A Senate committee examining a new law that will make superannuation and insurance executives more accountable for misconduct, a key recommendation of the Hayne royal commission, has recommended that it be passed by the parliament.
The FAR is the final tranche of legislation to implement recommendations of the financial services royal commission. As well as extending the Banking Executive Accountability Regime and creating a fund to compensate customers of a failed financial services company, the bill also toughens rules around payday lending.
However, the committee, chaired by Victorian Labor senator Jess Walsh, said it viewed the accountability measures in the FAR – including banning powers and deferred remuneration arrangements – as complementary to existing penalties for entities and “accountable persons” in the Corporations Act. Liberal senator Andrew Bragg said the “compensation scheme of last resort” will reduce incentives for the Australian Securities and Investments Commission to enforce the law. He also complained that the Australian Financial Complaints Authority , which will administer the scheme, will be “allowed to hide behind ASIC and does not report directly to parliament”.
The FAR bill also introduced protections for users of ‘small amount credit contracts’, also known as payday loans, including caps on costs for consumer leases. These are supported by consumer groups.