Hoda Nahlous, Elizabeth Ticehurst, Susan Staples and Nathan Jones discuss corporate culture and compliance.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established in 2017.
The prevailing theme that continues to arise out of the Royal Commission's inquiry is 'culture' – i.e. 'corporate culture'.
In his speech in July 2016, the then Chairman of the Australian Securities and Investments Commission (ASIC), Mr Greg Medcraft, described culture as follows: “Culture is a set of shared values and assumptions within an organisation. It reflects the underlying 'mindset of an organisation', the 'unwritten rules' of how things really work. It works silently in the background to direct how an organisation and its staff think, make decisions and actually behave.”
The Royal Commission findings have only served to heighten the focus on corporate culture. In particular, ASIC considers corporate culture to be a key driver of conduct within the financial industry.
For ASIC, poor culture can be a driver of misconduct, specifically, it often leads to poor outcomes for investors and consumers, impacts on the integrity of the Australian financial markets and can erode investor and financial consumer trust and confidence. By contrast, a good corporate culture can be a driver of best practice, or ethical conduct.
Through its focus on corporate culture, ASIC expects to obtain the benefit of early warning signs where things might be going wrong.
The values and principles of an organisation’s culture should be set from the top, that is, by the board. These values and principles should then be reflected in the organisation’s business strategy, business model, and the board’s risk appetite with respect to the organisation.
A good corporate culture can help organisations move beyond minimum standards and 'tick the box' compliance practices to best practice standards and compliance practices that protect stakeholders.
KPMG provides a holistic approach to organisations' corporate governance needs in order to achieve best practice standards.
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