Today, the Parliament has passed the Albanese Government’s legislation to implement the Financial Accountability Regime (FAR). This completes the final major recommendation to Government made by the Banking Royal Commission.
Financial services executives make decisions that impact upon the lives of all Australians. They must be held to high standards of accountability and integrity.
The FAR replaces and extends the Banking Executive Accountability Regime by imposing tough new accountability obligations on banks, insurers, and superannuation funds. The FAR ensures that these institutions clearly identify individuals who will be held accountable for the actions of the organisation.
An executive who breaches these obligations can be penalised with a loss of income, disqualification from working in the sector, and individual civil penalties for assisting in the organisation’s contravention of its obligations.
The FAR will apply to the banking industry six months after Royal Assent and to the insurance and superannuation industries eighteen months after Royal Assent.
This follows the Government’s passage of legislation to establish a Compensation Scheme of Last Resort, which will deliver compensation of up to $150,000 to victims of financial misconduct that have an unpaid determination from the Australian Financial Complaints Authority. The ten largest eligible financial institutions will be required to provide compensation of around $230 million to victims for heritage claims as part of this scheme.
The Royal Commission, which exposed significant and systemic misconduct across the industry, was only set up because of Labor’s strong advocacy. The Coalition voted against a Royal Commission 26 times and were unable to finish legislating the recommendations before they were run out of office.
It has taken a Labor Government to finish the job.
