The FSC made a submission on 13 August to Treasury in respect of the Financial Accountability Regime (FAR) draft Bill, a recommendation of the Hayne Royal Commission due to start from 1 July, 2023.
As well as the Bill, the Government also released exposure draft explanatory materials, an information paper on joint administration of the new laws by APRA and ASIC, a policy paper on prescribed responsibilities and positions of key executives, and a Questions and Answers document for consultation. The FSC submission also touched on these other documents.
While the FSC has acknowledged the intent of the FAR Bill to increase executive accountability in APRA-regulated entities, we also outlined certain general concerns.
These include unduly onerous obligations on an accountable person; complexity of FAR interacting with general law; regulatory arbitrage. We are also concerned about the extent that the regime would apply to foreign entities and foreign executives. FAR appears to overreach and capture many more people in an entity than the Banking Executive Accountability Regime, or BEAR.
On 3 September, Government released for consultation another piece of proposed legislation, the draft Financial Accountability Regime (Consequential Amendments and Transitional Provisions) Bill 2021. We will continue to advocate against the issues we believe would result in unintended consequences of the Bill, including adverse impacts on recruitment and retention in financial services.
The Consequential Amendments and Transitional Provisions Bill is a follow up to the draft FAR Bill and:
- makes consequential amendments to various Commonwealth laws to establish the FAR; and
- provides for transitional arrangements relating to the repeal of the Banking Executive Accountability Regime under the Banking Act 1959.
The FSC is currently reviewing the latest Bill in the context of providing further feedback to Treasury.
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