Proposed legislation for the Financial Accountability Regime (FAR) aimed at raising senior executive answerability in the insurance, banking and superannuation sectors should be passed, the Senate Economics Legislation Committee said in a report after examining the bills.

The backing came despite concerns from Greens Senator Nick McKim, who was a member of the Committee, that the measures do not go far enough to hold individuals accountable for negligent conduct.

The Committee chaired by Labor Senator Jess Walsh also gave its backing to the Compensation Scheme of Last Resort (CSLR) bill despite reservations from Coalition Senators over the scope of the financial redress program for consumers.

Bills for FAR and CSLR were introduced in parliament last month and are now before the Senate, having progressed through the House of Representatives. The Senate referred the provisions of the bills to the Committee for inquiry and to report by this month.

FAR and CSLR represents the tranche of remaining measures made by the Hayne royal commission to strengthen consumer protections and deter future financial sector misconduct.

“The translation of the royal commission’s recommendations into legislation to establish both the FAR and CSLR were welcomed by submitters,” the Committee report says.

“The committee agrees that the bills are vital to restoring trust in the financial services sector and will increase transparency and accountability and improve protections and access to redress for consumers.”

FAR is an extension of the Banking Executive Accountability Regime, applying to all Australian Prudential Regulation Authority-regulated entities. It will be jointly administered by the prudential regulator and Australian Securities and Investments Commission.

Financial Services Minister Stephen Jones has previously said FAR imposes a “strengthened responsibility and accountability” framework that will ensure that the directors and most senior and influential executives of financial institutions will be held accountable for their decisions and conduct.

But Senator McKim says the FAR bill is “all carrot, no stick” as the provisions spare finance sector executives the ignominy of being held personally accountable.

He says it is “far more disappointing” that the Labor Government has adopted the policies of the previous administration.

“The provisions to withhold up to 40% of executive bonuses for four years as a security are not sufficient,” he said in additional comments attached to the report.

“As the royal commission demonstrated only too well, it often takes a lot longer than four years for the regulators to do something about misconduct, if ever.”