‘Hard work’ after Hayne shakes up boards

IAG and Virgin chair Elizabeth Bryan says the Hayne inquiry has changed the role of an ASX board.

IAG and Virgin Australia chairman Elizabeth Bryan. Picture: AAP

IAG and Virgin Australia chairman Elizabeth Bryan says the role of an ASX board has changed after the Hayne royal commission, increasing pressure on firms to tackle social issues and technology change alongside profit growth.

“The role is changing … it is hard work now, you are dealing with a lot of questions that there is no real clear answer to,” she said of the responsibilities of non-executive directors.

Speaking at the Stockbrokers And Financial Advisers Association conference in Sydney, Ms Bryan stressed there were two key issues boards needed to address, their social purpose and rapid change in technology.

“If any company gets either of those wrong it is out of business,” she added. “They are really really serious issues.”

After the damning revelations about the banking and insurance industries highlighted by the royal commission last year, Ms Bryan said local companies needed to focus on long-term profits over short-term earnings growth.

The royal commission highlighted a lack of accountability on several boards and led to the departure of National Australia Bank’s chief executive Andrew Thorburn and will see former chairman Ken Henry depart later this year.

On how the industry responded to the Hayne final report and its recommendations, Ms Bryan said:

“There will be a lot of costs on companies in dealing with it there will be a lot of costs in our regulators in dealing with it.

“We have to make it work I think one way or another … it’s not easy when you are down in the weeds but nevertheless it’s doable.”

IAG was embroiled in the royal commission for selling junk add-on insurance through car dealerships, a market it has exited.

The royal commission also took aim at the industry’s pay structures and called for the banking executive accountability regime to be extended to the broader financial services sector.

“We (the industry) were operating on a model that is no longer acceptable, we were operating on a maximising profit model and we had rem (remuneration) structures that were built around maximising profit and we had very few other major accountabilities in there.

“That model shifted and we didn’t shift with it fast enough.”