Board directors of aged care providers should be reviewing the final report from the financial services royal commission and take steps to improve their governance and practice immediately, an industry expert has advised as week two of the inquiry into aged care commences.
CEO and Managing Director of the Australian Institute of Company Directors, Angus Armour, told Inside Ageing that many of the lessons from the Financial Services Royal Commission are applicable to directors across all sectors including aged care.
“Senior leaders should not wait for the outcomes of the Aged Care Royal Commission to enact change within their businesses. Much can be learned from the recent Financial Services Royal Commission; the pillars of accountability, transparency and effective challenge of management are central to a strong governance environment. Boards must ensure they have all of the information necessary to do their job.”
“It would be naïve to view the findings, and lessons, from the Hayne Royal Commission as isolated to the Financial Services sector,” Mr Armour said.
“There are important lessons in it for all directors including around how pay structures and a focus on financial returns affect business practices; board visibility of misconduct and customer remediation; and the need for open and constructive engagement with the relevant authorities and regulators.”
Mr Armour said the final report on the financial services royal commission emphasises many of the key principles of good governance, in particular “the importance of board challenge of management and having the right flow of information to the board in order for directors to discharge their duties.”
“The Hayne report recommends that all financial services entities should, as often as reasonably possible, take proper steps to assess the entity’s culture and its governance; identify any problems with that culture and governance; deal with those problems; and determine whether the changes it has made have been effective.”
“Aged care providers should consider how these concepts apply to their organisations and where governance frameworks can be strengthened,” he said.
As for the challenges faced by organisations that are named in the royal commission, boards and executives across all industries need to ensure they are fulfilling their duties and meeting community expectations.
“Organisational leaders – boards and executives across all industries – should reflect on their obligations and conduct to ensure they are fulfilling their duties, and further to that, responding to changing community expectations,” Mr Armour said.
“Where there have been significant failings by organisations in carrying out their duties to customers, to residents, and there have been few tangible consequences for poor outcomes, I think the community wants to see change, and remediation. The media plays an important role in shining a light on these matters to drive change.”
“It is imperative that the highest standards are applied to the protection of vulnerable people, including older Australians in aged care.”
As the inquiry progresses and morale wanes, it’s important that boards remain focused on positive change as a result of the Commission.
“What we must do is ensure positive change occurs as a result of the Commissions with a renewed focus on purpose, culture and accountability; the relationship between the board and management; board reporting and information flows; and management of risk,” Mr Armour said.