Chief information officers within Australia's banking sector are one of 12 categories of executive that the government wants to subject to an approval and behavioural regime by regulator APRA.
In its May federal budget, the government revealed plans to introduce a new ‘banking executive accountability regime’ (BEAR) intended to hold banks and their senior executives to account for their behaviour whilst carrying out their responsibilities.
The government today published a consultation paper [pdf] on its proposal, outlining the scheme's key features and how it should be implemented.
The regime will broadly require banks to register potential executives or directors with APRA, and provide maps of their roles and responsibilities, before they are hired so the regulator can vet them.
APRA will check whether the individual has previously been removed or disqualified from its registered executives list, and whether there have been other issues affecting the individual's suitability.
The government said this is intended to keep hiring responsibility within banks but give APRA visibility of accountable executives, and the opportunity to advise of any concerns prior to hire.
APRA will also have the power to remove or disqualify executives or directors where they "do not meet expectations".
The scheme captures oversight positions like chair roles as well as seven executive positions spanning CEO, CIO, CFO, COO, chief risk officer, and head of internal audit and head of a foreign bank branch.
Executives and directors would be expected to "act with integrity, due skill, care and diligence and be open and co-operative with APRA". APRA has asked for feedback on the specified roles, and whether any should be added or removed from the list.
A new power would also allow APRA to force a review and adjustment of an executive's renumeration where it believes it is "producing inappropriate outcomes".
The government has already announced that at least 40 percent of a bank executive's variable renumeration will be deferred for a minimum four years. That percentage rises to 60 percent for CEOs. This is intended to deter short-term focus or excessive risk-taking.
"Deferring variable remuneration is aimed at providing an appropriate period of time for risks to crystallise and for variable remuneration to be adjusted downwards as a result. The intention is to better align the realisation of risk with reward," the government's consultation paper states.
However it notes that banks might shift the balance of payment from variable to base remuneration as a result of this policy.
The regulator will additionally be able to levy fines on banks should they fail to meet their BEAR obligations, with a maximum penalty of $200 million for big banks and $50 million for smaller financial services providers.
Submissions to the consultation paper are due by 3 August 2017. The scheme would apply to all authorised deposit-taking institutions (ADIs).
"Because they provide such important services to the community, it is imperative that Australians have trust and confidence in the banking system. Banks must operate at the highest standards and meet the needs and expectations of consumers and businesses," financial services minister Kelly O'Dwyer said in a statement.
"But recurring scandals have shown that this is not always the case. So it is important that there are mechanisms in place to deter poor behaviour and ensure that banks are held to account where they fail to meet the standards expected of them."