APRA serves notice on financial services remuneration

APRA policy regulation

20 March 2019
| By Mike |
image
image
expand image

The big banks have been placed on notice that their executive remuneration regimes will have to become more transparent and that variable remuneration will have to be variable in practice.

The Australian Prudential Regulation Authority executive general manager, Policy and Advice, Pat Brennan has flagged to a Sydney forum that before the middle of the year the regulator will be releasing a consultation paper ahead of an updated prudential standard on remuneration.

He said that the consultation paper represented a follow-on from APRA’s 2018 Information Paper on Remuneration practices at large financial institutions “where we found that practices were not as robust as they should be”.

“We have also learnt a great deal from the CBA Prudential Inquiry and of course the Royal Commission,” Brennan said.

“The new standard will be stronger and be primarily focused on outcomes. This will include that performance assessment must reflect consideration of all relevant contributions to performance, including risk management,” he said. “Banks will need to be transparent with APRA on how remuneration decisions are made; and variable remuneration must be truly variable in practice.”

Brennan also flagged that APRA would be refreshing its governance and fit and proper standards as part of an improved accountability regime for financial institutions, particularly the new regime to be run by the Australian Securities and Investments Commission (ASIC) in parallel with APRA’ s Bank Executive Accountability Regime (BEAR).

“Again, this will be in light of what we have learned through our supervisory activity, through the CBA Prudential Inquiry and the findings of the Royal Commission,” he said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

6 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 11 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 9 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 12 hours ago