Call for pay to be structured around long-term company interests
The Association of Chartered Certified Accountants (ACCA) has called for remuneration and incentive schemes in the financial services sector to be structured to match the long-term interests of a company to remain fair and effective.
In a new report, entitled Future of Financial Regulation, the ACCA said adopting “ethics-based corporate cultures on remuneration and incentives would ensure financial institutions act in the long-term interests of their stakeholders".
“Recent scrutiny of executive remuneration schemes and boards has demonstrated that getting it wrong can be detrimental to a company’s reputation and long-term financial stability,” ACCA panel member Chris Campbell said.
The Future of Financial Regulation report provides nine key principles for regulators, boards and professionals to use as a blueprint for effective regulation.
Campbell said the three key principles Australia should look to improve are risk management and internal control, incentives and business conduct.
“Australian companies need to elevate the importance of risk management and internal audits to safeguard against financial threats and corporate failure,” he said.
"These organisations do have risk management policies in place but most are not transparent in how these are governed, implemented and reviewed.
"Organisations need to go beyond the minimum when it comes to disclosure as transparency is imperative to maintain ethical business conduct," Campbell said.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
