The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have released a package of documents for consultation, to support the implementation of the Financial Accountability Regime (FAR) by the financial services industry. It will replace the Banking Executive Accountability Regime (BEAR), which came into effect on 1 July 2018 and is solely administered by APRA. In addition to authorised deposit-taking institutions (ADIs), the FAR will also apply to insurance companies, superannuation trustees and licensed non-operating holding companies (NOHCs). It will be jointly administered by APRA and ASIC.
The FAR will impose a strengthened responsibility and accountability framework for APRA-regulated entities in the insurance, banking, and superannuation industries and their directors and most senior and influential executives. In doing so, it is designed to improve the risk and governance cultures of those financial institutions. The FAR will apply to ADIs six months after the Financial Accountability Bill 2023 receives Royal Assent and to insurance and superannuation entities 18 months following Royal Assent.
To support early engagement with entities and to enable the timely implementation of the FAR, APRA and ASIC have released documents for consultation, including: proposed regulator rules that prescribe information for inclusion in the FAR register of accountable persons, including supporting detail about the ADI key function descriptions; and proposed transitional rules that prescribe information to be provided by banking entities in relation to their existing accountable persons under the BEAR at the transition point.
Insurance sector
The regulators will consult on the list of specific key functions for insurance and superannuation entities in due course. However, these entities may wish to review the Regulator rules as their key functions are likely to be similar to the list included for ADIs. The list of data items for inclusion in the FAR Register, which is set out in the Regulator rules, is relevant to all accountable entities. The closing date for submissions is 17 August 2023.
The FAR, which will be established under the Financial Accountability Regime Bill 2023 (the Bill) and Schedule 1 and Schedule 2 of the Financial Accountability Regime (Consequential Amendments) Bill 2023, aims to improve accountability standards in APRA-regulated entities, drive reform in operating culture and reinforce the standards of conduct expected by the Australian community. Further industry engagement will follow after the Bill is passed by Parliament and receives Royal Assent.
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