The federal government has imposed a $6.2 billion levy on the major banks, and has given APRA the power to strip senior executives of their bonuses.
The budget has announced the introduction of a new Banking Executive Accountability Regime that will require all senior executives to be registered with APRA.
If executives are found to be in breach of the regime, they can be deregistered and disqualified from holding executive positions – and they can be stripped of their “significant” bonuses, according to the budget papers.
Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements, said the government.
Financial institutions that are in breach of the misconduct rules also face fines, starting at $50 million for small banks and $200 million for large banks.
Treasurer Scott Morrison also announced a 6 basis point levy on the liabilities of the five Australian banks with assessed liabilities of $100 billion or more, to begin on 1 July 2017.
This measure will secure $6.2 billion over the budget and forward estimates, according to the government.
Customer deposits of less than $250,000 and additional capital requirements imposed on the banks by regulatory authorities are excluded from their assessed liabilities.
“Unlike the previous bank deposit tax, this is specifically not a levy on pensioners’ and others’ ordinary deposit accounts, nor is it on home loans,” said the budget papers.
The share prices of the big four banks fell by an average of 3 per cent on Tuesday in the lead-up to the federal budget, despite the S&P/ASX200 only falling by 0.5 per cent.
Australian Bankers' Association chief executive Anna Bligh called the levy a "tax on the economy" that "will hit Australians by hurting investment and could have unintended consequences".
"Contrary to the government’s claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system," Ms Bligh said.
"This new tax is not a well thought out policy response to a public interest issue, it is a political tax grab to cover a budget black hole."
SUBSCRIBE TO THE IFA DAILY BULLETIN
10:39Commonwealth FP adviser cops five year banBy Staff Reporter
09:45ASIC findings prompt insurer refundsBy Staff Reporter
09:39IFAs ‘ceding ground’ to institutionsBy Aleks Vickovich and Killian Plastow
17 Jan 2018ASIC accepts licence variation from HLB Mann JuddBy Staff Reporter
17 Jan 2018ANZ Wealth commences AI underwriting projectBy Staff Reporter
16 Jan 2018Reform of SMSF expat restrictions called forBy Staff Reporter
- view all