ASIC powers need to be extended for Banking Executive Accountability Regime – September 2017

Filed under: Economy and Finance, Financial Regulation,

The Government has welcomed the release by the ASIC Enforcement Review Taskforce of a position paper titled ‘ASIC’s power to ban senior officials in the financial sector’.

The Taskforce paper provides for additional measures against banking executives on top of those proposed in the Banking Executive Accountability Regime, which would be implemented by the Australian Prudential Regulation Authority (APRA). The Treasury consultation on proposed APRA powers and responsibilities under the BEAR was completed in August. The outcome of the consultation is yet to be announced.

The ASIC position paper on ASIC’s power to ban senior officials in the financial sector is one of a number of consultations on ASIC’s powers under the BEAR. Details of other consultations are available in the links below.

In its final report, the Financial System (Murray) Inquiry concluded that ASIC’s banning powers against individuals needed to be enhanced to improve accountability of managers and the culture of firms in the financial services and credit sectors.

The Taskforce position paper says that at present ASIC’s powers are limited to banning a person from managing a financial services business or providing financial services. To implement the BEAR these powers would need to be extended, the paper says.

Financial Services Minister Kelly O’Dwyer said the Government was changing the game in terms of accountability in the financial sector.

“The Government and the community are demanding better from those who occupy senior roles in banks, and the financial services sector generally,” she said.

“The Banking Executive Accountability Regime (BEAR) will ensure that banks and their senior executives and directors are held accountable when they fail to meet community expectations, including through stronger powers for APRA to remove and disqualify senior executives and directors and through new civil penalties.

“The Taskforce proposals would complement the BEAR by enhancing ASIC’s power to hold individuals in the financial services and credit sectors to account for their conduct, in line with the conclusions of the Murray Inquiry.”

The ASIC Enforcement Review Taskforce was established in October last year.

The terms of reference allow for an examination of the adequacy of ASIC’s enforcement regime, including the adequacy of ASIC’s power to ban senior managers from continued employment in financial services businesses.

The Taskforce is now seeking community and industry feedback on the position paper before making final recommendations to the Government later this year.

Membership of the Taskforce includes senior members of the Treasury, ASIC, the Attorney‑General’s Department and the office of the Commonwealth Director of Public Prosecutions, as well as representatives from industry bodies, consumer groups and academia.

The position paper is available on the Treasury website. Stakeholders are invited to comment by 4 October.

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