Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Act 2018 (5 of 2018)

Schedule 1   The Banking Executive Accountability Regime

Part 1   Main amendments

Banking Act 1959

1   After Part II

Insert:

Part IIAA - The Banking Executive Accountability Regime

Division 1 - Obligations under the Banking Executive Accountability Regime

Subdivision A - ADIs

37 Obligations of ADIs

(1) An ADI must comply with:

(a) its accountability obligations under Division 2; and

(b) its key personnel obligations under Division 3; and

(c) its deferred remuneration obligations under Division 4; and

(d) its notification obligations under Division 5.

(2) However, this section does not apply to:

(a) an ADI:

(i) that the Minister has exempted under section 37A; or

(ii) that is included in a class of ADIs that the Minister has exempted under section 37A; or

(b) a foreign ADI, except to the extent that it operates a branch of the foreign ADI in Australia.

37A Minister may exempt ADIs

Exemption of particular ADIs

(1) The Minister may, by written notice given to an ADI, exempt the ADI from compliance with this Part.

Class exemptions

(2) The Minister may, by legislative instrument, exempt a class of ADIs from compliance with this Part.

37AA Inconsistency with corresponding foreign laws

(1) If APRA is satisfied that an ADI would contravene a law of a foreign country if the ADI were to comply with a particular obligation under section 37, APRA:

(a) may give to the ADI a written notice specifying that obligation; and

(b) may specify in the notice:

(i) the extent to which the ADI need not comply with that obligation; and

(ii) conditions to which the notice is subject.

(2) An ADI is not required to comply with that obligation:

(a) to the extent compliance would result in the ADI contravening that law of a foreign country; or

(b) if the notice specifies the extent to which the ADI need not comply with that obligation - to the extent so specified;

if the conditions (if any) specified in the notice are complied with.

Subdivision B - Accountable persons

37B Obligations of accountable persons

(1) An accountable person must comply with his or her accountability obligations under Division 2 in relation to each of the responsibilities that cause him or her to be an accountable person of an ADI, or of a subsidiary of an ADI.

(2) However, this section does not apply to an accountable person to the extent that he or she is an accountable person of an ADI, or a subsidiary of an ADI, to which section 37 does not apply because of subsection 37(2).

37BA Meaning of accountable person

General principle

(1) An individual is an accountable person , of an ADI or a subsidiary of an ADI, if he or she:

(a) either:

(i) in the case of the ADI - holds a position in the ADI or in another body corporate of which the ADI is a subsidiary; or

(ii) in the case of a subsidiary of the ADI - holds a position in the subsidiary; and

(b) because of that position, has actual or effective senior executive responsibility:

(i) for management or control of the ADI; or

(ii) for management or control of a significant or substantial part or aspect of the operations of the ADI or the relevant group of bodies corporate that is constituted by the ADI and its subsidiaries.

Particular responsibilities

(2) Without limiting subsection (1), an individual is also an accountable person of an ADI if he or she:

(a) holds a position in, or relating to, the ADI; and

(b) because of that position, has a responsibility, relating to the ADI:

(i) of a kind set out in subsection (3); or

(ii) of a kind determined under subsection (4).

(3) For the purposes of subparagraph (2)(b)(i), the following are the responsibilities:

(a) responsibility for oversight of the ADI as a member of the Board of the ADI;

(b) senior executive responsibility for carrying out the management of all the business activities of the ADI and its subsidiaries, including:

(i) allocating to accountable persons responsibility for all parts or aspects of the relevant group of bodies corporate that is constituted by the ADI and its subsidiaries; and

(ii) reporting directly to the Board of the ADI;

(c) senior executive responsibility for management of the ADI's financial resources;

(d) senior executive responsibility for overall risk controls and/or overall risk management arrangements of the ADI;

(e) senior executive responsibility for management of the ADI's operations;

(f) senior executive responsibility for information management, including information technology systems, for the ADI;

(g) senior executive responsibility for management of the ADI's internal audit function;

(h) senior executive responsibility for management of the ADI's compliance function;

(i) senior executive responsibility for management of the ADI's human resources function;

(j) senior executive responsibility for management of the ADI's anti-money laundering function.

