Speaking at a Finsia event in Sydney on Friday, APRA chairman Wayne Byres said the Banking Executive Accountability Regime (BEAR) will strengthen the existing prudential framework in Australia.
While the BEAR will give APRA great power to disqualify banking executives from the industry and adjust remuneration, it is "not new territory", Mr Byres said.
"Our existing regime – seen as overbearing (no pun intended) when it was introduced – would now be seen internationally as somewhat limited," he said.
Changes to the Banking Act to put the BEAR into place will ensure the new regime has "teeth", Mr Byres said.
"It will then be up to APRA to implement the framework through our supervision process. It will also necessitate consequential changes to our supporting prudential standards," he said.
Mr Byres said it was difficult to be specific about the BEAR since the enabling legislation is still being drafted.
"But the core objective – establishing clearer accountabilities for, and expected standards of behaviour by, senior executives within banks – is difficult to argue against," he said.
"Indeed, once the new framework is put in place for banks, APRA intends to think about whether some of the concepts within the regime have broader application."
The new powers should only need to be used rarely, he said – but that doesn't mean APRA won't use them if it needs to.
"The goal must be that, with clear boundaries and obligations set out by the regulatory framework, boards and executives conduct their affairs in such a manner that intervention by APRA is not needed," Mr Byres said.
"It is a much better outcome, for example, that boards hold their executives to account for poor outcomes than have to rely on the regulator to do it for them."
FSC loses two senior policy managers
AMP Capital appoints new CFO
BNY Mellon appoints head of distribution, APAC
What a blockchain-powered ASX should mean
Separating the signals from the noise
Could passive investing have structural issues?