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Significant impact on agriculture from Banking Royal Commission says AIA

Thu 21, Feb 2019

The importance of the recently launched professional accreditation scheme for agriculture has been highlighted by the Banking Royal Commission (BRC).

Developed by Ag Institute Australia (AIA), the Chartered Agriculturalist (CAg) program directly tackles ethical issues raised by the BRC, which have ramifications for consultants, advisors and other professionals working in services sectors such as agriculture and natural resource management.

The industry-first CAg scheme sets a new mark of professionalism for people working in, and supporting, the agricultural sector, allowing individuals to demonstrate their level of skills and experience to industry.

For AIA, as an organisation that supports and enables the development and recognition of industry professionals, the ramifications of the BRC has profound significance.

AIA Chair Turlough Guerin says AIA directors and members need to recognise and learn from the BRC findings.

“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),” explains Mr Guerin.

“It should also include what would be good for an organisation more broadly such as growth, repositioning, and showing leadership to the wider profession.”

Paul Geurtson, an AIA Member active in the irrigation sector, says he can see banks and financial institutions introducing a requirement for more accredited advisers in the farming community to ensure greater trust and confidence in planning and risk mitigation.

Mr Geurtson believes there will be more focus on the type and quality of advice being received by customers.

“The AIA CAg chartered scheme allows banks and financial institutions to be more comfortable with the advice and assistance the farming community and individuals are receiving,” he 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 advisor.”

Implications of the BRC recommendations are also going to be direct for agriculture.

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).

Many banks involved in agribusiness already have bankers with a level of expertise in agriculture, however the requirement for independent valuation brings transparency to the process, according to AIA Director Sarah Hunter.

“In the same vein, and considering the CAg accreditation scheme, we are building a structure which will foster the growth of a cohort of independent experts in agriculture able to bring that value to the sector,” she 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.”

Through CAg, 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.

 


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