The Turnbull Government is continuing to deliver on strengthening accountability in the banking system, today releasing exposure draft legislation for the Banking Executive Accountability Regime (BEAR).
In order for the banking sector to operate at the highest standards and meet the needs and expectations of Australian consumers and businesses the Turnbull Government is focused on taking action now to ensure Australians can have trust and confidence in the banking system.
Announced in the 2017-18 Budget, the BEAR will make banks and their most senior executives and directors accountable for meeting heightened standards of behaviour in line with community expectations and ensure our banking system is unquestionably strong, unquestionably fair and unquestionably competitive.
Public consultation took place from 13 July 2017 to 3 August 2017 and covered the key design elements of the BEAR. Submissions were received from a wide range of respondents including banks, industry groups, consumer bodies and law firms.
The draft legislation provides further clarity on the accountability obligations of banks and their directors and senior executives, and enhanced consequences for being in breach of these obligations. In particular, prudential regulator APRA will be empowered to:
• impose substantial fines on banks;
• more easily disqualify accountable persons; and
• ensure that banks’ remuneration policies result in financial consequences for individuals.The BEAR is due to apply from 1 July 2018.
Banks remain at the centre of some of the most critical decisions in life, including buying a first home, starting a business, and saving and investing for retirement. It is therefore important that mechanisms are in place to deter poor behaviour and provide for accountability where standards of behaviour are not met.
This is imperative to maintain community confidence that the banking sector will serve the interests of consumers and businesses.
The exposure draft of the legislation is available on the Treasury website.