Board briefing August 2023

Welcome to our August Board briefing, which provides an update on the matters covered in our meeting on 31 July.

A significant topic for discussion was CEO succession, as our CEO Alan Kirkland had let us know that he would be leaving CHOICE later this year. The Board is very sorry to see him go, but we note that he leaves CHOICE with an exceptional management team and an organisation made up of many people who carry out our very important purpose. Nonetheless, CEO transition is a key moment for any organisation and will be a focus for the Board over the next few months.

We met for a full day at the CHOICE offices, with most directors present in person. Our discussions included a strategy workshop in the morning followed by a formal Board meeting in the afternoon. 

Our agenda for this meeting included:

• the CEO recruitment process
• results for 2022–23
• the content management system project
• the annual general meeting and election process.

Strategy workshop

We held the first workshop in a series of discussions to develop a new three-year strategy for CHOICE. The intention of this workshop was to ensure that we are aligned on the key problems we are trying to address. As a result of this discussion, we agreed on the following key principles to guide the strategy:

1. The strategy must align with the purpose and objectives in our constitution: While this is perhaps obvious, we considered it important to check that the purpose and objectives remain relevant. Our view was that although we might draft them slightly differently if writing them today, they continue to provide appropriate guidance for our work.
2. The strategy needs to deliver long-term sustainability for CHOICE: By the end of the three years of the strategy, we need to be confident about our future financial position.
3. The strategy needs to deal with the risks of future disruption: Emerging technologies such as generative artificial intelligence have the potential to disrupt markets, so we need to address the risks and opportunities they present.
4. The strategy needs to focus on how we transform markets to make them fairer for consumers, rather than simply providing them with information to navigate markets.
5. The strategy needs to make sense to stakeholders: Our members and the other people and organisations we work with need to understand and support what we seek to do.

In our next workshop in October we will focus on the key trends affecting CHOICE and how our organisation is performing. Please feel free to reach out at any time if you have any feedback or suggestions about opportunities or risks we should be considering as part of this process.

CEO recruitment process

As mentioned earlier, our CEO Alan Kirkland has advised the Board of his resignation after 11 years in the role. The Board knew that this would come at some point. As part of our regular discussions on CEO succession, Alan had previously indicated that he felt ten years or so was an appropriate maximum period to serve in the role.

The Board will engage an external recruitment firm and the role will be advertised publicly very soon. A selection committee, including one person from outside the Board, will guide the process, and the full Board will make the final decision to appoint a new CEO.

Alan will continue in the role until early November. The Board has arranged for CHOICE senior manager Ian Morgan to act as CEO if recruitment is not complete by the time Alan leaves. Ian has held a range of leadership roles at CHOICE over the past 12 years and has previously acted as CEO, so is more than equipped to provide stable leadership through the transition period.

Results for 2022–23

We considered a range of reports on CHOICE's performance against goals over the past financial year.

The number of paid memberships declined from the high point of 206,053 at the start of the financial year to 200,446 in June 2023. Our target and budget had been set in April-May 2022, a time when inflation was rising but expected to peak earlier and at a lower level than what ultimately occurred. As people were spending less on household appliances, we attracted fewer new members than expected, meaning we missed our budget for membership – our largest source of income.

The management team made a range of savings to operating expenditure during the year, including in consulting costs, to offset the decline in revenue. At the same time, we were working on our largest technology project in recent years – the content management system upgrade (more on this below). Having paused that project, we decided to recognise all of the costs incurred to date in our 2022–23 accounts. This combination of factors resulted in a moderate deficit for the year, with the final amount to be confirmed and reported when our audit is complete.

CHOICE achieved some positive results in 2022–23, including:

• government legislation to establish a compensation scheme for victims of misconduct in the financial system, an outcome CHOICE has long fought for
• the government's interim scheme to assist customers of the predatory funeral insurer Youpla (achieved by First Nations advocates with support from CHOICE)
• an increase in traffic to choice.com.au as members and other consumers made use of the range of information we produced on cost of living issues.

We will report in more detail on achievements across a range of areas in the Annual Review that we produce in the lead up to our AGM.