(4) APRA may, by legislative instrument, determine a responsibility for the purposes of subparagraph (2)(b)(ii) (other than a responsibility set out in subsection (3)).

(5) Subsection (2) does not apply in relation to a position that a person holds in an Australian branch of a foreign ADI.

Head of an Australian branch of a foreign ADI

(6) Without limiting subsection (1), an individual is also an accountable person , of an ADI that is a foreign ADI, if he or she has senior executive responsibility for the conduct of all the activities of an Australian branch of the foreign ADI.

37BB Exception for responsibilities excluded by APRA

(1) Despite section 37BA, a person is not an accountable person , of an ADI or a subsidiary of an ADI, if each of the person's responsibilities that would, apart from this section, cause the person to be an accountable person of the ADI or subsidiary is either:

(a) a responsibility excluded under subsection (2) of this section in relation to that ADI or subsidiary; or

(b) a responsibility excluded under subsection (3) of this section in relation to a class of ADIs or subsidiaries that includes that ADI or subsidiary.

(2) APRA may, by written notice given to an ADI or a subsidiary of an ADI, exclude specified responsibilities that would, apart from this section, cause any person who holds a position in, or relating to, the ADI or subsidiary to be an accountable person.

(3) APRA may, by legislative instrument, exclude specified responsibilities that would, apart from this section, cause any person who holds a position in, or relating to:

(a) an ADI included in a class of ADIs specified in the instrument; or

(b) a subsidiary an ADI included in a class of such subsidiaries specified in the instrument;

to be an accountable person.

37BC Inconsistency with corresponding foreign laws

(1) If APRA is satisfied that an accountable person, of an ADI or a subsidiary of an ADI, would contravene a law of a foreign country if he or she were to comply with a particular obligation under section 37B, APRA:

(a) may give to the accountable person a written notice specifying that obligation; and

(b) may specify in the notice:

(i) the extent to which the accountable person need not comply with that obligation; and

(ii) conditions to which the notice is subject.

(2) An accountable person is not required to comply with that obligation:

(a) to the extent compliance would result in the accountable person contravening that law of a foreign country; or

(b) if the notice specifies the extent to which the accountable person need not comply with that obligation - to the extent so specified;

if the conditions (if any) specified in the notice are complied with.

(3) APRA must give a copy of the notice to the ADI or subsidiary.

Division 2 - Accountability obligations

37C The accountability obligations of an ADI

The accountability obligations of an ADI are to take reasonable steps to:

(a) conduct its business with honesty and integrity, and with due skill, care and diligence; and

(b) deal with APRA in an open, constructive and cooperative way; and

(c) in conducting its business, prevent matters from arising that would adversely affect the ADI's prudential standing or prudential reputation; and

(d) ensure that each of its accountable persons meets his or her accountability obligations under section 37CA; and

(e) ensure that each of its subsidiaries that is not an ADI complies with paragraphs (a), (b), (c) and (d) as if the subsidiary were an ADI.

37CA The accountability obligations of an accountable person

(1) The accountability obligations of an accountable person of an ADI, or of a subsidiary of an ADI, are to conduct the responsibilities of his or her position as an accountable person:

(a) by acting with honesty and integrity, and with due skill, care and diligence; and

(b) by dealing with APRA in an open, constructive and cooperative way; and

(c) by taking reasonable steps in conducting those responsibilities to prevent matters from arising that would adversely affect the prudential standing or prudential reputation of the ADI.

(2) If more than one of the accountable persons of an ADI or a subsidiary of an ADI have the same responsibility mentioned in section 37BA in relation to the ADI or subsidiary, all of those accountable persons have the accountability obligations jointly in relation to that responsibility.

Note: Under section 37DB, APRA may direct an ADI to reallocate a responsibility of an accountable person.

