Revised Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)
Chapter 3 Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017
3.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
3.2 This Bill amends the Banking Act to establish the BEAR. The BEAR is a strengthened responsibility and accountability framework for the most senior and influential directors and executives in ADI groups.
3.3 To support the BEAR, the Bill gives APRA new and strengthened powers.
Human rights implications
3.4 This Bill engages the following human rights and freedoms:
- the imposition of strict liability for an offence;
- the right against self-incrimination under article 14(3)(g) of the International Covenant on Civil and Political Rights (ICCPR); and
- the right to protection from arbitrary or unlawful interference with privacy under article 17 of the ICCPR.
Assessment of civil penalties
3.5 Practice Note 2: Offence provisions, civil penalties and human rights observes that civil penalty provisions may engage criminal process rights under Articles 14 and 15 of the International Covenant on Civil and Political Rights (ICCPR), regardless of the distinction between criminal and civil penalties in domestic law. This is because the word 'criminal' has an autonomous meaning in international human rights law. When a provision imposes a civil penalty, an assessment is therefore required as to whether it amounts to a 'criminal' penalty for the purposes of the Articles 14 and 15 of the ICCPR.
3.6 The civil penalty provisions in the Bill (which are in new section 37G) should not be considered 'criminal' for the purposes of international human rights law.
3.7 While the civil penalty provisions included in the Bill are intended to deter people from non-compliance with the obligations imposed by the BEAR, none of the civil penalty provisions carry a penalty of imprisonment and there is no sanction of imprisonment for non-payment of any penalty. The statement of compatibility therefore proceeds on the basis that the civil penalty provisions in the Bill do not create criminal offences for the purposes of Articles 14 and 15 of the ICCPR.
Strict liability offences
3.8 The Bill imposes a strict liability offence where an ADI appoints a person disqualified under the BEAR into an accountable person role, including on a temporary basis.
3.9 By providing for a strict liability offence, the Bill provides that it will not be necessary for the prosecution to prove fault as part of the offence. This approach is appropriate as there is no ambiguity as to whether a person is disqualified or not. To allow a disqualified person to act or be an accountable person will not protect depositors' interests in an ADI.
3.10 The penalty for the offence complies with the requirements of the Government's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers as:
- the offence is not punishable by imprisonment;
- the maximum penalty is at the maximum allowable for strict liability offences (60 penalty units for individuals (currently $12,600)); and
- the harm to depositors and financial stability is so significant that fault should not be an element of the offence.
Right against self-incrimination under article 14(3)(g) of the ICCPR
3.11 The Bill includes new examination powers. They empower an investigator appointed by APRA to require a person to attend an examination and answer the questions put to the person. APRA can also require a lawyer to provide certain documents, books or accounts. A failure to act in a certain way or provide information required is punishable by a criminal penalty of up to 30 penalty units (currently $6,300).
3.12 The new examination powers engage the right against self-incrimination under article 14(3)(g) of the ICCPR because they provide that a person cannot refuse to attend an examination and answer questions nor can the person refuse to provide accounts, books, documents or sign a record of an examination on the basis that doing so would incriminate the person.
3.13 However, the Bill balances APRA's need to access information with a natural person's right against self-incrimination by limiting the use of incriminating material supplied by the individual.
3.14 Incriminating information or documents provided (and identified as such) cannot be used against the individual in criminal proceedings or in proceedings where the person may be liable to a criminal penalty. The protection does not apply to proceedings concerning the falsity of the information or documents provided. This is consistent with sections 137.1 and 137.2 of the Criminal Code which creates offences for providing false or misleading information.
3.15 Incriminating evidence supplied by an individual can be used to investigate unlawful conduct by that person and a third party and can be used in subsequent proceedings against a third party.
3.16 Engaging the right against self-incrimination in this way is necessary and justified as the public benefit in removing the liberty outweighs the loss to the individual. The information which would be obtained by APRA is critical in it performing its regulatory functions, specifically protecting depositors in an ADI, ensuring the stability of Australia's financial system including through investigating prudential matters.
3.17 The material and evidence necessary for APRA to perform its regulatory function is likely to only be available from certain individuals in an entity.
3.18 The new information gathering powers in the Bill are therefore consistent with the right against self-incrimination under article 14(3)(g) of the ICCPR.
Right to protection from unlawful or arbitrary interference with an individual's privacy
3.19 Article 17 of the International Covenant on Civil and Political Rights (ICCPR) prohibits unlawful or arbitrary interferences with a person's privacy, family, home or correspondence. It also provides that everyone has the right to the protection of the law against such interference or attacks.
3.20 The Human Rights Committee has interpreted the term 'unlawful' to mean that no interference can take place except in cases envisaged by law, which itself must comply with the provisions, aims and objectives of the ICCPR. The Human Rights Committee has also indicated that an interference will not be considered to be 'arbitrary' if it is provided for by law and is in accordance with the provisions, aims and objectives of the ICCPR and is reasonable in the particular circumstances. 
3.21 Privacy is a concept which is broad in scope and includes a right to information privacy. The Bill directly engages the right to privacy under Article 17 of the ICCPR because it requires the provision of information by an ADI in respect of an accountable person in its employ.
3.22 Specifically, the Bill provides that an ADI must give APRA information on those performing the functions of an accountable person, which would include personal information, a statement on the roles and responsibilities of each accountable person and a map which demonstrates how an accountable person is responsible for functions across the ADI and its subsidiaries.
3.23 The circumstances in which information may be collected and used are clearly defined by the Bill and are therefore a lawful interference with the right to privacy.
3.24 Amendments to the APRA Act limit when the information collected by APRA can be shared. The circumstances are limited to a request from the individual to whom the information relates and an ADI who has applied to register a person as an accountable person and APRA is aware of a reason why the person would not be suitable as an accountable person. Otherwise the information collected by APRA will not be public.
3.25 Moreover, as it would not be possible to achieve the objectives of the Bill, namely giving APRA the ability to identify who to hold responsible where an issue arises in an ADI without collecting some information about identifiable individuals, these limitations on the right to privacy are reasonable in the circumstances. The provisions do not interfere with the right to privacy of those individuals more than is necessary to achieve the objective.
3.26 The provisions in the Bill relating to the collecting of information are therefore consistent with the right to the protection against arbitrary or unlawful interference with privacy under article 17 of the ICCPR as they are explicitly provided for in the Bill in appropriate circumstances.
3.27 The Bill is compatible with human rights because:
- the strict liability offences are appropriate and consistent with the requirements of the Government's Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers;
- the information gathering powers are consistent with the right against self-incrimination under article 14(3)(g) of the ICCPR; and
- the information gathering powers are consistent with the right to privacy under article 17 of the ICCPR.
3.28 This Bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.