whilst I don’t argue that everyone including the CEO is entitled to take leave, I couldn’t help but think about the mental health pressure that one of my close colleagues went through when NAB without warning or justification, applied the proceeds of the sale of one of her investment properties to other bank loans which were not in default, or faced any prospect of default. A 25 year customer of NAB, her life and finances were turned upside down trying to sort out the mess that the bank created.
The Royal Commission only heard a very small number of victim submissions and there are literally hundreds of thousands of customers that are entitled to compensation. Often when compensation finally arrives, it does little to undo the real damage created by financial stress and the mental anguish years of fighting with the banks has created.
The bottom line is that the Royal Commission has shown that greed is alive and well at the top end of corporate Australia. But unless there is a major shake-up of the governance model that underpins Australia’s largest corporate boards, very little will change in my opinion.
Today, board directors are accountable to the shareholders, but the Royal Commission shows us that this model simply does not work. Board members focus on shareholders to the exclusion of customers, employees and the environment can have devastating effects.
There have been no proposed changes to the law in reference to director responsibilities, however the Royal Commission is a wake up call to those sitting around the table that shareholder primacy cannot continue if we expect better from our major public institutions. There needs to be a significant and radical rethink about board director priorities and unless there is change at board director level, very little will change in the operations of the business. There has to be a shift of balance from focus on shareholder returns to customer interest and boards need to also factor in community interests. Its time to review director duties which are seriously outdated.
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