BULAW 5915 Corporate Law Semester 2 2020 Written Assignment

Introduction

Royal Commission in Australia

Name

Institution

1. Why was there pressure exerted on the Federal Government to have a Royal Commission?

The government was pushed to have a Royal commission to enable investigation of the behavior of the big banks and other organization that were also in the sector to uncover the truth about any deeds in the government and seek to help the construction of government policy. (Wright, K., Swain, S., & McPhillips, K. 2017). This was done through hearing groups of witness, this includes the bank and the financial providers, Australian Banker Association, consumers’ law enforcement agencies and the affected consumers.

2. What arguments did the government and financial services sector use to reject the call for a Royal commission?

Government and financial services rejected the demand for royal commission that it was already nonoperational and will not give out the exact change and also saw it that it will not operate effectively. They came up with some of arguments to reject the Royal commission. One of the argument was that, the royal commission was not answer to compound questions. The commission had ran for some year and concluded in the report that contain reference. This process result to consultations, in white paper of the government and department of consultations making it not being the only answer to complex question.

Secondly, they argued that the royal commission had took much longer period of time in achieving its goal. Seeing that altering policies will be harder in making procedure, the government complained that royal commission had a poor track record of constructing some of the agreement both in the parliament and among the parliament. Thirdly, they suggested that unlike the Royal Commission, parliament had better way to construct strategy. Royal commission having a few non parliamentary experts, academics and few politician, it may be harder to construct and give out solutions that can sustain parliamentary procedure and results to change lasting.

Lastly, they argued and suggest that unlike the Royal commission, ways through which the government handles great questions are always progressing better and effective and those questions are being responded well exceeding the royal commission. Through government, new ways of investigating attitudes like independent panels, have been seen growing and working alongside or possibly succeed the requirements of the public. Therefore was better according to them denying Royal commission.

3. Using one bank or other providers as an example (so you can use either IOOF, NAB or any other provider testifying before the commission), what governance issues did the Commission investigations and hearings identify for that provider?

Using NAB (NATIONAL AUSTRALIA BANK), as the provider, a number of issues were identified by the commission investigations and hearings many of the findings were observed from NAB by the Royal commission investigation. One of the findings that were identified is that, NAB reinforced the final report of Royal commission and they expect more openness from the financial services industry that was so attentive on getting rights of the customers. It also defied NAB to close the space between what the commission says or do. They also find that NAB gives out the daily action to achieve. The second finding, was that, NAB at its hand had also decided to expand the security of the code of the bank activity to small business with an exact less borrowing from the last agreed level.

In addition, the commission investigation and hearings found that NAB has started restoring trust and mending their organization a better for its customers with a policy to abridge the bank goods and services. They also opted to make a resort program on the self-assessment procedure. Moreover there was also identification that NAB had built a customer committee. The function of this committee was to supervise an important improvement in the significance given to consumer in making decisions and more penetrating to focus on customer results at NAB.

Furthermore, it was discovered by the commission that NAB didn’t grip for facing the outcomes of having suggest a surviving sightlessness to the importance of the original conduct than having to pay back what was already taken making it being so unfair. The investigation commission also got that NAB is ready for changes that the Royal commission has made to make sure that customers always come first continuously. The consumers are always considered by banking and financial services earners in connection with number of credit produce resident mortgage, car finance and credit cards being included. Another findings is that the NAB was linked by the Royal commission to make submission on behalf of them to customers and they will surrender any confidentially responsibilities that they have decided.

4. From a governance perspective, how has that provider responded to the commission findings not just in words?)

NAB responded in number of ways to the commission, on their findings after all that investigations through witness that made them also to great respond with commission. Firstly NAB agreed to a request from the commission into the any misbehavior of criticism that may be encounter in the Banking, Retirement and financial service industry. This kind of response was to communicate with the commissioner, where he requested NAB to identify any misbehavior that it may not reflect the community standards and its expectation on their behalf. The NAB chief committed to cooperate fully with the royal commission and welcome any of the chance to assist by giving out answers and comments to which the information has been request. (Wright, K., Swain, S., & McPhillips, K. 2017). They also replied back by accepting and agreed to respect the procedure that the commissioner will put and look forward to hear the commission as it considers all the reply and submission and also to give out the next process.