37CB Taking reasonable steps

Without limiting what constitutes the taking of reasonable steps in relation to a matter for the purposes of this Division, the taking of reasonable steps in relation to that matter includes having:

(a) appropriate governance, control and risk management in relation to that matter; and

(b) safeguards against inappropriate delegations of responsibility in relation to that matter; and

(c) appropriate procedures for identifying and remediating problems that arise or may arise in relation to that matter.

Division 3 - Key personnel obligations

37D The key personnel obligations of an ADI

(1) The key personnel obligations of an ADI are:

(a) subject to subsections (2) and (3), to ensure that the responsibilities of the accountable persons of the ADI and its subsidiaries cover:

(i) all parts or aspects of the operations of the relevant group of bodies corporate that is constituted by the ADI and its subsidiaries; and

(ii) each of the responsibilities to which subsection 37BA(2) applies; and

(b) to ensure none of the accountable persons of the ADI are prohibited under section 37DA; and

(c) to comply with any directions APRA gives to the ADI under section 37DB; and

(d) to take reasonable steps to ensure that each of the ADI's subsidiaries that is not an ADI complies with paragraphs (b) and (c) as if the subsidiary were an ADI.

(2) Paragraph (1)(a) does not apply in relation to a responsibility excluded by APRA under subsection 37BB(2) or (3).

(3) If the ADI is a foreign ADI, the ADI's obligation under paragraph (1)(a) is taken to be an obligation to ensure that the responsibilities of the ADI's accountable persons cover:

(a) all parts or aspects of the operations of each Australian branch of the ADI; and

(b) for each Australian branch of the ADI, the responsibility to which subsection 37BA(6) applies.

37DA People prohibited from being an accountable person

(1) A person is prohibited from being an accountable person if the person:

(a) is not registered under Subdivision B of Division 6; or

(b) is disqualified under section 37J.

(2) However, if a person becomes an accountable person of an ADI, or a subsidiary of an ADI, by filling a temporary vacancy or a vacancy that was not foreseen at the time it arose, paragraph (1)(a) does not apply to the person until the person has been an accountable person for:

(a) 28 days; or

(b) such other period as is determined under subsection (3) or (4).

(3) APRA may, by written notice given to an ADI, determine a period for the purposes of paragraph (2)(b) in relation to the ADI or a subsidiary of the ADI.

(4) APRA may, by legislative instrument, determine a period for the purposes of paragraph (2)(b).

37DB APRA may direct an ADI to reallocate responsibilities

(1) APRA may give an ADI a written direction to reallocate a responsibility to which paragraph 37D(1)(a) applies if APRA has reason to believe that the current allocation of the responsibility is likely to give rise to a prudential risk.

(2) In deciding whether to issue a direction under subsection (1), APRA must have regard to the responsibilities of the accountable person set out in the accountability statement for the person under section 37F.

(3) The direction may specify the period within which it is to be complied with.

(4) APRA may, by written notice given to the ADI, vary the direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

(5) The direction has effect until APRA revokes it by written notice given to the ADI. APRA may revoke the direction if, at the time of revocation, it considers that the direction is no longer necessary or appropriate.

Division 4 - Deferred remuneration obligations

37E The deferred remuneration obligations of an ADI

(1) The deferred remuneration obligations of an ADI are:

(a) to ensure that, in relation to the variable remuneration of an accountable person of the ADI:

(i) the payment of a portion of that variable remuneration is deferred for a period; and

(ii) the amount of that portion is at least the amount required under section 37EB; and

(iii) that period is at least the period required under section 37EC; and

(b) to have a remuneration policy in force that requires that, if the person has failed to comply with his or her accountability obligations under section 37CA, the person's variable remuneration is to be reduced by an amount that is proportionate to the failure; and

(c) to ensure that, if the remuneration policy requires the variable remuneration to be reduced because of that failure, the amount of the reduction is not paid to the person; and

(d) to take reasonable steps to ensure that, if:

(i) variable remuneration may become payable to an accountable person of a subsidiary of the ADI; and

(ii) the subsidiary is not an ADI;

the subsidiary complies with paragraphs (a), (b) and (c) as if the subsidiary were an ADI.

