The Albanese 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.
The Financial Accountability Regime (the FAR) is a key recommendation of the Financial Services 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 (the BEAR), which previously only applied to the banking sector.
The FAR will apply to banks (which are currently subject to the BEAR) from 15 March 2024. It will apply to insurance and superannuation entities from 15 March 2025.
The Financial Accountability Regime (Minister) Rules 2024 (the Minister Rules) 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; and
- the threshold (based on total asset size) above which an entity is required to provide the regulators with additional accountability statements and maps.
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. The regulators have also released Regulator Rules and other material to support the industry’s transition to the FAR.
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. Entities are nevertheless expected to transition to the FAR as promptly as possible. Further information is available in the regulators’ joint letter of 5 February 2024.
