Speaking at a Financial Services Council breakfast in Sydney yesterday, Treasurer Scott Morrison said that under the BEAR bank executives will no longer be able to shift blame when "something goes wrong".
Mr Morrison said senior leaders within Australia's banks will be held to new standards of honesty, integrity, due skill, care and diligence – and they will have to "wear" the consequences of behaviour that contradicts those standards.
APRA will have new powers to administer civil penalties of up to $210 million, which Mr Morrison described as a "strong deterrence" for poor behaviour.
"But this goes beyond banks being forced to write big cheques to absolve their sins," he said.
"Executives and directors in breach of their obligations face disqualification from the banking industry and they may be stripped of their bonuses.
"This is legislation with teeth. And such is necessary to restore the public's faith in the leadership of our banks and the way they go about their business."
The Treasurer stressed that the BEAR is "not about bashing the banks".
"The formation of this legislation has been done in a very consultative manner with the banks and their chief executives. They have been extensively involved in the process. We have also listened to their concerns around procedural fairness and have addressed them," he said.
Mr Morrison noted that bank executives penalised under the BEAR will have the same appeal rights under the Administrative Appeals Tribunal as financial planners.
"We will not measure success in enforcement actions alone — the ultimate goal is to end inappropriate behaviour," he said.
"The onus is on the banks to ensure the regime drives improvements in culture and behaviour rather than becoming a compliance exercise or an enforcement regime."
Former CommSec COO joins fintech company as CEO
Boutique manager hires Perennial executive
Equip Super appoints strategy and markets executive
A correction, not a turning point
Why bond covenants matter
Striking a balance between security and innovation