The Government has finalised the rules to support the full operation of the Financial Accountability Regime as it begins to come into force later this month.
A statement from Minister for Financial Services, Stephen Jones, explains the FAR is a key recommendation of the Royal Commission “…and will improve accountability for institutions and their senior executives across the banking, insurance and superannuation sectors.”
It is an expansion of the former Banking Executive Accountability Regime which previously only applied to the banking sector.
Jones says the FAR will apply to banks (which are currently subject to the BEAR) from 15 March 2024 and will apply to insurance and superannuation entities from 15 March 2025.
He says the Financial Accountability Regime (Minister) Rules 2024 prescribe a range of matters in support of the FAR, in particular:
- Responsibilities and positions of accountable entities in each sector which make someone an ‘accountable person’ subject to the FAR
- The threshold (based on total asset size) above which an entity is required to provide the regulators with additional accountability statements and maps
Jones says the government is committed to ensuring regulation is applied proportionately without compromising consumer safeguards. Following consultation, the rules have been updated to align enhanced regulation with the broader approach to regulation by APRA.
The FAR is jointly administered by APRA and ASIC and the regulators have also released Regulator Rules and other material to support the industry’s transition to the FAR.
Further Guidance
In a separate statement, ASIC and APRA say they have released final rules and further guidance to support the financial services industry in implementing the FAR.
The regulators says the FAR “…imposes a stronger responsibility and accountability framework for APRA-regulated entities in the banking, insurance and superannuation industries and their directors as well as their most senior executives.”
They say that in doing so, the FAR aims to improve the risk and governance cultures of those financial institutions.
ASIC and APRA says the release of the materials follows a joint public consultation on the draft Regulator rules, Transitional rules and ADI key functions descriptions.
They will next consult on the proposed key functions for insurance and superannuation entities.
Click here for the regulators’ Financial Accountability Regime information package.
