Outcomes are ASIC’s priority, not culture, says Cathie Armour

It is not the corporate cop’s job to assess if a board is instilling a good culture in a company, says ASIC commissioner Cathie Armour.

ASIC Commissioner Cathie Armour. Picture: Hollie Adams

ASIC commissioner Cathie Armour says it is not the corporate cop’s job to assess whether a board is instilling good culture within an organisation and it’s more concerned with “outcomes”.

“Regulators are interested in the outcomes for customers and the outcomes for the broader market. And we’re really keen that there’s a framework that achieves that,” Ms Armour told the Governance Institute’s national conference on Thursday.

“So some of the cultural indicators that people talk about, we think boards should pay attention to, but there isn’t a case where we’re going to say ‘the great problem here is your culture is X or Y or Z’.”

The outcomes are the “critical” aspect, she said as she pointed to key indicators the regulator watches for.

“One that we looked at in the last 12 months was a very simple one, which was around the new laws on whistleblower policies.

“The issue of how you deal with whistleblowers has been around for a long time, so we were pretty surprised to see that a significant portion of a corporate set we surveilled had policies but they weren‘t even up to date.”

That was a good example how the regulator “gets a sense” on how a company is operating, Ms Armour said.

“You need to look at the people who might be most poorly treated or most likely to have a concern, and just test what the reasonableness of that is and how those people are dealt with.”

The regulator watches closely how complaints or issues are dealt with, she said.

“One of the areas in financial services that is really key is when you’ve found a systemic problem, how quickly do you get to remediation: how much are you nickelling and diming on the remediation and how much are you trying to just err on the side of generosity.”

Financial services firms are preparing for a wave of new legislation that will hit the sector next month, including requirements around breach reporting to the regulator and internal dispute resolutions.

Some of these “are really quite cultural”, Ms Armour said.

“The more contemporary changes we’ve seen in corporate governance has been a broader acceptance of the notion that the responsibilities of those governing and managing corporations really are to take into account a broad range of stakeholders,” she told the audience.

Appearing on the same panel discussion, ANZ director Ilana Atlas said the focus with regulation should be on how companies implement it.

“It can be embraced and used as a lever to improve the experience of customers, or it can be treated very grudgingly as a tick-the-box compliance exercise. The way regulation is implemented is just as determinative of culture as regulation itself,” she said.