The content management system project

We have reported in Board briefings over the past year on our project to replace the content management system that powers the CHOICE website. This is a large and complex project that has not progressed as expected, so the management team decided in April to pause the project and commission an independent review.

At this meeting, we received the report of the independent review and an update on recent work. The independent review identified that the project had not been properly set up at the outset, which had led to a range of problems in project management and delivery. It found that some of the work completed to date could still be used, but recommended we restart the project from scratch to make sure we have clear objectives, business requirements and processes for managing delivery.

The management team had already commenced this process by the time of the Board meeting, with a new project management structure in place. The management team presented some frank reflections on what had gone wrong in the project to date.

This will remain a complex project, with some significant decisions required in the next few months about how we deliver it from here. However, we believe that our reflection on what could have been done better to date will provide a much better foundation for success.

Annual general meeting and election process

We made a number of decisions on the process for this year's AGM and Board election.

The AGM will be held at 6pm on 28 November at the CHOICE building in Marrickville, with the opportunity to attend virtually.

There are three positions on the Board up for election this year, with two current directors intending to stand for re-election. Having completed an audit of the skills on the Board, we have identified the following areas as priorities for members to consider in the process:

• Policy, campaigning and/or not-for-profit: Demonstrated skills in policy, campaigning and/or experience in relevant not-for-profit organisations, along with strong political acumen.
• Consumer focus: Experience in strategies to address the needs of communities that are at particular risk of exploitation, especially in relation to their consumer rights.
• Digital content, products and services: Skills and experience in growing new and existing products and audiences for digital channels.
• Technology: Experience in leading technology strategy and delivery to support digital products and services and/or overseeing major technological changes. Ideally at a senior level in a number of medium to large organisations.

All candidates must also satisfy a range of core requirements, including governance experience and alignment with the CHOICE purpose and values. If you have skills in one of the areas listed above and are interested in running for the Board, please contact our Company Secretary Sarah Coombs for more information. Nominations close next Wednesday so if you are interested, please contact Sarah within the next few days.

You should have already received a preliminary notice of AGM. Closer to the date, you will receive a formal notice, as well as information on how to vote if we require an election. Any questions about the process can be directed to the Company Secretary.

Thank you for your ongoing support for CHOICE's work. We'll next meet in late September and will be back in touch after that. As always, please feel free to email us with any comments or suggestions on any of the matters raised in this briefing.

Board briefing June 2023

Welcome to our June Board briefing, which provides an update on the matters covered in our meeting on 30 May.

This year we have settled into a pattern of some meetings by videoconference, with longer meetings face-to-face for those who can attend. With directors living in a range of locations, some with young children, this helps us to manage the time commitments we require from directors while ensuring that we have face-to-face contact with each other and staff. Our May meeting was one of our shorter virtual meetings.

Our agenda for this meeting included:

• an update on performance against our strategy
• approval of our budget for the next year
• an update on the content management system migration project
• CHOICE's role in the Voice referendum
• the process for developing our next strategy.

Update on performance against our strategy

The current financial year has been a difficult one in which to set and meet targets given that the scale of the global inflation crisis and impact of the war in Ukraine were not clear when we set our priorities and budget in early 2022.

Our membership has been gradually declining since a high point at the end of last financial year, largely because consumers are spending less on household appliances, which means less people are seeking out product reviews. New people are still joining CHOICE every day, with higher numbers during peak retail sales seasons and in response to events like sudden cold weather (which prompts many people to look for heaters) but in general we are welcoming less new members than at the same time last year.

As membership is our largest source of revenue, this means that we will miss our overall budget for revenue this financial year. The management team has fortunately been able to identify a range of savings to offset this shortfall in revenue, which will bring us close to our budgeted bottom line for the year, subject to the impact of the review of our content management system project, mentioned below.

Our work to advocate for reforms that can better protect consumers – especially in the current economic environment – continues to go well. The week before our Board meeting, the federal government announced details of its plans to regulate buy now, pay later products like other credit products. CHOICE has been working closely with other consumer groups to advocate for this reform. We'll be participating in further discussions about the details of legislation over the next few months but it is clear that buy now, pay later providers will be required to check that loans are suitable before approving them, which is a very positive step.

