The Turnbull Government is delivering on its promise to hold banks and their senior executives to account, with tougher consequences if expectations are not met.
The Senate today passed the Banking Executive Accountability Regime (BEAR), imposing higher standards of behaviour.
This legislation is part of a broader suite of financial services reforms delivering on the Turnbull Government’s commitment to put consumers first, ensuring Australians can have trust and confidence in the banking system.
Where these obligations are not met, APRA will be empowered to seek substantial fines, more easily disqualify individuals and ensure banks’ remuneration policies result in financial consequences for individuals.
Banks will be required to register their senior executives and directors (accountable persons) with APRA and provide greater clarity regarding their responsibilities.
These measures will incentivise good behaviour and ensure that banks and individuals are held to account where they fail to meet the standards expected of them.
For large authorised deposit-taking institutions (ADIs), the BEAR will commence on 1 July 2018. This is important to ensure that accountability gaps in the sector are addressed as soon as possible.
For small and medium ADIs, the regime will commence from 1 July 2019, allowing them more time to comply. Small and medium ADIs do not have the same operational resources as large ADIs, so it is appropriate to provide these entities more time to adapt to the new regime.
The Government has previously indicated that it intends to make a legislative instrument defining small, medium and large ADIs for the purpose of the BEAR. We will soon consult on this draft instrument.
I look forward to seeing the next phase of the critical implementation work that both APRA and ADIs will undertake to ensure these new standards of accountability are met.