The Financial Accountability Regime (FAR) Bill 2023 and legislation for the compensation scheme of last resort (CSLR) are now before the Senate after securing passage in the House of Representatives this week.

Financial Services Minister Stephen Jones introduced the legislation earlier this month in the House of Representatives.

FAR and its Financial Accountability Regime (Consequential Amendments) Bill 2023 include an amendment proposed by Independent Senator for the ACT David Pocock.

The amendment articulates “more clearly the scope of the minister's exemption power and to provide for parliamentary oversight of the exercise of that power,” Mr Jones said in his second reading speech in the House of Representatives.

However a proposed amendment from the Greens for the legislation to include individual penalties for breaches of accountability obligations was defeated in the House of Representatives.

Labor Senator Tim Ayres, who introduced the legislation in the Senate, says the FAR bill underscores the Government's commitment to finalise the action necessary to fully address the Hayne royal commission-backed measures that will “compel” the financial services industry to act in the public's interest.

He says the Government has not adopted the Greens' recommendation as the bill “already contains effective measures to address executive failures to comply, including disqualification, loss of deferred bonuses, and individual civil penalties for assisting in an entity's contravention of its obligations”.

“These sanctions are on top of penalties for misconduct already in place in other financial services laws,” he said.

FAR is an extension of the Banking Executive Accountability Regime and will apply to all Australian Prudential Regulation Authority-regulated entities including insurance when the legislation receives Royal Assent.

It is one of the last remaining financial sector reforms recommended by the Hayne royal commission.

“The aim of the FAR is ultimately to strengthen and increase individual and entity level accountability across the financial services sector, including for non-financial conduct risk,” law firm Minter Ellison said.

Minter Ellison says FAR Bill 2023 is very similar in substance to, and essentially replaces the 2022 FAR Bill.

McCabes Principal Mathew Kaley says the Senate only has a few more sitting days this month and it seems the FAR bill will not be progressed further during that time.

“Given that an 18-month transition period remains in the bill, insurers are therefore looking towards a start date at the tail end of 2024,” he said.

Senate passage of FAR Bill 2022, which was introduced last year, stalled after the Albanese Government decided not to press ahead with the Greens’ amendment to include civil penalties of up to $1.1 million for individual executive breaches. The Bill had already progressed through the House of Representatives.