FSC warns of increased expense under Financial Accountability Regime

FSC far DDO treasury BEAR regime financial accountability regime design and distribution obligations financial services council Bank Executive Accountability Regime Financial Services Sally Loane

27 February 2020
| By Mike |
expand image

The Government will need to deliver clarity between how its new Financial Accountability Regime (FAR) will work alongside the Design and Distribution Obligations (DDO) which are still under development, according to the Financial Services Council (FSC).

The submission, filed with the Treasury this week, raises serious questions about the new regime, including about whether it will cover foreign entities and executives.

The FAR regime represents an extension of the Bank Executive Accountability Regime to a broader range of financial services businesses and, like other organisations, the FSC has also expressed concern at the degree to which it will act as an impediment to recruitment.

“Given that the Regulators have power to disqualify a person from acting as an accountable person, (subject to review and appeal rights), we do question the need for such a regime. In a practical sense it seems to us that a disqualified person is extremely unlikely to ever again secure a comparable position in the financial services industry,” the submission said.

“We also express our concern as to the impact such a regime might have on appropriate recruitment and retention,” it said and cited the experience in the United Kingdom where firms had found it more expensive to recruit for senior roles.

“We anticipate there would be a similar impact to the Australian industry following the introduction of the FAR regime,” the submission said. “The industry may see increased remuneration costs to compensate for the risk of multiple levels of the organisation or alternatively a reduced talent pool.”

Commenting on the Government’s proposals, FSC chief executive, Sally Loane, said the measures as proposed would be in addition to the five current pieces of legislation governing advice and the raft of Royal Commission legislation, including enforceable codes and very significant potential for criminal and civil penalties.

“We urge the Government to investigate fully the potential consequences of this new regime and how it will align with existing and long-standing laws such as directors and officers’ duties under the Corporations Act and the Superannuation Industry (Supervision) Act which governs most superannuation trustees. 

“We want to be certain that all these pieces of legislation and regulation align and work together to provide better consumer outcomes, and do not operate as a disincentive for business,” Loane said.


Read more about:



Recommended for you



sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry


Dear CEO and board, It's time to start some VERY HEAVY LOBBYING on behalf of advisers which could save your platform re...

15 hours 44 minutes ago

He is every thing ASIC said he was BUT How on earth did he expect to get away with it????? . these guy's who dip in...

17 hours 57 minutes ago
Chris Cornish

A tad optimistic from Morningstar. Adviser numbers are somewhat irrelevant; it all comes down to the platform and whethe...

19 hours ago

A former financial adviser has been banned by ASIC from providing financial services for inappropriate advice, among multiple breaches....

1 week 1 day ago

Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation....

2 weeks 2 days ago

Iress has announced it is strengthening its security settings after suffering an unauthorised access of its systems over the weekend....

2 weeks 3 days ago