“Commissioner Hayne’s observations are entirely consistent with the AICD’s view and teaching on good governance. The pillars of accountability, transparency and effective challenge of management are central to a strong governance environment,” he said.

“Outcomes for customers, shareholders and the community will be enhanced if boards are focused on these pillars.

“Australia’s corporate governance model is fundamentally sound, but board oversight of culture, governance and risk can and should be strengthened.

“We support Commissioner Hayne’s recommendation that financial services institutions should, as often as they reasonably can, take steps to assess culture and governance; identify any problems and deal with them promptly; and follow-up to check whether the changes have been effective.

“Commissioner Hayne highlights the important separation between boards and management. A director’s role is to continually engage and challenge management recommendations and assumptions, without blurring the line between board level oversight and managerial responsibilities.

“Critical to this process is the need for boards to ensure they have all of the information necessary to do their job.

“We fully endorse Commissioner Hayne’s comment, ‘The task of the board is overall superintendence of the company, not its day-to-day management. But an integral part of that task is being able and willing to challenge management on key issues, and doing that whenever necessary.’”

Mr Armour said that Commissioner Hayne rightly observes that in order to carry out their duties to act in good faith in the best interests of the corporation, directors must consider more than the financial returns that will be available to shareholders in any particular period.

“The AICD welcomes the Commission’s recognition that directors operate in a complex environment, and not one where duties represent a simple choice between customers and shareholders.”

Media Contact: Matthew Pritchard 0412 937 390

The Australian Institute of Company Directors is committed to excellence in governance. We make a positive impact on society and the economy through governance education, director development and advocacy. Our membership of more than 43,000 includes directors and senior leaders from business, government and the not-for-profit sector.