They also agreed to be attentive and listen to the customers, understand how they can serve them better, things to improve and any other need to be fix possible. NAB saw it better and so much significant that the community and the customers to whom they had learned from them to work together and build a better banking industry. This is the reason why they fully supported customer’s opinion to be heard by the Royal commission. The provider, who is the NAB also dedicated to tell the customer complaints and wanted to hear from the customers themselves as the first hand complaint with any issues that are relevant to their organization NAB.

They also reacted and responded to the commission through respecting and acknowledge that the customers, have right to raise their anxieties with the Royal Commission and also to encourage them to make submission whenever they are interested. In addition to that, the NAB sent the information to their bankers informing them to maximally give hand to customers who wanted to make submission in to the Royal commission. For easy convenience and reaching, Contact was also given to customers who can speak to the bankers directly any time whenever they needed assistance.

5. From an enforcement perspective, what has ASIC and APRA done to address the criticism raised in the report?

The ASIC and the APRA had some plans and strategies that helped them to address the criticism situation that raised in the report. Bothe the ASIC and APRA addressed the criticism that was raised in the report. Their plans had better strategies that revoked criticism. Starting with ASIC’s plans for addressing criticisms, it increased litigation whereby it listed up its new implementation strategy that head on increasing and accelerate court-based outcomes that supervised by the new office of enforcement started to operate. This was to be applied in matters that may breaks into ASIC to have occurred. It was to fail in some of the cases in the court but continue to follow litigation. Another discourse that was done was to continue supervising agent characters and publish information and examine regarding insurance in retirement fund trustee not acting in member’s interest.

The ASIC portrayed and expelled out a general improvement on the development of governance and responsibility to key policies first. This helped them to regulate reveals that was examining the possibility of the program to involve additional institutions of finances. They will analysis, governance practices including methods to variables compensation of personal management and their interaction between officers and directors. On the other hand APRA had also it plans to address criticisms that arose on the report just like ASIC but for it, it was slight improved and modified. Firstly it maintained the system of finance as it reinforces and strengthening capital requirements for and reduces the stress as it is plan number one. It also improve the result for retirement members that is, it aimed to facilitate the resolution of consistently low-performing funds and to only focused on improving openness and inside the industry offering transparency as it gathered information, compared against performance standard and finally to conduct large industry reviews hence developing widely better practice procedures and as well strategies too.

APRA also decided to enforce small amount of cyber – reliance standards to make sure that the reply of the plans of financial institutions are fit for reasons. These was to be taken by the Regulators who was to build up a data driven steps that will help and assist to improve its own long term zero metrics against which the resilience of institutions will be approximated. APRA also stated a constructiveness through approach to governance, culture, and accountability issues inside institution that are regulated. This was to boost and points out the expectation that exist, give hand to government reforms to expand rules and regulation accountability to all APRA regulated institution. The regulator was to be closer to supervise the administration of non- financial risks by coming together with the third parties and regulator in employing rules and structuring technology to its administration role. Therefor APRA will share the outcomes of its guiding practice more frequently to assist markets and watchdogs in developing and identifying poor performance through this administering of non-financial institution. Therefore the corporate governance and the financial performance has been investigated to confirm its effectiveness in protecting shareholders wealth, but its findings on their relationship are unconvincing ranging from positive to negative as documented in the last studies. The board of directors also APRA has consider a significant of the governance structure of companies where small size of the board were made so balanced and results to increase in efficiency, accuracy and coordination as well.

