The Government has started consultation on bringing the Banking Executive Accountability Regime (BEAR) regime to superannuation funds, a recommendation of the Banking Royal Commission.
The BEAR was legislated in 2017, in order to impose a new accountability regime on banks. One of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was that the BEAR be extended, over time, to all APRA-regulated financial services institutions, including super funds.
The Government adopted this recommendation, and went further with plans to extend it to “solely ASIC regulated entities”.
A ‘Proposals Paper’ has now been released seeking input on how this scheme, dubbed the Financial Accountability Regime (FAR), would be implemented.
“Financial Accountability Regime entities will be subject to accountability, key personnel, notification and deferred remuneration obligations. These obligations will ensure that senior executives of these financial entities will be more accountable for the activities of the organisation for which they are responsible and, consistent with the BEAR, impose strict consequences for those who fail to perform their roles with competence, honesty or integrity,” said a statement by Treasurer Josh Frydenberg.
The Treasurer said the FAR would apply on a “staggered basis to all general and life insurers, private health insurers, superannuation entities, and licensed non-operating holding companies”, without setting out a timetable. The Proposals Paper says the Government has “not yet determined an implementation timeframe for the FAR and intends to consult on timeframes as part of the consultation on the exposure draft legislation”. As part of its implementation timetable for the response to the Royal Commission, the Government set the target of having the legislation for this recommendation before Parliament by the end of 2020.
There will be consultation around how FAR should be extended to entities regulated solely by ASIC after it is implemented for APRA-regulated entities, the Treasurer said.
Consultation on the Proposals Paper is open until 14 February 2020.