(2) A reduction of variable remuneration:

(a) need not be a reduction of variable remuneration relating to a period in which the failure occurred; and

(b) may be a reduction to zero.

(3) Remuneration , of an accountable person, includes:

(a) in relation to an accountable person of an ADI - any amount of remuneration that:

(i) is paid or payable to the accountable person by a related body corporate of the ADI; and

(ii) if that related body corporate is a non-ADI holding company of the ADI - does not relate only to the accountable person holding a position in the related body corporate; or

(b) in relation to an accountable person of a subsidiary of an ADI - any amount of remuneration that:

(i) is paid or payable to the accountable person by a related body corporate of the subsidiary; and

(ii) if that related body corporate is a non-ADI holding company of the subsidiary - does not relate only to the accountable person holding a position in the related body corporate.

37EA Meaning of variable remuneration

(1) The variable remuneration of an accountable person of an ADI, or a subsidiary of an ADI:

(a) means so much of the accountable person's total remuneration as is conditional on the achievement of objectives; and

(b) includes so much of the accountable person's total remuneration as is remuneration of a kind determined under paragraph (3)(a) or (4)(a).

(2) However, remuneration of a kind determined under paragraph (3)(b) or (4)(b) is not variable remuneration of an accountable person of an ADI, or a subsidiary of an ADI.

(3) APRA may, by written notice given to an ADI, or a subsidiary of an ADI, determine that:

(a) remuneration of a particular kind, of one or more accountable persons of the ADI or subsidiary, is variable remuneration; or

(b) remuneration of a particular kind, of one or more accountable persons of the ADI or subsidiary, is not variable remuneration.

A determination under this subsection may apply to all accountable persons of the ADI or subsidiary, or be limited to a particular accountable person or class of accountable persons of the ADI or subsidiary.

(4) APRA may, by legislative instrument, determine that:

(a) remuneration of a particular kind is variable remuneration; or

(b) remuneration of a particular kind is not variable remuneration.

37EB Minimum amount of variable remuneration to be deferred

(1) The amount of an accountable person's variable remuneration that is required to be deferred under subparagraph 37E(1)(a)(ii) is as follows:

(2) For the purposes of this section, the value of variable remuneration of an accountable person of an ADI, or a subsidiary of an ADI, that has been deferred is taken to be:

(a) the value worked out, for the accountable person, in the way determined under subsection (3) or (4); or

(b) if no such determination applies in relation to the accountable person - what would have been the value of that remuneration if it had instead been paid to the person at the time the decision to grant it was made.

(3) APRA may, by written notice given to an ADI or to a subsidiary of an ADI, determine the way to work out, for the purposes of this section, the value of variable remuneration of accountable persons of the ADI or subsidiary.

(4) APRA may, by legislative instrument, determine the way to work out, for the purposes of this section, the value of variable remuneration of:

(a) accountable persons of an ADI included in a specified class of ADIs; or

(b) accountable persons of a subsidiary of an ADI included in a specified class of subsidiaries of ADIs.

37EC Minimum period of deferral

(1) The required period under subparagraph 37E(1)(a)(iii) in relation to variable remuneration of an accountable person of an ADI, or a subsidiary of an ADI, is:

(a) 4 years; or

(b) a shorter period approved by APRA under subsection (4) in relation to the variable remuneration;

starting on the day after the day on which the decision was made granting the accountable person the variable remuneration.

(2) However, if, at the end of the period under subsection (1), the ADI or subsidiary considers that the accountable person is likely to have failed to comply with his or her accountability obligations under section 37CA, that period is extended until the day the ADI or subsidiary determines whether he or she has failed to comply.

