New regime to strengthen accountability framework for Australia’s financial institutions

The Financial Accountability Regime (FAR) is effective beginning 15 March.

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) announced more details to aid banks, insurers, and superannuation trustees in preparing for the implementation of the Financial Accountability Regime (FAR).

FAR, effective from 15 March, for banks and one year later for the insurance and superannuation sectors, introduces a strengthened framework of responsibility and accountability.

It aims to enhance the risk governance cultures of APRA-regulated entities, their directors, and senior executives.

The information package comprises various guidance materials relevant to all industries:

An information paper designed to assist entities and their accountable persons in understanding and fulfilling their obligations under FAR.
An updated accountability statement guide and template to aid entities subject to FAR's enhanced notification obligations in preparing accountability statements.
Reporting form instructions to support entities in reporting FAR breaches to APRA and ASIC.

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Furthermore, the information package includes a consultation specifically targeting insurance and superannuation entities. This consultation entails:

A joint letter introducing the consultation package and providing guidance on the necessary steps insurance and superannuation entities should take before FAR's commencement on 15 March.
Proposed amendments to the Regulator rules and draft descriptions of key functions for insurance and superannuation entities.

The consultation seeks industry feedback on the proposed list of key functions for these sectors and the accompanying key function descriptions by 19 April. Both regulators plan to continue engaging with the industry throughout the consultation and implementation phases in the coming months.