The Albanese government has provided an update on the Financial Accountability Regime (FAR) that comes into force next week.
A key recommendation of the 2019 Hayne royal commission, the regime aims to improve accountability for institutions and their senior executives across the banking, insurance and superannuation sectors and expands on the former Banking Executive Accountability Regime (the BEAR), which only applied to the banking sector.
The FAR will apply to banks from 15 March 2024 and will apply to insurance and superannuation entities from 15 March 2025.
It is to be jointly administered by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC).
However, with the ministerial rules still being finalised as of February 2024, the regulators 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”.
“Notwithstanding this, given the guidance currently available, we expect entities to submit their registration applications and to make relevant notifications to us as promptly as possible, and by no later than 30 June 2024,” they said in a joint statement.
The Financial Accountability Regime (Minister) Rules 2024, signed by Minister Stephen Jones on 5 March 2024, now prescribe a range of matters in support of the FAR, particularly:
- 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.
Additionally, APRA and ASIC had released regulator rules and other material in July 2023 for consultation to support the industry’s transition to the FAR, which have now been updated to align enhanced regulation with the broader approach to regulation by APRA.
“In order to ensure a smooth transition from the BEAR to the FAR, and given the regulators had not yet released their Transitional Rules for banks, the regulators have announced a ‘no‑action position’ in relation to certain matters that depend on the Ministerial Rules for the period between 15 March and 30 June this year,” Jones said in a statement.
“Entities are nevertheless expected to transition to the FAR as promptly as possible.”
