The Government’s new Banking Executive Accountability Regime has emerged as one of the most contentious elements in the Budget ruffling the feathers of both the Australian Bankers’ Association (ABA) and the Financial Services Council (FSC).
The Government has said it will legislate a new regime which will require bank executives to be registered with the Australian Prudential Regulation Authority (APRA) and that the regulator will have the ability to impose multi-million dollar penalties on employers and expel or disqualify miscreant executives.
However the real bite in the new regime is that there will be a requirement for a minimum of 40 per cent of a bank executive’s variable remuneration – and 60 per cent for certain executives such as the chief executive – to be deferred for a minimum period of four years.
The Treasurer, Scott Morrison, said this was to ensure executives were more accountable.
He said the Banking Executive Accountability Regime complemented the work of the Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce established last year.
That taskforce is examining the breach reporting regime and the adequacy of ASIC’s regulatory tools and powers and will report in September.
Financial Services Council (FSC) chief executive, Sally Loane cited the imposition of the new accountability regime as a reason why calls for a Financial Services Royal Commission should fall silent.
She warned as well that there would need to be substantial consultation around the implementation of the new regime.
“Further consultation will be required on the Government’s final implementation of the Bank Executive Accountability Regime, a suite of new regulatory requirements on banks and other financial institutions that include the capacity for APRA to block the hiring of new executive employees and the registration of executives,” the FSC CEO said.
