In making this submission, the ACTU supports and reiterates the submission made by the Finance Sector Union (FSU), the union representing workers in the finance and insurance industry.

The ACTU was supportive of the Banking Executive Accountability Regime (BEAR) which sought to ensure that executives of banks which caused significant harm through the development of products and policies, and application of their market power were held accountable. The Banking Royal Commission showed that executives of banks, insurers, and for-profit superannuation funds acted with impunity and without consequence in their pursuit of profits at any cost. Workers lost their life savings, houses, were sold financially crippling products, and junk insurance; even dead workers weren’t spared fees for advice. The ACTU is broadly supportive of the FAR and its expansion to increase the transparency and accountability of finance sector organisations. It is an important step to implementing the Hayne Royal Commission and preventing further harm to working people from this sector.

We agree with the FSU that it is disappointing that penalties to enforce accountability have been scaled down and limited to civil penalties only. It is highly unlikely that the culture of greed which caused the systemic misconduct in the for-profit finance sector has been eliminated in just three years. Individual penalties are a significant deterrent to poor behaviour and their removal will likely only see a return to the unaccountable culture that has plagued executives of banks.

The FAR’s focus on methods of clawing back variable remuneration as a method of accountability raises concerns with the Government’s position of assuming variable remuneration as a default method of pay setting. Incentive payments and bonuses are rare for most workers and their ability to drive improvements in performance is dubious at best. The implementation of FAR must not be an opportunity for banks, superannuation funds and insurers to further inflate often exorbitant executive salaries.