This Budget is the next stage in the Government's economic plan, building on commitments from the 2016-17 Budget and the 2016 election.
Fairer and more accountable banks
Protecting Australians’ interests in our banking and financial system
We depend on our banks and other financial institutions to buy our homes, facilitate transactions, to help grow our businesses, to build wealth and to manage our risk.
For it to work effectively, Australians need to be confident that financial services providers – banks, insurers, superannuation funds – will serve their customer’s interests.
Too often the sector has not met those expectations.
That is why the Government is overhauling the financial system. Building on its existing reform agenda, the Government is taking strong new action to ensure the sector delivers the outcomes expected of it by the community.
The Government will create a one-stop shop — the Australian Financial Complaints Authority — to ensure consumers have access to free, fast and binding dispute resolution services. Combined with the work to enhance mandatory reporting of financial services law breaches and the reforms to raise professional standards of financial advisers and to address conflicted remuneration in life insurance, this means customers will be better protected than ever before.
The Government will legislate for a new Banking Executive Accountability Regime with enhanced powers for the Australian Prudential Regulation Authority, to remove and disqualify an executive, direct adjustments to banks’ remuneration policies, and enforce new obligations on bank conduct, with penalties (up to $200 million) when those are not met.
Senior bank executives will be required to register with APRA and banks required to advise APRA prior to making a senior appointment. Penalties will be imposed on banks that don’t monitor the suitability of their executives to hold senior positions.
The regime will require a proportion of senior executives’ ‘at risk’ remuneration be deferred for at least four years to focus decision-making on long-term outcomes.
The Government will also clamp down on poor practices in the credit card market by putting in place new rules on providing credit cards.
The Government will introduce a major bank levy of 6 basis points on banks with liabilities above $100 billion. This represents a fair contribution to the community from our major banks, is consistent with other advanced countries and helps foster competition from smaller banks.