Banks expect prudent use of salary rules

As an inquiry begins into the Commonwealth Bank, Treasurer Scott Morrison is moving to give the banking watchdog the power to rein in executive pay.

morrison

Treasurer Scott Morrison is moving to crack down on bank bosses' salaries. (AAP)

Bankers expect the industry watchdog will use new powers to tighten rules around executive salaries prudently and only in exceptional circumstances.

Treasurer Scott Morrison will ask parliament to approve new laws giving the Australian Prudential Regulation Authority the power to cap salaries, delay bonuses and drive directors out of the industry if they are guilty of wrongdoing.

Assistant Minister to the Treasurer Michael Sukkar warned bank executives the government does not want them making short-term decisions that affect their remuneration.

"Often those decisions are not in the best interests of the company in the long term," Mr Sukkar told Sky News on Tuesday.

He said when bankers were being remunerated quite well, Australians expected a high standard of service and a high standard of decision making.

Australian Bankers' Association chief executive Anna Bligh is confident APRA will exercise these powers prudently.

"While they are very strong and unusual powers, banks don't expect them to be used other than in exceptional and necessary cases," Ms Bligh told AAP.

However, she said there were concerns among smaller banks that these provisions, if widely used, could make them less competitive when seeking high-calibre staff.

The move comes as APRA launched an inquiry into Commonwealth Bank after a series of issues raised concerns about its governance, culture and accountability.

CBA is also being prosecuted by money moving regulator AUSTRAC over alleged money laundering and being investigated by corporate regulator ASIC for possible breaches of disclosure obligations.

Labor frontbencher Brendan O'Connor says a week does not go by without another crisis hitting the banking sector.

"This has gone on for far too long ... clearly, there are some systemic problems in the sector which can only be dealt with by a proper investigation with the power of the royal commission," he said.

The government has repeatedly dismissed the idea of an industry-wide royal commission.


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Published 29 August 2017 3:50pm
Source: AAP


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