APRA and ASIC finalise new accountability framework for financial industry

APRA and ASIC finalise new accountability framework for financial industry | Insurance Business Australia

Insurance News

Release of finalised rules follows joint consultation

Insurance News

By
Roxanne Libatique

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have finalised the rules and provided additional guidelines for the adoption of the Financial Accountability Regime (FAR)

This new regime, slated to replace the current Banking Executive Accountability Regime (BEAR), introduces an enhanced framework for accountability and responsibility for entities regulated by APRA in the insurance, banking, and superannuation sectors, affecting their board members and top executives.

The goal behind FAR is to bolster governance and risk management practices within these institutions.

regulator rules, which set out the specifics for entries in the FAR register of accountable individuals
transitional rules, offering guidance for authorised deposit-taking institutions (ADIs) on reporting existing accountable persons under BEAR as they move to FAR
guidance on defining ADI key functions, aimed at assisting banks in the distribution of these critical roles
directions for completing reporting forms, which will aid banking entities in submitting the required details to APRA and ASIC

Consultation on Financial Accountability Regime

The release of the financial rules and further guidance comes on the heels of a joint consultation by APRA and ASIC on the draft versions of the regulator and transitional rules, along with the ADI key functions guidance.

Following the consultation, the regulators shared a joint letter highlighting the main concerns and their responses, particularly focusing on the gathering of data for the FAR register and the handling of key functions.

These rules and guidelines build upon the initial FAR information package distributed by APRA and ASIC in October.

The FAR is set to be enforced starting March 15, 2024, for the banking sector, with the superannuation and insurance sectors to follow on March 15, 2025.

The next steps involve APRA and ASIC consulting on the specific key functions for the insurance and superannuation entities, indicating a continuous effort to streamline the implementation of FAR across different sectors of the Australian financial industry.