CHOICE has drafted a submission to Treasury on the draft laws transitioning to the new Financial Accountability Regime (FAR). This regime holds senior financial executives accountable for misconduct that occurs under their watch.
The existing Business Executive Accountability Regime (BEAR) has been in operation for over three years, coming into effect on 1 July 2018. Since that time:
- no executives have been disqualified
- no executives have had their bonuses clawed back
- no banks have been fined.
If the BEAR's impact is measured in financial terms – by the amount of executive remuneration clawed back or the amount of fines issued – then its impact has been precisely zero.
CHOICE supports the passage of the FAR legislation. However, we recommend a number of amendments to strengthen enforcement and increase the range of sanctions available for regulators.
In particular, CHOICE is calling on the federal government to:
- impose civil penalties of $1,050,000 for individuals for breaches of accountability obligations (as originally proposed by the government)
- require 100% of an accountable person's variable remuneration to be subject to deferred remuneration obligations
- add an accountability obligation that requires entities and accountable persons to "pay due regard to the interests of customers and treat them fairly"
- expand accountability obligations to include all executives and senior management of accountable entities.
Read more about the joint consumer submission signed by CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Super Consumers Australia, which addresses in detail the consumer groups' policy recommendations.
Download submission (PDF)
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