Another key area of performance the Board monitors is the amount of people visiting choice.com.au, because this indicates whether our work is relevant and valuable to consumers. It was pleasing to see that traffic to our website remains strong, with around 1.5 million visitors per month. This has been helped along by the range of information we are producing to help people with cost-of-living pressures.

Approval of our budget for the next year

As this was the final Board meeting of this financial year, we were required to approve a budget for 2023–24.

We are expecting membership revenue to continue to decline next year, given that cost-of-living pressures are not likely to abate quickly. We have budgeted for a small increase in the price of CHOICE membership for new members, to partly offset the expected drop in membership numbers. This recognises that CHOICE's costs are going up but it will only apply to new people joining CHOICE – we will not be increasing prices for current members like you. We have also budgeted for some expenses to increase, with the largest increase due to a salary increase to staff.

Overall, this will see us budget for a deficit in 2023–24. At this stage we expect several years of planned deficits as we continue to invest in improvements to the technology that we need to support the organisation's ability to grow, before returning the budget to surplus. We have, over time, built up a financial position that allows us to withstand the occasional deficit because, as a not-for-profit organisation, we tend to go through cycles of surpluses and deficits in order to ensure that our cash reserves remain at an appropriate level. The Board will be working with management to closely monitor financial performance over the next year to ensure the organisation remains sustainable in the long term. The upcoming discussions about our future strategy, mentioned below, will also explore how we can grow revenue and ensure that CHOICE has an effective operating model.

Update on content management system migration project

We received a further update on the major technology project that involves moving the content management system that sits behind our website to a new platform.

This project – which is the most complex technology project we have undertaken in some years – has been running for some time, with a number of delays and challenges. This has understandably had an impact on the morale of staff working on the project.

Prior to the Board meeting, management in consultation with the Board's Technology Committee had decided to pause work on most parts of the project and commission an independent assessment. The Board made it clear that we are seeking a full and frank assessment of the problems to date and practical advice on the best way forward from here.

Since the Board meeting, our Technology Committee has been briefed on the outcomes of the assessment. The Board and management will soon be making decisions about how we approach the project from here. This will involve additional time and cost but it is extremely important that we get this project right and capture lessons about how it could have been better managed, so that we can apply them to future technology projects.

CHOICE's role in the Voice referendum

As foreshadowed in our last Board briefing, we continued our discussion about CHOICE's role in the upcoming referendum on a First Nations Voice to Parliament.

The Board decided to formally endorse the idea of a Voice to Parliament enshrined in the Constitution, as proposed in the upcoming Referendum. This is consistent with our position on the Uluṟu Statement from the Heart, which we have publicly supported since 2019. It is also consistent with our broader commitment to First Nations justice through our Reconciliation Action Plan and our investigations into issues like the practices of the predatory funeral insurer Youpla and the sale of poor quality used cars to people in remote communities. As these examples demonstrate, the decision to support the Voice is firmly grounded in our purpose as a consumer advocate. CHOICE continues to see far too many examples where consumer laws and regulation fail to adequately protect First Nations consumers, and a Voice to Parliament would encourage better government attention to ensuring that First Nations consumers enjoy the rights envisaged in CHOICE's constitution and the Australian Consumer Law.

We see our role as contributing to respectful debate by continuing to highlight issues impacting First Nations consumers and explaining why CHOICE supports the Voice.

Process for developing our next strategy

2023–24 will be the final year of our current three-year strategy. We would normally commence the process of developing a new strategy in early 2024 but given the changes in the world in the past few years, we have decided to start that process early. The Board agreed upon a process proposed by management that will involve a series of discussions commencing in July. We will be seeking your views along the way but please let us know if you have any early thoughts on what you think CHOICE could be doing differently to better deliver on our purpose of ensuring that markets are fair, just and safe for Australian consumers.

