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2022 | OriginalPaper | Buchkapitel

29. Composition, Independence, Representation, Codes of Conduct and Culture

verfasst von : Francesco de Zwart

Erschienen in: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia

Verlag: Springer Nature Singapore

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Abstract

This Chap. 29 examines board composition, independence, representation, codes of conduct and culture.

We begin with board composition, the independence proportion and representation and examine greater challenge, debate and testing.

We move to consider a change in board culture and codes of conduct/ethics and conflicts including changing board culture and ‘tone at the top’. We present governance variables for culture and ‘tone at the top’, ‘entrenchment’ of the CEO, codes of conduct and ethics including an ‘ethics, compliance and reputation committee’ and a conflicts of interest policy.

There follows the FSB’s Framework for Assessing Risk Culture including the aims of assessing risk culture, the FSB’s elements of a sound risk culture including the FSB’s and NAB’s ‘tone from the top’. We continue with the FSB’s further indicators of a sound risk culture – accountability, effective communication and challenge and incentives.

There is then focus on the FSRC findings on governance, remuneration and culture including the FSRC Final Report recommendations and commentary on culture, governance and on the role of the board and concluding that section with the FSRC Final Report recommendations and commentary on priorities.

The examination then moves to the NAB Self-Assessment 2018 on financial objectives and prioritisation including strategic planning and performance objectives, the growth fund and annual group budget, trade-offs in decision-making and customer outcomes.

Switching to the Westpac Review Team 2018 examination of prioritisation decisions, we examine WBC’s four (4) factors contributing to prioritisation of financial considerations.

We conclude with the FSRC Final Report recommendations and commentary on non-financial risks and accountability.

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Vorheriges Kapitel Ownership, Governance Structure and Government Bailout

Nächstes Kapitel NAB Self-Assessment 2018, Westpac Review Team 2018 and Westpac Reassessment on Governance, Accountability and Culture

Australian Prudential Regulation Authority, Prudential Standard CPS 510 Governance, July 2019, accessed 22 September 2019, available at: https://www.legislation.gov.au/Details/F2019L00662/Download (‘CPS 510’), sections 26–33, pp 9–10. In addition to finalisation of APRA’s Draft Prudential Standard 511 Remuneration, APRA has announced that it intends to consult on revised versions of Prudential Standard CPS 510 Governance, Prudential Standard CPS 220 Risk Management and Prudential Standard 520 Fit and Proper in the second half of 2020 with expected effective dates of 2022. See Australian Prudential Regulation Authority, Information Paper, APRA’s Policy Priorities, section 2.1.1 Governance and risk management, section 2.1.3 Accountability and Attachment B: Timelines.

Francesco de Zwart, Enhancing Firm Sustainability Through Governance, The Relational Corporate Governance Approach, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Corporations, Globalisation and the Law Series, July 2015, (‘Stage 1’). See discussion in section 7.3.2.1.2 of Stage 1, p 211.

For Stage 1, see also, Francesco de Zwart, “Enhancing firm sustainability through governance – Part 1: The challenge of corporate governance” (2018) 33(2) Aust Jnl of Corp Law 144 and Francesco de Zwart, “Enhancing firm sustainability through governance – Part 2: The framework of the relational corporate governance approach” (2019) 34(1) Aust Jnl of Corp Law 27.

CPS 510, above n 1, section 26, p 9.

Ibid, section 27, p 9.

Ibid, section 28, p 9.

Ibid, section 29, p 9.

Ibid, section 30, p 9.

Ibid, section 31, p 10.

Ibid, section 32, p 10.

Ibid, section 33, p 10.

Ibid, section 34, p 10.

Ibid.

Ibid, section 35, p 10.

Ibid, section 37, p 10.

Ibid, section 38, p 11.

Ibid.

Ibid, section 39, p 11.

David Walker, A review of corporate governance in UK Banks and other financial industry entities, Final recommendations, 26 November 2009, The Walker Review secretariat, accessed 14 March 2017 at http://www.http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/d/walker_review_261109.pdf (‘Walker Review 2009’), Para 2.7, p 35.

Ibid, Para 4.2, p 52.

Ibid, Recommendation 6, p 56.

See discussion in section 8.4.3 of Stage 1, above n 2, pp 242–244

Ibid.

See discussion in section 7.3.2.1.3 of Stage 1, above n 2, pp 212–215.

See discussion in sections 7.3.2.1.1–7.3.2.1.2 of Stage 1, above n 2, pp 208–212.

See discussion in sections 8.2.3–8.2.3.1 of Stage 1, above n 2, pp 229–232.

Australian Securities Exchange, ASX Corporate Governance Council, Corporate Governance Principles and Recommendations, Fourth Edition, February 2019, accessed 10 April 2020, available at https://www.asx.com.au/documents/regulation/cgc-principles-and-recommendations-fourth-edn.pdf (‘2019ASX’).

Ibid, Principle 3, p 16.

Ibid, Rec 3.1, p 16.

Ibid, Commentary to Rec 3.1, p 16.

Ibid.

Ibid, Rec 3.2(a), p 16.

