Mr TUDGE (Aston—Minister for Education and Youth) (09:49): I move: That this bill be now read a second time. This Financial Accountability Regime Bill 2021 establishes the Financial Accountability Regime, which replaces and extends the Banking Executive Accountability Regime following a number of recommendations from the financial services royal commission. The bill underscores the government's commitment to take action in response to the royal commission, which uncovered too many instances of misconduct across the financial sector, and highlighted that industry practices were too often not meeting community expectations. The new Financial Accountability Regime extends the existing banking sector responsibility and accountability framework to the insurance and superannuation sectors. The regime ensures that where misconduct occurs and financial institutions act below community expectations appropriate consequences will follow. I would now like to turn to the provisions of the bill. The regime imposes heightened accountability obligations for prudentially regulated financial institutions; meaning banks, insurers, and superannuation entities. These institutions are referred to as accountable entities in the regime. The regime also regulates directors and the most senior and influential executives of accountable entities, referred to as accountable persons in the regime. The regime imposes four core sets of obligations. Firstly, accountable entities and accountable persons must conduct their business in a proper manner, which includes acting with honesty and integrity, and with due skill, care and diligence; dealing with Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) in an open, constructive and cooperative way, preventing adverse impact on the accountable entities' prudential standing and preventing breaches of certain specified financial services laws by the accountable entity. Further, accountable entities must ensure clear identification of accountabilities for accountable persons in the organisation across key areas of operations, and defer at least 40 per cent of the variable remuneration of accountable persons for a minimum period of four years. Variable remuneration will be reduced where accountability obligations are breached. Ensuring there are financial consequences for accountable persons who do not meet their obligations will increase their focus on the long-term outcomes of their decisions. The regime will be supported by the imposition of notification obligations which require accountable entities to provide APRA and ASIC with certain information such as information relating to the responsibilities of their accountable persons or breaches of certain obligations by the accountable entities or their accountable persons. Both APRA and ASIC will jointly administer the regime. They will have the power to disqualify accountable persons, investigate suspected breaches of the regime, direct entities to take remedial action and apply to the Federal Court to impose a civil penalty on accountable entities. The regime will commence from 1 July 2022 for banks, and from 1 July 2023 for superannuation entities and insurers. Through this bill, the government is taking action to ensure that financial institutions operate in a manner that is consistent with community expectations. Full details of the measure are contained in the explanatory memorandum. I commend this bill to the House. Debate adjourned.