Consumer group Choice and the Consumer Action Law Centre (CALC) want the Bank Executive Accountability Regime (BEAR) extended beyond the banking centre to other financial services organisations and the Australian Securities and Investments Commission (ASIC) given equal powers with those of the Australian Prudential Regulation Authority (APRA).
Such a move would see the BEAR extended to cover financial planning businesses.
The two bodies have used a joint submission to the Senate Economics Legislation Committee inquiry into the BEAR legislation to argue that it does not go far enough and should be focused on dealing with consumer detriment as well as prudential matters.
“While we support the BEAR reforms, we believe improvements could be made to the bill to ensure that the accountability regime better links executive remuneration and any penalties to widespread consumer harm,” the submission said. “We also believe that it is imperative that ASIC is given equivalent powers to ensure it can effectively regulate non-ADI [bank] entities.”
It suggested this could be achieved via the proposed ASIC product intervention powers, or by extending ASIC’s current powers to disqualify people from managing companies or engaging in financial services.
“We note that the Financial Conduct Authority (FCA) is extending the United Kingdom’s equivalent regime to cover insurers and non-prudentially regulated firms as well as banks,” the submission said.
It said the BEAR legislation had restricted the application of the BEAR so it would only apply to “conduct that is systemic and prudential in nature”.
“This misses the crucial elements of the United Kingdom model that ties accountability measures to poor consumer outcomes, not just prudential matters,” it said. “Under the proposed model, we are concerned that executives may still avoid direct consequences for scandals similar to those identified by the Review of the Four Major Banks (also known as the Coleman Report) as harmful to consumers. No executive was terminated following the scandals identified in the report.”