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New Regime Empowers Australian Regulators to 'Disqualify' Executives

New Regime Empowers Australian Regulators to 'Disqualify' Executives

by Starling Insights

Starling Insights Editorial Board

Sep 22, 2022


Two weeks ago, the Australian government introduced the Financial Accountability Regime Bill 2022, frequently referred to as the FAR. The bill gives power to the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) to investigate and punish misconduct, and to hold specific individuals accountable for such.

Like many accountability regimes put in place in other markets in recent years, Australia's FAR requires that firms nominate executives as "accountable persons" for particular business areas and corporate functions. Under the new Australian regime, at least 40% of an accountable person's variable remuneration must be deferred for at least four years, with risk of reductions thereto should misconduct occur on their watch. Firms and accountable persons are also required to act upon and report any instances of non-compliance.

Under the FAR, regulators can disqualify accountable persons and order firms to reallocate responsibilities assigned to an accountable person to address misconduct risk. The bill also gives ASIC and APRA information gathering and investigative powers, requiring that the accountable entity and their auditors cooperate with investigations into FAR breaches.

Later this year, Starling will publish "The Era of Accountability," a Deeper Dive Supplement to our 2022 Compendium, which will discuss the global push from regulators, investors, employees, and the public to hold firms — and their leaders — accountable for the (mis-)management of culture and conduct risks. This Deeper Dive will only be available here on Starling Insights.

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