(3) An ADI may apply to APRA for APRA to approve a shorter period under subsection (4) in relation to the variable remuneration of an accountable person of an ADI, or a subsidiary of an ADI, if the ADI is satisfied that:

(a) based on the information known at the time of the application, the accountable person has complied with his or her accountability obligations under section 37CA; and

(b) it is unlikely that further information will become known, before the end of the 4 year period mentioned in paragraph (1)(a), that indicates that the accountable person did not comply with those obligations.

(4) APRA may approve a shorter period in relation to the variable remuneration of a person if APRA is satisfied that:

(a) either:

(i) the person is no longer an accountable person of the ADI or subsidiary, because of the person's death, serious incapacity, serious disability or serious illness; or

(ii) a circumstance determined under subsection (5) or (6) exists relation to the person; and

(b) the ADI or subsidiary has taken all reasonable steps to satisfy itself of the matters mentioned in paragraphs (3)(a) and (b).

(5) APRA may, by written notice given to an ADI, determine circumstances for the purposes of subparagraph (4)(a)(ii) in relation to the ADI and/or one or more subsidiaries of the ADI.

(6) APRA may, by legislative instrument, determine circumstances for the purposes of subparagraph (4)(a)(ii).

37ED Exemption for small amounts of variable remuneration

(1) Paragraph 37E(1)(a) does not apply in relation to the variable remuneration of an accountable person for a financial year if the amount of the person's variable remuneration that is required, or would apart from this section be required, under subparagraph 37E(1)(a)(ii) to be deferred for that financial year is less than:

(a) the amount determined under subsection (2); or

(b) if a determination under subsection (2) is not in force - $50,000.

(2) The Minister may, by legislative instrument, determine an amount for the purposes of paragraph (1)(a).

Division 5 - Notification obligations

37F The notification obligations of an ADI

(1) The notification obligations of an ADI are:

(a) to give to APRA a document complying with section 37FA (an accountability statement ) for each of its accountable persons, and to ensure that APRA is notified of any change to the accountability statement within the period, after the change, provided under subsection (2); and

(b) to give to APRA a document complying with section 37FB (an accountability map ), and to ensure that APRA is notified of any change to the accountability map within the period, after the change, provided under subsection (2); and

(c) to notify APRA of an event mentioned in section 37FC within the period, after the event, provided under subsection (2); and

(d) to take reasonable steps to ensure that each of its subsidiaries that is not an ADI complies with paragraphs (a) and (c) as if the subsidiary were an ADI.

(2) For the purposes of paragraph (1)(a), (b) or (c), the period is:

(a) 14 days; or

(b) such other period as determined under subsection (3).

(3) APRA may, by legislative instrument, determine, for the purposes of paragraph (2)(b), a period mentioned in paragraph (1)(a), (b) or (c).

37FA Accountability statements

(1) For the purposes of paragraph 37F(1)(a), an accountability statement of an ADI, or of a subsidiary of an ADI, for an accountable person of the ADI or subsidiary must contain a comprehensive statement of:

(a) the part or aspect of the ADI's or subsidiary's operations of which the accountable person has actual or effective responsibility for management or control; and

(b) the responsibilities of the accountable person, including any responsibilities to which paragraph 37D(1)(a) applies or subsection 37D(3) applies, as the case requires; and

(c) the matters determined by APRA under subsection (2).

(2) APRA may, by legislative instrument, determine matters for the purposes of paragraph (1)(c).

37FB Accountability map

(1) For the purposes of paragraph 37F(1)(b), an accountability map of an ADI must contain the following information:

(a) the names of all of the accountable persons of the ADI and its subsidiaries;

(b) details of the reporting lines and lines of responsibility of those accountable persons;

(c) sufficient information to identify an accountable person for each of the responsibilities to which paragraph 37D(1)(a) applies or subsection 37D(3) applies, as the case requires;

(d) information of a kind determined by APRA under subsection (2).

(2) APRA may, by legislative instrument, determine kinds of information for the purposes of paragraph (1)(d).

