The Australian Prudential Regulation Authority has disqualified around 60 superannuation and 20 general insurance personnel over the past three years as part of its application of the so-called ‘fit and proper person test’.
This fact has been revealed in the regulator’s latest Insight publication, in which it said that while APRA was prepared to consider enforceable undertakings from individuals, it favoured disqualification where criminal breaches had occurred.
It cited the instances where disqualification was preferred as being where:
* criminal breaches, dishonesty or other very serious misconduct are involved;
* the individual made personal gain and has not compensated the affected parties for their loss;
* the consequential loss or potential loss to which the individual contributed is substantial in size;
* the individual has neither acknowledged nor accepted responsibility, nor expressed remorse and contrition, for their misconduct;
* the individual has been uncooperative in dealing with the regulator;
* the individual does not agree to the enforceable undertaking being public; or
* the individual is more likely to form a future intention to seek work at a senior level in the relevant industry.
It said that of the 80 or so cases of disqualification that had occurred over the past three years, a number remained subject to appeal in the Administrative Appeals Tribunal.
APRA said that in instances of less serious misconduct, the flexibility and efficiency of an enforceable undertaking and the prospect of a more expeditious resolution helped meet APRA’s prudential objective in circumstances where the commitment of resources to complete a disqualification was also a consideration.
APRA said that the ‘fit and proper test’ was aimed at protecting policyholders and the community’s retirement savings from the risk of mismanagement.
“It is not aimed at penalising individuals who fail the test,” it said. “Even so, a potential consequence of excluding unsuitable personnel from playing key roles in these industries is that he or she may experience damage to their reputation and employment opportunities.
“Given the serious consequences of a fit and proper judgement, the relevant decision-maker is bound to consider not only the suitability of the individual, but also the severity of the consequences,” the APRA publication said.
It said this duty of care was additional to the requirement for natural justice, and that the avenues for appeal needed to be incorporated to ensure that the fit and proper process delivered fair and reasonable outcomes.
