{"id":10128,"date":"2023-12-05T10:00:36","date_gmt":"2023-12-04T23:00:36","guid":{"rendered":"https:\/\/insight.thomsonreuters.com.au\/legal\/?p=10128"},"modified":"2023-12-07T14:41:14","modified_gmt":"2023-12-07T03:41:14","slug":"new-far-close-to-implementation-for-apra-entities","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.com.au\/legal\/posts\/new-far-close-to-implementation-for-apra-entities","title":{"rendered":"New FAR close to implementation for APRA entities"},"content":{"rendered":"
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The Financial Accountability Regime (FAR), recently established by the long-awaited Financial Accountability Regime Act 2023 (Cth) (the Act), will come into effect for the banking industry in March 2024, and the superannuation and insurance industries in 2025.<\/h4>\n

In a\u00a0media release<\/a>\u00a0published on 3 October 2023 the Australian Prudential Regulation Authority (APRA) confirmed that implementing the Financial Accountability Regime (FAR) fulfils recommendations made by the financial services Royal Commission that provisions modelled on the Banking Executive Accountability Regime (BEAR) be extended to all APRA-regulated entities.<\/p>\n<\/div>\n<\/div>\n

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In fact, the FAR replaces the BEAR, which commenced on 1 July 2018 and was administered by APRA. In addition to authorised deposit-taking institutions (ADIs), the FAR will apply to insurance companies, superannuation trustees and licensed non-operating holding companies (NOHCs). Additionally, the FAR introduces conduct-focused prescribed responsibilities, and will be jointly administered by APRA and the Australian Securities and Investments Commission (ASIC).<\/p>\n

According to s 3 of the Act, its objects are:<\/p>\n

(a)\u202f to provide for a strengthened accountability framework for:<\/p>\n

(i)\u202f financial entities in the banking, insurance and superannuation industries; and<\/p>\n

(ii)\u202f persons who hold certain positions, or have certain responsibilities, related to those financial entities; and<\/p>\n

(b)\u202f to confer on APRA and ASIC functions and powers (including information gathering, investigation and enforcement powers) that:<\/p>\n

(i)\u202f relate to obligations under that framework; and<\/p>\n

(ii)\u202f can be performed and exercised in aid of their functions and powers under other laws.<\/p><\/blockquote>\n

In turn, s 4 outlines that the framework is to ensure that accountable entities take reasonable steps:<\/p>\n

(a)\u202f\u202f\u202f\u202f to conduct their business with honesty and integrity, and with due skill, care and diligence; and\u00a0<\/em><\/p>\n

(b)\u202f\u202f\u202f\u202f to deal with APRA and ASIC in an open, constructive and cooperative way; and\u00a0<\/em><\/p>\n

(c)\u202f\u202f\u202f\u202f to prevent adverse effects on their prudential standing or prudential reputation; and\u00a0<\/em><\/p>\n

(d)\u202f\u202f\u202f\u202f to ensure that their senior executives and other key personnel (called accountable persons) meet those same standards of conduct, and take reasonable steps to ensure compliance with applicable laws; and\u00a0<\/em><\/p>\n

(e)\u202f\u202f\u202f\u202f to ensure that related entities whose business and activities materially and substantially affect the accountable entities (called significant related entities) comply with the framework in the same way as the accountable entities themselves.<\/em><\/p><\/blockquote>\n

The provision goes on to note that accountable entities are subject to a series of obligations that enable oversight and enforcement by APRA and ASIC and that accountable persons are also subject to obligations, which can be enforced by accountable entities through reduction of deferred remuneration, or by the Regulator through disqualification.<\/p>\n

The October media release by the Regulators also included:<\/p>\n