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Regulators provide cross-industry guidance in time for FAR transition

By Jessica Penny
2 minute read

Banks, insurers, and super trustees have received additional resources ahead of the Financial Accountability Regime’s (FAR) formal commencement.

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have released an information package to help prepare banks, insurers, and superannuation trustees for the commencement of the FAR.

The release of the new materials coincides with the regime’s implementation of a “strengthened responsibility and accountability framework”, aimed at enhancing the risk governance cultures among APRA-regulated entities, as well as their directors and senior executives.

As part of the package, entities will have access to an information paper that assists them in understanding and complying with their obligations under the FAR, an updated accountability and statement guide, and reporting form instructions to assist entities in reporting FAR breaches.

The FAR – which takes effect for banks from 15 March 2024 and one year later for insurers and super trustees – extends the Banking Executive Accountability Regime (BEAR) by imposing new accountability, key personnel, deferred remuneration, and notification obligations on directors and senior executives.

The Financial Accountability Regime (Minister) Rules 2024, which the regulators noted was yet to be finalised in February, were officially registered earlier this month – six months after the regime first passed Parliament.

As such, the duo opted to provide banks with additional time last month, beyond the commencement date, “to finalise compliance with the new FAR requirements in relation to submitting applications for registration of new accountable persons; and complying with core or enhanced notification obligations”.

ASIC and APRA confirmed that following the release of the minister rules, they would release, among other resources, reporting form instructions and provide further details in relation to APRA Connect FAR form availability and FAR entity profile submissions.

Also on Thursday, the regulators launched a consultation on the proposed amendments to the regulator rules and draft key functions descriptions for insurance and superannuation entities.

This included a letter which outlined steps both sectors should take ahead of the FAR’s commencement in their respective industries.

In preparing for the regime’s implementation, APRA and ASIC encouraged insurance and super entities to move beyond a focus on “just meeting minimum compliance obligations to one where entities understand, clarify and sharpen their existing accountability arrangements”.

The regulators also confirmed their intention to engage further with industry as part of the consultation and implementation process over coming months.