True Independence

Preparing for the Banking Executive Accountability Regime

Forensic & Litigation Consulting

June 8, 2017

business people

With the proposed Banking Executive Accountability Regime, senior executives will need to ensure reasonable steps are taken to prevent non‐compliance occurring or continuing. Glen Unicomb and André Menezes discuss why it is crucial for financial services licensees to appoint genuinely Independent Experts to provide assurance over the effectiveness of frameworks for detecting and responding to misconduct.

The government’s recent budget announcement has heightened the responsibility of senior executives to conduct their operations with integrity, due skill, care and diligence.

The proposed Banking Executive Accountability Regime (‘the Regime’) provides for the Australian Prudential Regulation Authority (‘APRA’) to disqualify senior executives and strip them of their bonuses for failing to conduct their business “consistent with good prudential outcomes”.1 The Regime also includes provision to fine licensees up to $200 million for this failure.

The Regime parallels the UK Senior Managers and Certification Regime which requires Senior Managers to take reasonable steps to prevent non‐compliance occurring or continuing in their responsible business unit.2

Maintaining robust risk management, governance and compliance frameworks will assist senior executives in meeting their obligations. Important components of the framework are early detection and prompt responses to instances of non‐compliance.

1 Budget 2017 Fact Sheet ‐ Banking and Financial Services.
2 FCA Policy Statement 17/9 Guidance on the duty of responsibility: final amendments to the Decision Procedure and Penalties Manual, May 2017, Page 4.

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