Speaking at the Governance Institute National Conference 2019, Leah Fricke, non-executive director, Columbus Capital, said companies that choose to develop a relationship with regulators can help add value to their organisation and stand out from those that adopt a reactive approach.
“Great regulation and a great relationship with your regulator is a fantastic competitive moat,” Ms Fricke said.
“You as an organisation can do better because your regulator’s doing a great job and you have a great relationship with them.”
She added: “It’s like any longer-term relationship; it’s a roller coaster. There may be times where [ASIC commissioner John Price] and I don’t see eye to eye about how ASIC [is] doing something, but I hope that we’ll continue to talk about it and in 10 years’ time we’ll continue to talk about it and there’ll be mutual respect and consideration along that pathway.
“I think all organisations need to work out their strategy, make sure it’s fit for purpose and think more about the proactive friendship and relationship that they develop because the reactive [perspective], once it’s gone wrong, is value destruction for everyone.”
Understanding the ATO
Ms Fricke also believes companies can make better decisions in choosing how to interact with the ATO once it understands how the agency operates as a regulator.
“The ATO approach in working with organisations is to really determine and to sort of risk-weight the organisation over a couple of years to decide that you have the right systems in place, that you have the right intentions and then you’ll reach a point where you’re almost considered low-risk enough that you get the value of some presumptions that help you with certainty in how you manage your tax affairs, which means that there is real commercial efficiency upside in a positive relationship with that regulator,” Ms Fricke said.
“I look at that and think, as a director, that’s a regulator that I appreciate and I’m grateful that they appreciate our efforts.
“I think that model of the ATO is a really interesting and different model, and I found that very helpful from a certainty around decision-making at the board table.”