The Banking Royal Commission revealed that many decisions made by senior leaders of financial services firms have had a devastating impact on people across Australia. Their conduct has driven many members of the community into financial hardship, with serious results including the losses of family homes, the closure of small businesses, insolvencies, mental and physical ill-health, and relationship breakdown.
Australia’s financial system is currently designed to reduce the personal legal accountability of finance executives when they break the law. This contributes to a corporate culture of prioritising short-term profits over customer wellbeing and compliance, at the expense of the interests of consumers and the Australian community.
If designed correctly, the Financial Accountability Regime (‘FAR’) could be a game-changer in reforming corporate culture in Australia.
However, the Financial Accountability Regime Bill 2021 (‘the Bill’) is deficient in many important areas. As drafted, this law will be unlikely to hold finance executives to account for their actions, nor will it significantly improve corporate culture in Australia. Without amendment, members of the community remain vulnerable to decision-making that trades off consumer welfare for excessive profits, and we are likely to see a repeat of the same harmful corporate practices that resulted in the Banking Royal Commission.
Consumer Action is part of a coalition of consumer groups urging Treasury to amend the Bill to address these deficiencies and help avoid history repeating itself.21-08-13 – Joint consumer submission to Treasury – Financial Accountability Regime