Thank you for your ongoing support for CHOICE's work. We'll next meet in person in late July and will be back in touch after that. As always, please feel free to email us with any comments or suggestions on any of the matters raised in this briefing.

Board briefing March 2023

Welcome to our first Board briefing for 2023. We hope that you have enjoyed a safe and restful summer since we were last in touch.

The Board met for the first time this year on 23 February. We were pleased to meet face to face in Marrickville, with several directors joining by video conference. We were also pleased to welcome newly elected director Amanda Robbins to the Board. Amanda brings strong economic and public policy experience from a range of roles in government and advising not-for-profit organisations. You can read more about her background on the CHOICE website.

Our agenda for our February meeting included:

• an update on performance against our strategy
• exploration of CHOICE's role in the Voice referendum
• an update on the content management system upgrade
• a discussion of arrangements for responding to cybersecurity incidents
• decisions about implementation of our responsible investment policy
• approval of changes in Board membership.

Update on performance against our strategy

We received a series of reports on how CHOICE is performing across all areas of our strategy, including financially.

This included an update on CHOICE's impact work, with reforms to consumer protection in the financial services industry an important priority in the current economic environment. The Board continues to take a close interest in the CHOICE campaign for buy now, pay later products to be regulated like other credit products, given the clear evidence from financial counsellors about the number of people who are ending up with debts that cause further financial hardship. We also discussed CHOICE's work to defend hard-won protections for people who seek financial advice, noting that there has been a strong reaction from some parts of the industry to the CHOICE campaign to ensure that financial advisers continue to be subject to a duty to provide advice that is in their clients' best interests. This issue is likely to continue to be the subject of debate and CHOICE is working closely with other consumer groups to ensure that the rights of people who seek financial advice are protected.

In terms of financial performance, after several years of extraordinary growth, it is now clear – and unsurprising – that cost-of-living pressures are having an impact on CHOICE membership. While new members continue to join CHOICE, the numbers of people signing up over the peak January retail period were lower than expected and this pattern has continued. That has meant that over the past few months membership has declined for the first time since 2019. 

It is important to note that we came into this period with a historically high number of memberships and a safe level of cash reserves, so a decline in membership does not affect CHOICE's sustainability. While we still expect to report a surplus in the current financial year, it will be more challenging to budget for a surplus next financial year, especially given rising costs and some of the major projects we have underway. The Board will be considering next year's budget in more detail in our next few meetings.

We continue to monitor the progress of the litigation against CHOICE that we have previously reported to members. There have been no further developments in the case brought by bed business Theracare Home. The litigation by Goldair concerning CHOICE articles about heaters that failed safety tests continues. CHOICE has now filed an initial response to the Goldair submissions and the matter will go to a case management hearing this month, which will likely clarify the next steps in the process.

CHOICE and the Voice referendum

We devoted some time at this meeting to an initial conversation about CHOICE's potential role in the referendum to be held this year on amending the Australian Constitution to introduce a First Nations Voice to Parliament.

In discussing this, we recognised that the Board had officially endorsed the Uluru Statement from the Heart in September 2019. As the Voice is one of the three key measures proposed in the Uluru Statement, the organisation has already expressed support for the concept of the Voice. We discussed a broad spectrum of options for involvement by CHOICE, noting that this might not involve being a leading voice in public debate.

Several directors also reported back on a recent webinar hosted by the Australian Institute of Company Directors on this issue. The AICD has taken the view that the Voice proposal is an important governance issue for the nation, so should be at least considered by all boards. The AICD's advice at this event was that any decision about an organisation's role in the referendum should be based on its purpose.

Our key reason for supporting the Uluru Statement was and continues to be that it is consistent with our purpose as laid out in the CHOICE constitution, which is to work for fair, just and safe markets that meet the needs of Australian consumers. Our journalists, campaigners and partner organisations in the consumer movement continue to come across too many examples of business practices that have an unfair impact of Aboriginal and Torres Strait Islander consumers, with redress often inadequate or inaccessible. The impact of the funeral insurer Youpla, which sold poor-value policies to Aboriginal and Torres Strait Islander consumers over decades, leaving many out of pocket, illustrates how our system can fail to address the needs of First Nations communities. A Voice to Parliament would hopefully press the parliament to do more to redress those gaps.