Ibid, Rec 3.2(b), p 16.

Ibid, Commentary to Rec 3.2, p 16.

Ibid.

Ibid, pp 16–17.

Ibid, Rec 3.3(a), p 17.

Ibid, Rec 3.3(b), p 17.

Ibid, Box 3.3, p 17.

Ibid, Rec 3.3(a), p 17.

Ibid, Rec 3.3(b), p 17.

Ibid, Box 3.4, p 18.

Walker Review 2009, above n 18, Para 4.3, p 53.

Ibid, Para 4.4, p 53.

Ibid, Para 4.5, pp 53–54.

Ibid, Para 4.6, p 54.

Ibid, Para 4.7, p 54.

The Bank for International Settlements, The Basel Committee on Banking Supervision, Guidelines, Corporate Governance Principles for Banks, July 2015, accessed 21 March 2017 at http://www.bis.org/bcbs/publ/d328.htm, (‘BCBS Guidelines 2015’), Para 30, p 9.

Ibid, Para 30, p 9.

Financial Stability Board, Guidance on Supervisory Interaction with Financial Institutions on Risk Culture, A Framework for Assessing Risk Culture of 7 April 2014, accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/140407.pdf (‘FSBCult’).

National Australia Bank, NAB Self-Assessment on Governance, Accountability and Culture, November 2018, accessed 15 March 2019, available at https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/nab-self-assessment-2018.pdf (‘NAB Self-Assessment 2018’), pp 50–56.

See Westpac Banking Corporation, Review Team, Governance, Accountability and Culture Self-Assessment, 28 November 2018, accessed 5 August 2019, available at https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/media/Westpac_Self-Assessment_Report_.pdf (‘Westpac Review Team 2018’) and Westpac Banking Corporation, Reassessment of the Culture, Governance and Accountability Remediation Plan, June 2020, accessed 20 November 2020, available at https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/media/WBC_CGA_Reassessment.pdf (‘Westpac Reassessment’).

See discussion in sections 7.3.2.1.1–7.3.2.1.2 of Stage 1, above n 2, pp 208–212.

See discussion in section 2.6.2 of Stage 1, above n 2, pp 41–43.

Walker Review 2009, above n 18, Para 4.4, p 53.

BCBS Guidelines 2015, above n 49, Para 32, p 10.

Ibid.

See discussion in sections 7.3.2.1.1–7.3.2.1.2 of Stage 1, above n 2, pp 208–212.

See discussion in section 2.6.2 of Stage 1, above n 2, pp 41–43.

Shann Turnbull and Michael Pirson, “The Future of Corporate Governance: Network Governance – A Lesson from the Financial Crisis”, Fordham University Schools of Business Research Paper No. 2010–010, (15 March 2010), accessed 5 April 2017 at SSRN: http://ssrn.com/abstract=1570924, 4.

BCBS Guidelines 2015, above n 49, Para 83, p 19.

Ibid.

See discussion in section 2.6.2 of Stage 1, above n 2, pp 41–43.

FSBCult, above n 51, Introduction, p 1.

Ibid (emphasis in original and footnote omitted).

See discussion in section 2.6.2 of Stage 1, above n 2, pp 41–43.

FSBCult, above n 51, Risk Governance, p 2.

Ibid.

Ibid, Risk Appetite, pp 2–3.

Ibid, Compensation, p 3.

Ibid, Indicators of a sound risk culture, p 3.

Ibid, Tone from the Top 3.1, p 5.

Ibid.

Ibid, pp 5–6.

Ibid, p 6.

Ibid.

Ibid, 3.1.1, p 6.

Ibid, 3.1.2, p 6.

Ibid, 3.1.3, p 6.

Ibid, 3.1.4, p 6.

Ibid, 3.1.5, p 6.

Ibid, 3.1.6, p 6.

Ibid, 3.1.7, p 7.

Ibid, 3.1.8, p 7.

Ibid, 3.1.9, p 7.

Ibid, 3.1.10, p 7.

Ibid, 3.1.11, p 7.

Ibid, 3.1.12, p 7.

Ibid, 3.1.13, p 7.

NAB Self-Assessment 2018, above n 52.

Ibid, p 13.

Ibid.

Ibid, p 14.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

FSBCult, above n 51, Indicators of a sound risk culture, pp 3–4.

Ibid, 3.2.1, p 8.

Ibid, 3.2.2, p 8.

Ibid, 3.2.3, p 8.

Ibid, 3.2.4, p 8.

Ibid, 3.2.5, p 8.

Ibid, 3.2.6, p 8.

Ibid, 3.2.7, p 8.

Ibid, 3.2.8, p 8.

Ibid, 3.2.9, p 8.

Ibid, Effective Communication and Challenge, p 9.

120

Ibid, Indicators of a sound risk culture, p 4.

Ibid, 3.3.1, p 9.

Ibid, 3.3.2, p 9.

Ibid, 3.3.3, p 9.

Ibid, 3.3.4, p 9.

Ibid, 3.3.5, p 9.

Ibid, 3.4 Incentives, p 9.