37FC Events for which APRA must be notified

For the purposes of paragraph 37F(1)(c), the following events must be notified to APRA by an ADI:

(a) a person ceasing to be an accountable person of the ADI or a subsidiary of the ADI;

(b) the dismissal or suspension of an accountable person by the ADI, or subsidiary of the ADI, because the person has failed to comply with his or her accountability obligations under 37CA;

(c) the reduction of the variable remuneration of a person by the ADI, or subsidiary of the ADI, because the person has failed to comply with his or her accountability obligations under section 37CA;

(d) the ADI becoming aware of:

(i) a breach by the ADI of its accountability obligations under section 37C; or

(ii) a breach by an accountable person of the ADI, or of a subsidiary of the ADI, of his or her accountability obligations under section 37CA.

Division 6 - Enforcement and administration

Subdivision A - Civil penalties

37G Pecuniary penalty for non-compliance with this Part

(1) An ADI is liable to a pecuniary penalty if:

(a) the ADI contravenes its obligations under this Part (other than this Division); and

(b) the contravention relates to prudential matters.

(2) The amount of the pecuniary penalty is an amount not exceeding:

(a) if the ADI is a large ADI - 1,000,000 penalty units; or

(b) if the ADI is a medium ADI - 250,000 penalty units; or

(c) if the ADI is a small ADI - 50,000 penalty units.

(3) The Minister may, by legislative instrument, determine:

(a) the kinds of ADIs that are large ADIs; and

(b) the kinds of ADIs that are medium ADIs; and

(c) the kinds of ADIs that are small ADIs.

(4) In determining the pecuniary penalty, the Federal Court of Australia must have regard to the impact that the penalty would have on the viability of the ADI.

(5) Subsection (4) does not limit subclause 1(3) of Schedule 2.

(6) This section is a civil penalty provision.

Subdivision B - Registration of accountable persons

37H Register of accountable persons

(1) APRA must establish and keep a register of accountable persons.

(2) The register may be kept by electronic means.

(3) The register is not a legislative instrument.

(4) The register must contain, for each accountable person:

(a) the person's name; and

(b) the date of the person's registration as an accountable person; and

(c) the date the person ceases to be an accountable person; and

(d) details of any disqualification of the person under section 21 or 37J; and

(e) details of any variation or revocation of disqualification under section 22 or 37JA; and

(f) details of any direction APRA has given in relation to the person that is:

(i) a direction under section 11CA of a kind mentioned in paragraph 11CA(2)(c) or (d); or

(ii) a direction under section 23; and

(g) such other information as APRA considers appropriate.

Note: For disclosure of information on the register, see section 56 of the Australian Prudential Regulation Authority Act 1998.

37HA Registration of a person as an accountable person

(1) An ADI may apply to APRA to register a person as an accountable person.

(2) The application must:

(a) be in the form approved in writing by APRA; and

(b) contain the information that the form requires; and

(c) include a signed declaration that the ADI is satisfied the person is suitable be an accountable person; and

(d) include the accountability statement for the person under section 37F.

(3) APRA may, by written notice given to the ADI, request the ADI to give to APRA further information in relation to the application.

(4) APRA must, within the period provided under subsection (5), register a person as an accountable person if:

(a) the application meets the requirements of subsection (2); and

(b) the ADI gives to APRA any further information requested under subsection (3) in relation to the application;

unless the ADI withdraws the application before the day of registration.

(5) The period for registration under subsection (4) is the period of 14 days after:

(a) the day the application is made; or

(b) if APRA requests the ADI to give further information under subsection (3) in relation to the application - the day the ADI gives the further information to APRA.

Subdivision C - Disqualification of accountable persons

37J APRA may disqualify an accountable person

Disqualification by APRA

(1) APRA may disqualify a person from being or acting as an accountable person, for a period that APRA considers appropriate, if APRA is satisfied that:

(a) theperson has not complied with his or her accountability obligations under section 37CA; and

(b) having regard to the seriousness of the non-compliance, the disqualification is justified.

