Corp governance must play bigger role: Medcraft

Greg Medcraft


By Krystine Lumanta

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ASIC has called for the industry to adopt stronger corporate governance principles, as it looks to take a greater interest in the effectiveness of current standards in Australia.

At the last board meeting held by the International Organization of Securities Commissions (IOSCO), corporate governance and culture was a key focus of discussion, ASIC chairman Greg Medcraft said.

"And rarely we found that it came down to culture,” Medcraft, who is also chairman of IOSCO, told the Centre for International Finance and Regulation (CIFR) symposium on market and regulatory performance in Sydney last week.

"We’ve focused on corporate governance largely related to the financial sector during the crisis, but, in fact, I think that in the post-crisis environment corporate governance culture, more generally, is something that needs to be focused on ... a lot more.

"That was the feeling by regulators around the world; that we’ve got to think more about it,” he said.

Medcraft’s comments followed the release of the Macquarie University Department of Applied Finance and Actuarial Studies’ report, “Elements of Risk Governance and Culture”, at the CIFR symposium.

The paper, led by associate professor Elizabeth Sheedy, concentrated on risk governance codes post-global financial crisis reform. Phases two and three of the study are set to assess banks and insurance companies.

"I think corporate governance and risk governance is something we’re going to take a lot more interest in, in the future,” Medcraft said.

"What we see a lot more companies are doing is stakeholder assessments of their corporate governance or their culture, which I think is quite interesting.

"There are those [businesses] that make an assessment on what they think, but it’s a bit like doing a 360 degree survey.

"So there’s a gap between that and what the market thinks so one thing to perhaps think about is actual stakeholder assessments of culture because you might have got it wrong with your own internal assessment."

The International Corporate Governance Institute will release a new set of corporate governance principles later this year, including principles for the composition of boards and risk committees.

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