If you are still thinking that bank boards are a repository of wisdom and omniscience rivalling only the jailers who used Jeremy Bentham’s Panopticon, it might clear the air a bit if I tell you a story that two reliable sources swear is true.

(Visitors to Port Arthur will know that the surveillance system was designed to allow the jailers to keep an eye on the lags unobserved. At Port Arthur the chapel went even further by ensuring the prisoners couldn’t see each other, either. I make no claims of any other parallel between a penitentiary and a bank.)

Not long after the giant former rugby forward Cameron Clyne took over as chief executive at National Australia Bank in 2009, he was having a conventional work conversation with the bank’s then chairman, Michael Chaney.

It was a Thursday afternoon in Melbourne and Clyne started to glance at his watch with the unmistakable air of a man who had a plane to catch.

Chaney caught the drift and asked him where he was headed.

“I’m going home,” said the big bloke.

Chaney, a Perth boy who spends large chunks of his life in the air and for whom one Eastern States city must sometimes merge into another, was nevertheless a bit nonplussed.

Clyne explained that because his family lived in Sydney, he was in a habit of commuting to Melbourne for the first four days of the working week and then working out of NAB’s Sydney office on the fifth day.

This appeared to be a surprise to Chaney, who with his board had been intimately involved in hiring Clyne and who by then had already been chair of the Bank for more than four years, since 2005.

“You never told me,” said Chaney, a bit shocked at the revelation his Melbourne based bank’s CEO was not actually a Melbourne-based person.

“You never asked me,” was the big man’s four word reply.

What I am trying to convey here is that boards and senior management don’t always operate in glorious lockstep, and that cockup can often trump conspiracy when it comes to information not getting to where it ought to go.

In this case, it’s clear that in appointing Clyne, not one board member thought to ask him where he lived.

Does that have anything to do with the Hayne Royal Commission? Yes.

It’s the best example I have yet seen, innocent enough as it is, of directors neglecting to ask relevant questions.

And as you can see from the Royal Commission, it’s absolutely not alone.

I won’t for a moment try to suggest to you that, for instance, charging clients for non existent advice is an issue of miscommunication rather than wilful negligence, any more than charging dead people is for the same non existent service.

But I will say that such episodes follow the failure of directors to ask difficult and penetrating questions and to keep asking them until they are satisfied.

Commissioner Hayne was absolutely right to home in on culture within the big institutions, be they banks or AMP.

The Commissioner knows that there’s plenty of legislation already on the statute books to cover off on directors’ duties.

The problem, as the rest of us out there in the real world know, is that organisations seem to keep forgetting that when directors fail to ask rigorous questions, the scope for disaster builds and keeps building.

They will lay themselves open to a charge of either knowing and failing to act, or failing to ask the right questions in the first place. Negligence or ignorance, basically.

Here’s another example.

Many years ago in Melbourne there was a very long established (1902) steel stockholding and merchant company called Gollin and Co. In the early 1970s one of the shareholders heard there might be trouble and when he bumped into one of the directors, asked whether that was correct.

“How would I know? I’m only a director” was the lapidary reply and the shareholder did the logical thing and sold his holding as soon as he could. The shareholder reasonably concluded that the right questions were not being asked and not long afterwards, in 1976, Gollin indeed collapsed.

Back in them ‘thar’ days, being a company director was a sinecure offered to old mates of existing directors, several of whom may well have had a sense of fair play but who were often either too far from the company, in terms of understanding it, or too close to those old mates who had appointed them, to do his job in a frank and fearless way. I write “his” because until recently almost all directors were white males.

We now know, well after we should have done, that female directors tend not to be tied by the same loyalties.

The role of the board has always been to look after strategy while the management looks after the day to day running of the company. In Gollin’s case, that clearly didn’t happen and the only obvious difference between it and our reputation-battered banks is that the latter are a great deal bigger and more complicated.

But the same underlying concepts still apply.

I look forward to Commissioner Hayne’s final report, which will make much of senior management’s obligation to be straight with their boards, and of course the boards’ obligation to start asking relevant questions.

Who knows, they might even find out which city their CEO lives in.