The Turnbull Government is continuing to work to deliver on its commitment to strengthen accountability in the banking system.
Banks play a critical role in the lives of their customers, who rely on banks for a variety of services including depositing money, making payments and borrowing funds.
Because they provide such important services to the community, it is imperative that Australians have trust and confidence in the banking system. Banks must operate at the highest standards and meet the needs and expectations of consumers and businesses.
But recurring scandals have shown that this is not always the case. So it is important that there are mechanisms in place to deter poor behaviour and ensure that banks are held to account where they fail to meet the standards expected of them.
This is why in the 2017-18 Budget the Government announced that we will legislate a new Banking Executive Accountability Regime, which will make banks and their most senior executives and directors accountable for meeting heightened standards of behaviour, in line with community expectations.
Today we are announcing the release of a consultation paper, which outlines the key features of this new regime and the proposed approach for implementation.
Banks will be required to register individuals with APRA before appointing them as senior executives and directors.
Where banks and their senior executives and directors do not meet expectations, APRA will be empowered to more easily remove or disqualify individuals, ensure banks’ remuneration policies result in financial consequences for individuals, and impose substantial fines on banks.
The Government has sought to draw on elements of a similar system of accountability that is already in play in the UK. While we recognise that consistency is helpful, not all elements will be suitable for the Australian banking sector.
The stronger powers for APRA build on their existing prudential regulatory framework. APRA’s powers are also in addition to ASIC’s existing powers for regulating market conduct.
The consultation paper is available on the Treasury website.
Submissions are due by 3 August 2017 and can be sent to bear@treasury.gov.au. The Government encourages all interested parties to make a submission.