BEAR expanded under Royal Commission recommendations
The Banking Executive and Accountability Regime (BEAR) will be expanded to cover all financial services sector including credit providers and regulators as the government agrees to action all 76 recommendations from Hayne’s final report.
This is the assessment of Kevin Nixon, senior advisor to Deloitte's Asia - Pacific Centre for Regulatory Strategy
While the government will “take action” on all 76 recommendations of the report, Kevin Nixon – senior adviser to Deloitte’s Asia Pacific Centre for Regulatory strategy – said that this does not necessarily mean that specific laws will change, rather an indication of the direction the government will take on some of the recommendations.
ASIC and APRA will also come under the executive accountability regime.
“While the overall regulatory framework will remain the same, there are specific recommendations will shake things up” Nixon said.
Here, the devil will be in the detail.
“There are a few areas that stand out that will impact superannuation and the mortgage sector, according to Nixon.
These include the banning of fees on MySuper products and increased disclosure around broker commissions. Although the government has said it would not ban trailing commissions.
While the government has announced that it would set up a new regulatory oversight body – with former ACCC chief Graeme Samuel to review APRA – Nixon notes that Hayne’s recommendation still retains the “twin peaks” regulatory framework as well as the remits of both ASIC and APRA.
“The new regulatory oversight body was actually recommended as part of the Murray Inquiry but as Hayne noted in his report, it had not been implemented,” Nixon said.
Nixon also noted that it would be up to the regulators to initiate any criminal charges. Hayne has referred 19 cases of misconduct – across 22 institutions including three of the big four – to ASIC and APRA.
“It may lead to court cases and prosecutions. But Hayne handed these cases to the regulators to follow up which is appropriate.”
There were no big changes to responsible lending, widely feared by the industry.
“The hearings throughout the Royal Commission highlighted no glaring gaps in the existing regulation, rather it was how banks complied with the existing law.
“We have, however, seen over the last 12 months lending tighten, particularly around assessing the capacity of borrowers to pay. While there will be no change to the law around responsible lending, the overarching theme of complying with the law will remain.”
Overall, Nixon said the report – just under 500 pages – was measured and pragmatic.
“Hayne had to absorb a lot of information over the past 12 months. It wasn’t a headline-grabbing sensationalist report but a measured response.”