We noted that there will naturally be a range of views on the referendum among CHOICE members and staff, which we will need to acknowledge in any work on this issue. We also noted that it is already part of our work to present factual information on issues affecting First Nations consumers and to assist First Nations organisations to have their voices heard in debates about consumer protection. Playing a similar role in the debate about the referendum might be a natural extension of that work.

We did not make any decisions about CHOICE's role at this meeting. Our meeting occurred as the Yes campaign for the referendum was being launched. We are keen to see what role civil society organisations are asked to play before we decide how CHOICE may participate.

As noted in our last briefing, we would very much welcome any feedback or suggestions from voting members on this issue.

Content management system upgrade

We received a further update on the project to replace the content management system that powers the CHOICE website, which is the largest and most complex technology project we have taken on in recent years.

This project continues to experience significant delays. To provide a better assessment of the work that remains to be done, and the time and resources required to undertake it, management has commissioned an external project manager to review and flesh out the overall plan for the project. We will receive advice from that work progressively over the next few months and this will put us in a better position to determine how best to deliver the rest of the project.

It is very important that we complete this project effectively because it will provide an important foundation for future improvements to the ways in which we help consumers. It will also be important that we spend some time understanding what we could have done differently, because we will need to undertake other large technology projects once it is complete and we want to reduce the risks of encountering similar problems.

We will continue to update members on the progress of this project.

Responding to cybersecurity incidents

Building on the discussions at our previous meeting about arrangements for responding to cybersecurity incidents, we reviewed plans for communicating with members and the public in the case of an incident. This was important because if we are affected by an incident, it might be necessary to communicate rapidly. Having a range of templates that can be adapted, with clear processes for making decisions, will enable us to move faster.

For the same reason, the Board delegated to us as co-chairs the power to make any decisions in a situation where the Board is unable to assemble a quorum at short notice.

Work continues within the organisation on improvements to our ability to prevent, detect and respond to cybersecurity threats and we expect these issues to continue to be a regular feature of Board agendas.

Implementation of our responsible investment policy

The executive team and Samantha Challinor, Chair of our Finance, Risk and Audit Committee, advised us on the next steps to implement the responsible investment policy approved last year. This policy will see us shift $3m of our $12m in term deposits into managed funds over the coming months. The aim of this shift is to generate better returns than are possible on term deposits across a seven-year period, while applying an ethical and sustainable lens.

The Committee has appointed the firm Koda Capital as investment managers and is working through the steps required to start to shift investments. At this meeting, we agreed to delegate some powers to the Committee, including the ability to approve the initial investment and any changes over time to the managed funds included in our portfolio. The Board will receive regular reports on investment performance and the Committee will meet regularly with Koda to monitor this in more detail.

Changes to Board membership

In January, former director Ben Naparstek resigned from the Board. Ben was originally recruited for his strong editorial experience and had served on the Board since 2018. We appreciated his contribution to our work so we were sorry to see him go.

At this meeting, we appointed Jamie Pride to fill the casual vacancy created by Ben's resignation. Jamie had been in an additional co-opted position on the Board, so this effectively allows the Board to return to its normal size of nine directors.

We also discussed the need to bring more technology experience into the Board and its committees, given the importance of large technology projects to CHOICE over the next few years. We have decided to create a Technology Committee and will soon be seeking to recruit a person with senior experience in leading technology strategy or large technology projects to join the Committee. If you or somebody you know may be interested in this role, please contact our Company Secretary, Sarah Coombs.

As required by our Constitution at the first meeting of each calendar year, the Board was also required to determine who will hold officer roles for the next 12 months. We were pleased to be re-appointed as Co-Chairs and welcome the reappointment of CHOICE employee Sarah Coombs as Company Secretary.

We'll next meet in April for our strategy workshop, then in May for a formal Board meeting. We'll be back in touch after those meetings. As always, please feel free to email us with any comments or suggestions on any of the matters raised in this briefing.

Warm regards,