Senior banking executives will have their salaries regulated and bonuses delayed as part of a new accountability scheme announced in the 2017 federal budget.
- Executives face fines of up to $200 million for serious misconduct
- Bank executives will need to be registered
- 60pc of CEO bonuses to be deferred for minimum four years
A new Banking Executive Accountability Regime will require the top brass from all Australian banks to be registered.
The banking regulator, the Australian Prudential Regulation Authority, will be given new powers to change remuneration policies, ban executives and impose penalties of up to $200 million for misconduct.
In an unprecedented move, the regime requires at least 60 per cent of chief executive bonuses and 40 per cent of other senior executive’s bonuses be deferred for a minimum of four years.
Short-term and long-term incentives make up the majority of senior executive pay.
“These measures will mean executives will be more accountable, will be subject to greater scrutiny and there will be increased consequences for when executives and banks do not meet expectations,” Treasurer Scott Morrison said.
The major banks have been embroiled in various scandals in recent years, including market manipulation in setting the bank bill swap rate, breaching responsible lending laws, and providing misleading financial advice.
Bank CEO Salaries, 2016
- CBA: Ian Narev: $12.3 million ($2.65 million base salary)
- NAB: Andrew Thorburn $6.7 million ($2.4 million base salary)
- ANZ: Shayne Elliot $5.07 million ($2.1 million base salary)
- Westpac: Brian Hartzer $6.7 million ($2.8 million)
- Macquarie: Nicholas Moore $18.7 million ($818,000 base salary)
APRA will receive $4.2 million in funding over four years to implement the measures, which address the recommendations of the House of Representatives Coleman Report.
The Financial Services Council (FSC) said the new regulation should end the calls for a royal commission.
“The Government has laid out a blueprint for strengthening consumer trust in the financial services industry,” the council’s CEO, Sally Loane, said.
“The FSC calls on all parties to finalise this unprecedented and stringent package of reforms so that we can bring an end to the politicisation of the financial services industry.”
The Australian Bankers Association is yet to comment.