This bill did not become law and is no longer proceeding.
Budget, tax & economy
The bill would bring banks, insurers and super funds under one new accountability regime, expanding rules that had mainly applied to banking.
Misconduct exposed by the Financial Services Royal CommissionThe royal commission whose findings led the government to tighten accountability rules across banks, insurers and super funds. left Australia with an accountability regime that mainly applied only to banks. This bill creates a broader regime for banks, insurers and super funds, making senior leaders responsible for key business areas and exposing firms and executives to penalties and disqualification.
Australia already had the Banking Executive Accountability RegimeThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. for banks, but it did not cover insurers or super funds and debate over its effectiveness sharpened after misconduct in financial services exposed gaps in executive accountability. The 2022 bill responded by extending that model across more of the sector and tightening duties on senior leaders and firms, but it was delayed amid arguments over whether individual executives should face civil penalties before the 2022 version was discharged and replaced by a 2023 bill.
The main criticism was that the 2022 bill did not impose direct civil penalties on accountable persons. Greens amendments sought to add those penalties and stop entities indemnifying or insuring accountable persons against breaches, while consumer advocates had also asked the Senate committee to revisit the decision to drop individual banker fines. Labor and the Coalition still supported the bill.
Stephen Jones MP introduced this bill. Speeches supporting it came from Labor, Liberal Party.
Did it become law?
No
The bill did not complete passage through Parliament.
Final passage
No final passage
The bill has not completed passage and is no longer proceeding.
Time before failure
182 days
From introduction to the final recorded step before the bill stopped proceeding
Meaning
The bill would bring banks, insurers and super funds under one new accountability regime, expanding rules that had mainly applied to banking.
Senior directors and top executives at covered financial firms would have to act honestly and carefully, cooperate openly with APRAThe main regulator for banks, insurers and super funds that would oversee parts of the new regime. and ASICThe corporate and markets regulator that would also help enforce the new accountability rules for many firms., and could be disqualified if they breach those duties.
Covered financial firms would have to make sure named senior leaders are responsible for every part of the business, including important parts of related group companies.
Covered financial firms would have to hold back at least 40 per cent of senior executives’ bonuses for at least four years and cut that pay if the executive breaks accountability rules.
Financial firms that break these rules could face major civil penalties, including fines based on annual turnover, the value of any benefit gained, or a fixed penalty-unit cap.
The Financial Accountability Regime Bill 2022 introduces a new accountability regime for the banking, insurance and superannuation industries.Financial Accountability Regime explanatory memorandum
The Financial Accountability Regime places a series of obligations on accountable persons such as requirements to act with honesty and integrity, and with due skill, care and diligence and deal with APRA and ASIC in an open, constructive and cooperative way. Breaches of these obligations can result in a person becoming disqualified from being an accountable person. [Sections 21 and 42 to the Financial Accountability Regime Bill 2022]Financial Accountability Regime explanatory memorandum
The Financial Accountability Regime requires an accountable entity to ensure that the responsibilities of relevant accountable persons collectively cover all parts or aspects of its business, including the business of its relevant group. [Section 23(1)(a) to the Financial Accountability Regime Bill 2022]Financial Accountability Regime explanatory memorandum
deferred remuneration obligations—which require entities in the banking, insurance and superannuation industries to defer at least 40 per cent of the variable remuneration (for example, bonuses and incentive payments) of their directors and most senior and influential executives for a minimum of 4 years, and to reduce their variable remuneration for non-compliance with their accountability obligations; andFinancial Accountability Regime explanatory memorandum
If an accountable entity fails to comply with an obligation, it may be subject to a civil penalty of up to 50,000 penalty units, three times the value of the benefit derived or detriment avoided by the entity, or 10 per cent of the entity’s annual turnover up to 2.5 million penalty units for each contravention (for more detail, see the sections below on civil penalties). [Sections 80 to 83 to the Financial Accountability Regime Bill 2022]Financial Accountability Regime explanatory memorandum
Context
Australia already had the Banking Executive Accountability RegimeThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. for banks, but it did not cover insurers or super funds and debate over its effectiveness sharpened after misconduct in financial services exposed gaps in executive accountability. The 2022 bill responded by extending that model across more of the sector and tightening duties on senior leaders and firms, but it was delayed amid arguments over whether individual executives should face civil penalties before the 2022 version was discharged and replaced by a 2023 bill.
Existing bank accountability rules point to a wider regime
APRAThe main regulator for banks, insurers and super funds that would oversee parts of the new regime. and Macquarie University said BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. was improving culture and behaviour, while the report noted TreasuryThe government department that was preparing the broader accountability reform and policy changes described on the page. was preparing to extend the model across the finance sector.
Australian Financial Review ↗Critics say BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. has not held any bank executives to account
A consumer group said precisely zero bank executives had been held accountable under BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector., sharpening the case for a stronger replacement.
Australian Financial Review ↗Government introduces the Financial Accountability RegimeThe new rules being created for financial firms, under which senior leaders can be held responsible for parts of the business and punished for breaches. bill
The minister said the bill would replace and extend BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. to implement Hayne royal commission recommendations and push financial institutions to meet higher community expectations.
Hansard ↗Senate committee reports on the bill
The Senate Economics Legislation Committee reported on the bill and recommended that it be passed.
Senate Economics Legislation Committee ↗Vote is delayed as Labor rethinks executive fines
The government put off a vote after reconsidering a deal that would have restored million-dollar fines for individual executives who breached the regime.
