The banking industry is supportive of the current governance framework and contributes to government initiatives to ensure the ongoing robustness of the sector.
Good governance is important to ensure that the objectives of a bank are achieved whilst ensuring that the bank complies with legal, industry and ethical standards. Good governance takes into account the interests of customers, the community, shareholders and regulators.
Australia’s banks are subject to multiple layers of governance, which are the systems and processes that banks use when pursuing their objectives and managing their risks. The first layer of governance is directed by each bank’s Board of Directors. Accountability at the bank level is achieved by the publication of annual reports, ASX announcements, formal reporting to the regulators and the government. The best place to start to understand these structures for individual banks is on their websites, usually under the investor relations section.
Second, banks are subject to the governance processes of regulators. The sector is governed under the ‘twin peaks’ model under two regulators ASIC and APRA. Additionally, the Reserve Bank of Australia is responsible for financial system stability and payments. Further detail about the responsibilities of these regulators is available on their websites.
Third, the banking industry also self-governs. This is achieved through the ABA’s policies, guidelines, and the ABA’s Banking Code of Practice. These tools build on the law and regulation to set the standards by which the industry operates. Importantly, they are developed and driven by the industry in order to give transparency to the banking public about what they can expect from their banks under given situations. This website reflects the work of self-governance undertaken by the industry through the ABA.