New AMP (ASX: AMP) Chairman David Murray isn’t wasting any time stamping his authority on the organisation.
As well as opposing the trend towards reducing financial integration that is sweeping through our large financial organisations – after ANZ sold out of wealth management in 2017, Commonwealth Bank (ASX: CBA) and NAB (ASX: NAB) are in the process of getting rid of their wealth management arms – Murray has also criticised ASIC’s corporate governance guidelines.
In Murray’s view, these corporate guidelines have resulted in Board members being forced to wade through hundreds of pages of documents rather than actually concentrating on things that really matter, such as corporate strategy.
Murray reckons the ASX corporate governance principles “contributed to what happened to AMP and others in the financial sector”.
And who can argue with him?
Box-ticking hasn’t worked
AMP’s latest corporate governance statement shows that it has complied with all the recommendations of the latest ASX Corporate Governance Council Principles and Recommendations.
Yet doing so hasn’t prevented the poor treatment of many customers of AMP’s financial advice business that has been documented in excruciating detail at the Financial Services Royal Commission.
As Murray explains: “Am I okay because I tell the world I’ve got an audit committee and I follow the ASX corporate governance principles? Or am I okay because I’ve figured out the best possible set of procedures for the board to follow in signing off the accounts? They are two very different questions.”
In other words, Murray is more concerned with substance over form, and is going to chair AMP with that in mind.
But he’s not stopping there.
In reasserting the primacy of the CEO over his or her subordinates and non-executive directors, Murray also understands that ultimately, whether it is a large financial conglomerate like AMP or the local corner store, it is far more effective to have one person in charge rather than be ruled by committee.
Rather than leading, committees have the tendency to engage in groupthink, while also being able to spread the blame should something go wrong.
This in contrast to having the buck stop with the CEO: he or she may be imperfect and make mistakes, but at least it is clear who leads the organisation and who is responsible should something go wrong.
This greater accountability for AMP’s new CEO – whoever that turns out to be – can only be a good thing.
So whatever those who emphasise form over substance may think, I think these are good moves by David Murray.
And with AMP shares hovering around two decade lows, AMP shareholders should too.