127

Ibid, Indicators of a sound risk culture, p 4.

Ibid, 3.4.1, p 10.

Ibid, 3.4.2, p 10.

Ibid, 3.4.3, p 10.

Ibid, 3.4.4, p 10.

Ibid, 3.4.5, p 10.

Ibid, 3.4.6, p 10.

Ibid, 3.4.7, p 10.

Ibid, 3.4.7, p 10.

Commonwealth of Australia, Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report, 4 February 2019, accessed 5 February 2019, available at https://static.treasury.gov.au/uploads/sites/1/2019/02/fsrc-volume1.pdf, Volume 1, (‘FSRC Final Report’), pp 334–5 (footnote omitted).

137

Ibid, p 335.

138

Ibid, p 375 (footnotes omitted).

139

Ibid, p 376.

140

Ibid, p 386 (bold in original and footnote omitted).

141

Ibid, pp 386–7 (bold in original and footnote omitted)

142

Ibid, p 387.

143

Ibid, Rec 5.6, p 392.

Ibid.

Ibid.

Ibid.

Ibid (bold in original omitted).

148

Ibid, Rec 5.7, p 393.

Ibid.

Ibid.

Ibid.

Ibid, Governance, p 394.

153

Ibid, What the examples show, p 400.

154

See discussion in section 9.1.2.1 of Stage 1, above n 2, pp 262–266.

155

FSRC Final Report, above n 136, p 400.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid, p 401.

Ibid.

Ibid.

Ibid, p 402.

Ibid.

Ibid, p 402.

Ibid.

Ibid, p 403.

Ibid.

Ibid.

Ibid.

NAB Self-Assessment 2018, above n 52, pp 36–40.

Ibid, p 37.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid, p 38, Action #16 therein.

Ibid, p 38.

Ibid.

Ibid.

Ibid, Action #16 therein.

Ibid, p 38.

Ibid, p 39.

Ibid.

Ibid.

Ibid.

Ibid.

Ibid, Action #17 therein.

195

Ibid, p 39.

196

Ibid.

197

Ibid, Action #18 therein.

198

See discussion in sections 7.3.1.2.1 of Stage 1, above n 2, pp 198–201.

199

Westpac Review Team 2018, above n 53, section 8.1.1, p 63.

200

Ibid.

201

Ibid.

202

Ibid, section 8.1.2, p 63.

203

Ibid, section 8.1.4, p 63.

204

Ibid.

205

Ibid, section 8.1.5, p 63.

206

Ibid, Recommendation G31, p 63.

207

Ibid, section 8.1.2, p 63.

208

Ibid.

209

Ibid, section 8.1.3, p 63.

210

Ibid, section 8.1.6, p 64.

211

Ibid, section 8.1.7, p 64.

212

Ibid.

213

Ibid, section 8.1.8, p 64.

214

Ibid, section 8.1.9, p 64.

215

Ibid, section 8.1.10, p 64.

216

Ibid, 8.1.11, p 64.

217

Ibid, Recommendation G32, p 64.

218

Ibid, Recommendation G33, p 64.

219

Ibid, section 8.1.6, p 64.

220

Ibid.

221

Ibid, section 8.2.1, p 64.

222

Ibid, section 8.2.2, p 65.

223

Ibid.

224

Ibid, section 8.2.3, p 65

225

Ibid, section 8.2.4, p 65.

226

Ibid.

227

Ibid, section 8.2.5, p 65.

228

Ibid, section 8.2.6, p 65.

229

Ibid, Recommendation G34, p 65.

230

Ibid, section 8.2.7, p 65.

231

Ibid.

232

Ibid, section 8.2.8, p 65.

233

Ibid.

234

Ibid, section 8.2.9, p 65.

235

Ibid.

236

Ibid, section 8.2.10, pp 65–66.

237

Ibid, section 8.2.10, p 66.

238

Ibid section 8.2.11, p 66.

239

Ibid, section 8.2.12, p 66.

240

Ibid, sections 8.2.13–8.2.14, p 66.

241

Ibid, Recommendation G35, p 66.

242

Ibid.

243

See discussion in Sect. 36.8 of Chap. 36 below.

244

FSRC Final Report, above n 136, p 406 (bold in original).

245

Ibid, p 407.

246

Ibid, citing Australian Prudential Regulation Authority (APRA), Prudential Inquiry into the Commonwealth Bank of Australia, Final Report, 30 April 2018, (‘APRA Final Report’), accessed 1 June 2018 at www.apra.gov.au/AboutAPRA/.../CBA-Prudential-Inquiry_Final-Report_30042018.pdf, p 59.

247

FSRC Final Report, above n 136, p 408.

248

Ibid.

249

Ibid.

250

Ibid, p 409.

Titel: Composition, Independence, Representation, Codes of Conduct and Culture
verfasst von: Francesco de Zwart
Verlag: Springer Nature Singapore
Buch: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia
Print ISBN: 978-981-16-1709-6

Electronic ISBN: 978-981-16-1710-2

Copyright-Jahr: 2022
DOI: https://doi.org/10.1007/978-981-16-1710-2_29

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