Australian Financial Review ↗The 2022 bill is discharged from the Notice PaperThe parliamentary list of business for the chamber; if a bill is discharged from it, the bill is effectively dropped from that program.
The original bill was removed from the Senate Notice PaperThe parliamentary list of business for the chamber; if a bill is discharged from it, the bill is effectively dropped from that program., ending its run in that form and clearing the path for the regime to be reintroduced in revised legislation.
Parliamentary timeline ↗Government brings back the accountability package in a new bill
After the 2022 bill had been discharged, the package returned as the Financial Accountability RegimeThe new rules being created for financial firms, under which senior leaders can be held responsible for parts of the business and punished for breaches. Bill 2023.
Hansard ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Referred to Committee (28/09/2022): Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
APH bill page notesThe bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The bill reached this recorded parliamentary step.
Key criticism
The main criticism was that the 2022 bill did not impose direct civil penalties on accountable persons. Greens amendments sought to add those penalties and stop entities indemnifying or insuring accountable persons against breaches, while consumer advocates had also asked the Senate committee to revisit the decision to drop individual banker fines. Labor and the Coalition still supported the bill.
Criticism focused on the penalties being too weak, not on rejecting stronger accountability rules.
No direct civil penalties for accountable persons
Critics argued the bill should let regulators seek civil penalties against accountable persons, not only entities, because disqualification and reduced bonuses might not be enough to deter misconduct.
Risk the new regime would repeat BEAR's weak results
Some critics warned that without stronger sanctions, the new regime could repeat BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector.'s weak practical record, which consumer advocates said had not held bank executives to account.
Further sources
Votes
No recorded votes were found before this bill stopped proceeding.
Parliamentary debate
Start here — lead voices
Stephen Jones supports the bill and says it will complete the reforms from the Hayne royal commission by strengthening accountability across banks, insurers and superannuation funds.
Read in Hansard ↗James Stevens supports the bill and says the financial accountability reforms are a sensible extension of the BEARThe earlier accountability scheme for banks that this bill would extend to more of the financial sector. regime, with stronger oversight to protect consumers and hold senior people in financial institutions to account.
Read in Hansard ↗Jenny McAllister supports the Financial Accountability RegimeThe new rules being created for financial firms, under which senior leaders can be held responsible for parts of the business and punished for breaches. Bill 2022, saying it finishes the Banking Royal Commission response and strengthens accountability across banks, insurers and superannuation.
Read in Hansard ↗Taylor says the opposition will support the Financial Accountability RegimeThe new rules being created for financial firms, under which senior leaders can be held responsible for parts of the business and punished for breaches. because it implements royal commission recommendations and largely matches the coalition's earlier plan.
Read in Hansard ↗All speeches by bloc
2 speakers · 3 contributions · 2 support
“Through this Bill, the Government is finalising the necessary action to ensure that financial institutions are meeting the community's expectations, and shifting their focus from profit at all costs to outcomes for all Australians.”Read the full speech in Hansard ↗
Hansard records 2 separate contributions by Stephen Jones on this bill. They are grouped here so the speaker is listed once.
Minister's second reading speech
Stephen Jones supports the bill and says it will complete the reforms from the Hayne royal commission by strengthening accountability across banks, insurers and superannuation funds. He argues it is needed to make financial institutions act in the public interest and face consequences when they do not meet community expectations.
“The bill underscores the government's commitment to finalise the action necessary to fully address the recommendations of the Hayne banking royal commission and implement measures that compel the financial services industry to act in the public's interest.”Read this contribution in Hansard ↗
Second reading speech
Stephen Jones supports the bills in his summing-up, saying the Financial Accountability RegimeThe new rules being created for financial firms, under which senior leaders can be held responsible for parts of the business and punished for breaches. will implement banking royal commission recommendations and increase accountability for financial institutions and their senior executives.
“The Financial Accountability Regime delivers on the government's commitment to finalise the implementation of five recommendations from the banking royal commission. The FAR will increase the accountability of financial institutions in the banking, insurance and superannuation industries and of their most senior executives and directors, restoring trust and confidence in a sector that plays an integral role in the wellbeing of Australians and our economy as a whole.”Read this contribution in Hansard ↗
3 speakers · 3 support
“I rise to speak in support of the Financial Accountability Regime Bill 2022 and the other two bills that we're debating concurrently here before the House. We continue to work through the recommendations of the Hayne royal commission, and I'm not certain whether there are many final recommendations from that, after these bills are progressed, that need to be brought before us to complete that process, but I'm very pleased to be speaking on the progression of these bills.”Read the full speech in Hansard ↗
“The Financial Accountability Regime Bill, which is part of the package here, took action to implement five recommendations to the financial services royal commission. In response to the commission, the coalition made a further commitment to extend the executive accountability regime to entities regulated solely by ASIC, particularly in the insurance industry and the broader financial services industry. We will progress this further commitment following the initial implementation of the regime to all APRA regulated entities as well. Those BEAR standards that were established for the banking industry are absolutely appropriate for this extension.”Read the full speech in Hansard ↗
“I support the bills.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Discharged from Notice Paper
Discharged from Notice PaperThe parliamentary list of business for the chamber; if a bill is discharged from it, the bill is effectively dropped from that program.
The bill reached this recorded parliamentary step.
Senate Economics Legislation Committee; Committee report (24/10/2022)
Referred to committee
Referred to Committee (28 Sept 2022): Senate Economics Legislation Committee; Committee report (24 Oct 2022)
APH bill page notes