In conclusion to this, both commercial plans identifies fostering the change in culture and best governing to address the shortcomings of the financial services industry through criticism issue. Those followers of Banking Royal Commission will remember that all-embracing theme of Commission final report was that culture initiated misconduct and a focus on corporate. Cultures should heads towards modifying a repeated occurrence of criticisms. The Banking Royal commission may have been awoke the sleeping issue but executes their plans and gain their visions.

6. What (if any) implications do those specific findings have for corporate governance more generally in Australia? (when answering this question, consider the principles of corporate Governance on the ASX website)

A number of implications was received on the findings getting a great attention, due to its significant to corporation, health, and society in general. Australia decided work on the implications of the findings using some of its principles. Security introduced principle of good corporate Governance and best practice recommendation. This was to be in response to company which have fails as a result of failures from accounting irregularity and ethics failures, as well as lack of control.

These reverses the practice of the international by focusing only on the attention of the self- directors at the same time stock exchange and stock market started cooperating the governance repairs to help in winning back the trust and confidence of investors. (Wright, K., Swain, S., & McPhillips, K. 2017). The Australian royal commission. The securities and the exchange commission approved their corporate governance outdating out their standards.

Moreover, basing on the principle of good corporate governance and associated recommendation about board features. It suggested that they should structure the board to add value. This is to say that, corporate should have a board of an effective composition comprising of the size and commitment to enough discharge its responsibilities and duties. This recommends that the main stream of the board should be independent and the chair should be an independent director. Again on the other hand, same individual should exercise the role of the executive officers and the chair. Also the board should build nomination committee, companies that should reveal the information that is indicated in the guide to principle.

In addition to this, the perspective of corporate governance maybe viewed as a system where a company is monitored and managed. Focusing on this, the corporate governance by regulation increased the concentration on insufficiency of the law and regulations which govern the exercise of business and operation of their commercial activities. Also other implication was that, the board concluded that the participation of non – executive directors on the board was limited to prepare for an attendance of the meetings of the corporate board and the meetings of the relevant board committee.

On top of that corporate governance, stated that the board of directors should have a good understanding and competence to deal with some of the emerging issues that may arose in the business. They should also be able to evaluate and effectively question the management occasion, thereby make an independent assessment of the situation confidential to the organization well.

There was also an adaptive reply to changes in the business environment as well as development applicable competition for members of board of directors are needed to sustain the operation in designing the methods and some changes that needed to be implemented in the company consideration of the possible effects of the changes is done by the assistance of frame work. (Wright, K., Swain, S., & McPhillips, K. 2017). This will ensure all the factors of the activities are put in place according to regulation refers to a set of rules.

The remuneration committee consisting of the non- executive directors was also have to be responsible in determining compensation level for executives. This implies that all executives ought to be fully disclosed and shareholder’s approval for these should be required. In addition to that compensation should reflects the performance and be in appropriate manner and position.

The organization for Economic cooperation implied also a final principle of corporate governance. This principle was designed in a manner that it help Australia in evaluating and developing their existing law, their institution and their regulations on corporate governance and to offer advice and proposition to boost and improve development in the market, shareholders, companies and other stake holders. This principle has covered almost all the aspect of the privilege of the shareholders, reasonable treatment, their role, transparency and disclosure provisions and their board accountability.

Reference

Mathews, B. (2017). Optimizing implementation of reforms to better prevent and respond to child sexual abuse in institutions: Insights from public health, regulatory theory, and Australia’s Royal Commission. Child Abuse & Neglect, 74, 86-98.

Wright, K., Swain, S., & McPhillips, K. (2017). The Australian royal commission into institutional responses to child sexual abuse. Child Abuse & Neglect, 74, 1-9.

Wishart, D., & Wardrop, A. (2018). What can the Banking Royal Commission achieve: Regulating for good corporate culture? Alternative Law Journal, 43(2), 81-88.

Sy, W. N. (2019). The Farce of Fake Regulation: Royal Commission Exposed Australia. Available at SSRN 3375629.