Yesterday, ifa reported that the independent panel reviewing governance and remuneration issues at CPA Australia has confirmed financial losses and performance shortfalls in the professional association’s independent financial advice subsidiary.
The report also reveals that controversial former CEO Alex Malley, who publicly launched the CPA Australia Advice business alongside ASIC chairman Greg Medcraft, seized personal control over the process of appointing board directors to the AFSL.
At a CPA Australia board meeting in February 2015, Mr Malley – who was also chief executive of CPA Australia Advice – personally recommended candidates for appointment to the advice arm’s board, according to minutes of the meeting.
The board then approved the appointment and remuneration of Mr Malley’s five recommended candidates, a number of whom were existing members of the board, including then-CPA president Graeme Wade, who received an additional $100,000 to serve as chair of the advice arm.
According to CPA’s reviewers, this process was out of step with the association’s own internal procedure for appointing board members.
“CPA Advice board appointment and remuneration did not follow the same procedure as CPA Australia,” the report stated. “Some members raised queries regarding the appointment of directors, especially the lack of clarity around the candidates for selection.”
The report said that it is “not unusual” for directors to be paid additional fees to sit on the boards of subsidiaries, but added that usually additional remuneration is reserved for “office-holders”.
Medcraft was a pathetic joke, obviously his bias and weakness of character is now becoming clear in aspects such as this and the truth that LIF was built on no substantiated research. Love for one of his underlings to start dishing out the dirt as no one can be that incompetent and not make intelligent subordinates get frustrated…
What now Mr Medcraft?
Maybe Mr Medcraft should take over as CEO of CPA Advisers as he is such a strong advocate.
I personally worked with one of the board members for over 5 years when he was an Accountant in practice. He did not believe in Financial Planning, in fact he actively disparaged advice and told his clients not to waste their money on getting advice, whilst also handing out his own version of unlicensed advice (e.g. cheapest super fund is best). Great person to put on the board to get a financial planning arm up and running!
Well that’s the financial services industry folks! Do the wrong thing and get a massive severance payout!
There is a lesson here for board members of any business or professional body. Directors must not, cannot, let a CEO assume powers they do not constitutionally hold. Reputation is lost easily, but hard to recover. The price for a well run company is eternal vigilance by the elected board, which selects the CEO and is therefore responsible for the CEOs decisions. Board members cannot take their eye off the ball, seduced by spin and bling from a CEO. I think that any person who occupies a Board position must undergo a companies directors course as a minimum.
Peak of Professionalism right there!!!