Fri 15, Feb 2019
Ag Institute of Australia (AIA) has been considering the findings of the recent Banking Royal Commission (BRC). In the context of the niche that the AIA occupies in Australian agriculture and natural resource management, and particularly as an organisation that supports and enables the development and recognition of industry professionals, the ramifications of the BRC are in our view both relevant to our stakeholders, and in many ways has profound significance.AIA Members and the Members of the Board suggest that AIA Members, and our stakeholders, should take heed to the BRC findings.Firstly, the BRC has implications for member-based organisations such as the AIA. The BRC has been a reminder that director’s duties should focus on the interests of the organisations which will be more than just a focus on members benefits (proxy for shareholder returns) to include what would be good for an organisation more broadly such as growth, repositioning, and showing leadership to the wider profession. The AIA’s development of the Chartered Agriculturalist (CAg) scheme directly tackles ethical issues raised by the BRC. These issues have ramifications for consultants, advisors and other professionals working across the board in the services sectors such as agriculture and natural resource management. Paul Geurtson, an AIA Member active in the irrigation sector, believes there will be more focus on the type and quality of advice being received by customers. “The AIA Chartered scheme allows banks and financial institutions to be more comfortable with the advice and assistance the farming community and individuals are receiving,” Paul says. “The BRC will have a flow on effect to other industries to ensure best practises on ethics and standards are being applied across the industry. This could carry through to rural supply from fertiliser, chemicals and irrigation systems where free advice is being provided in return for sales. “The findings from the BRC could see greater transparency between advisers and rural business suppliers. “Being a CAg will help provide confidence in the ethics and standards being applied by the provider (Advisor). “I can see banks and financial institutions putting in a requirement to see more accredited advisers in the farming community to ensure greater trust and confidence in planning and risk mitigation.”
Implications for agriculture are also going to be direct with the recommendations from the BRC.
These include no default interest charges on land affected by natural disasters, introduction of farm debt mediation, and placing the onus on insurers to obtain all relevant information (rather than the insured being penalised for inadvertent failure to disclose). “In the same vein, and considering the CAg accreditation scheme, we are building a structure which will foster growth of a cohort of independent experts in agriculture able to bring that value to the sector,” Sarah explains. “I have always believed that the best way to do business is to put the needs of your customer first, even if it means forgoing your own advantage. Sound relationships are built on transparency and trust, and your reputation is everything. “A CAg will combine expertise in a sound ethical framework and represent reliability and consistency for clients in agriculture.” As an AIA Board Director, Virginia Shaw believes she has a responsibility to ensure that AIA members are adequately skilled, maintain their professional relevance and can be a sustainable resource to the agricultural industries. “In an ever-changing world we need checks and balances to ensure that we are doing things right and doing the right things to those that we have a duty of care, or who have entrusted us to provide professional advice or services,” she explains. “No matter how big or small our contribution and whether we are paid or voluntary, we must always act ethically and respect the diverse community in which we live and work.” As highlighted by Daniel Tan, AIA Board Director, incentives for performance should cover good governance and quality of customer service, not just be based solely on financial ones. “There is a clear need for organisations in agriculture to support a culture of good governance, performance and compliance,” Daniel says. Andrew Bishop, Immediate Past Chair of the AIA, says there are direct implications transferrable from financial advice to agricultural advice as to responsibilities that the advisor must carry and bear. “In relation to advice, it must be given in the best interests of the client rather than the adviser,” he says. “This links directly back to ethical frameworks embedded in professional standards and technical competency and this is where CAg plays an important role. “Governance and the responsibilities of directors, in this case financial companies e.g. banks, insurers, extend directly to agricultural companies and organisations as well.” Shaun Coffey, AIA Board Member, went further to suggest that responsibilities of agricultural professionals could reach wider. “Perhaps our broader community (all potential members of the AIA) expects that not only will members benefit from our activities, but we will be accountable for standards in the profession and the standing of the profession,” Shaun indicated. The AIA is well placed to support its members and its stakeholders to confidently face the challenges put to the sector by the BRC findings.