Minority report
REVIEW OF FINANCIAL SECTOR LEGISLATION AMENDMENT BILL
Labor and the Democrats support the amendments to the
Banking Act to introduce a “fit and proper person” standard for directors and
senior managers. However, we are concerned that the proposed amendments do not
set out the minimum criteria by which the fitness and integrity of directors
and senior manager’s will be assessed.
Instead APRA would devise a standard under the Banking Act,
which would set out the minimum criteria against which fitness and integrity
will be assessed. However, APRA was unable to tell the Committee, other than
in very general terms, what minimum criteria would be included within the fit
and proper standard.
A standard is not a disallowable instrument and so there
would be no opportunity for parliamentary review of the minimum criteria.
Labor and the Democrats therefore propose to introduce an amendment by which
the minimum criteria for the fit and proper standard are defined by a
regulation and hence subject to disallowance (Attachment 1).
The Government’s proposed self-regulatory approach to the
application of a fit and proper person test is based on the principles of the
Basle Accord, which were framed prior to recent financial scandals. If the
Accord were drafted in the wake of these scandals it is likely to have favoured
a more prescriptive approach to regulation.
SENATOR JACINTA COLLINS
Labor Senator for Victoria
SENATOR RUTH WEBBER
Labor Senator for Western Australia
SENATOR ANDREW MURRAY
Australian Democrats
The
Parliament of the Commonwealth of Australia
THE SENATE
DRAFT-IN-CONFIDENCE This draft is supplied in confidence and should be
given appropriate protection.
Financial
Sector Legislation Amendment Bill (No. 2) 2002
(Amendment to be moved by Senator Conroy on behalf of the Opposition in committee of the
whole)
- (1) Schedule 2, item 17, page 18 (after line 9), at the end of
section 21, add:
- For the purposes of
subsection (1), the regulations must prescribe a standard of a fit and proper
person to be a director or a senior manager which must include but not be
limited to consideration of whether a director or senior manager has:
- been subject to an adverse
settlement in civil proceedings;
- been subject to disciplinary proceedings
by the regulator;
- contravened any regulatory
requirement;
- been subject to a justified
complaint relating to regulated activities;
- been involved in a business which
has been refused a license or had a license revoked;
- refused the right to carry on
business requiring a license;
- been investigated, disciplined,
suspended or criticised by the regulator or professional body;
- been dismissed or asked to resign
from a position of trust;
- been disqualified as a director
or manager;
- failed to be candid and truthful
in dealing with a regulatory body.
[fit and proper person]
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