(2) For the purposes of subsection (1), APRA may disqualify a person from being or acting as an accountable person of one or more of the following:

(a) a particular ADI;

(b) a particular subsidiary of an ADI;

(c) a class of ADIs;

(d) a class of subsidiaries of ADIs;

(e) any ADI;

(f) any subsidiary of an ADI.

Written notice

(3) APRA must give written notice of a disqualification to the person and the ADI.

(4) A disqualification takes effect on the day specified in the notice, which must be not earlier than 7 days after it is signed.

(5) Before disqualifying a person, APRA must give written notice to:

(a) the person; and

(b) the ADI;

giving each of them an opportunity to make submissions on the matter.

(6) If a submission is made to APRA in response to the notice, APRA must have regard to the submission and may discuss any matter contained in the submission with such persons as it considers appropriate for the purpose of assessing the truth of the matter.

(7) A notice given under subsection (5) to an accountable person and an ADI must state that any submissions made in response to the notice may be discussed by APRA with any other persons as mentioned in subsection (6).

(8) Part VI applies to a decision by APRA under this section to disqualify a person.

37JA APRA may vary or revoke a disqualification

(1) APRA may vary or revoke a disqualification made under section 37J on its own initiative or on application by a person disqualified under that section.

(2) A variation or revocation of a disqualification takes effect on the day on which it is made.

(3) APRA must give the person written notice of:

(a) a variation or revocation of a disqualification; or

(b) if the person applied for a disqualification to be varied or revoked - a refusal to vary or revoke the disqualification.

(4) Part VI applies to a decision by APRA under this section to:

(a) vary a disqualification; or

(b) refuse to vary or revoke a disqualification.

37JB Self-incrimination

To avoid doubt, subsection 52F(2) does not apply to APRA's consideration of whether to make a decision under section 37J or 37JA.

37JC Allowing a person disqualified by APRA to act as an accountable person

(1) An ADI, or a subsidiary of an ADI, contravenes this subsection if:

(a) a person is disqualified under section 37J; and

(b) the person is or acts as an accountable person of the ADI or subsidiary; and

(c) the person is disqualified from being or acting as an accountable person in the ADI or subsidiary; and

(d) the ADI or subsidiary allows the person to be or act as an accountable person.

Fault-based offence

(2) An ADI, or a subsidiary of an ADI, commits an offence if it contravenes subsection (1).

Penalty: 250 penalty units.

Strict liability offence

(3) An ADI, or a subsidiary of an ADI, commits an offence of strict liability if it contravenes subsection (1).

Penalty: 60 penalty units.

Division 7 - Miscellaneous

37K General administration of this Part

APRA has the general administration of this Part.

37KA Indemnifying ADIs and accountable persons

(1) A related body corporate of an ADI must not (whether by agreement or by making a payment and whether directly or through an interposed entity):

(a) indemnify the ADI against the consequences of breaching an obligation under this Part; or

(b) pay, or agree to pay, a premium for a contract insuring the ADI against the consequences of breaching an obligation under this Part.

(2) An ADI, or a related body corporate of an ADI, must not (whether by agreement or by making a payment and whether directly or through an interposed entity):

(a) indemnify a person who is or was an accountable person of the ADI against the consequences of breaching an obligation under this Part; or

(b) pay, or agree to pay, a premium for a contract insuring such a person against the consequences of breaching an obligation under this Part.

(3) This section does not apply to a liability for legal costs.

37KB Causes of action not created

This Part does not have the effect of creating a cause of action that would not have existed if this Part had not been enacted.

37KC Review of operation of Part

(1) The Minister must cause a review of the operation of this Part to be undertaken.

(2) The review must:

(a) start 3 years after the commencement of this section; and

(b) be completed within 6 months.

(3) The Minister must cause a written report about the review to be prepared.

(4) The Minister must cause a copy of the report to be laid before each House of the Parliament within 15 sitting days of that House after the Minister receives the report.