ASIC and APRA announce joint consultation on the Financial Accountability Regime Regulator Rules

Recently, ASIC and APRA announced joint consultation on the Financial Accountability Regime Regulator Rules. These will initially be Transitional Rules for financial institutions with obligations under the current Banking Executive Accountability Regime (BEAR).

We’ve been sharing our thoughts about the Financial Accountability Regime (FAR) since 2021, but this latest action caught our attention for several reasons.

With Australian Parliament still at least one stage away from passing the FAR Bill, financial regulators have asserted themselves early and together. This sends a clear signal that affected organisations need to prepare for FAR implementation from the outset – effectively from now.

The scale of preparations should not be underestimated, even for institutions that feel they already have a sound risk culture and robust risk management programs. Key additions to FAR compared with BEAR include:

• It will be jointly supervised by ASIC and APRA
• More roles will be in scope, and record-keeping and reporting regarding who they and what they do is more detailed
• The ‘reasonable steps’ element shifts the burden of proof from the regulator on to institutions, who must demonstrate that they made every effort to prevent material contravention of any specified laws.

In a FAR environment, delegated authorities will require careful monitoring and proactive succession planning.

Starting points for FAR compliance include:

1. Identify your Accountable Persons. Note that there will need to be at least one for every key function
2. Update Accountability Frameworks. Include all regulatory requirements, including role attributes, related delegations, and applicable reasonable steps
3. Undertake training about what FAR is, who is directly affected, and what they should do in the context of both your sector and individual organisation.

Remember, you can’t show accountability without first ensuring capability.

For detailed information about consultation on Financial Accountability Regime Regulator Rules, refer to APRA’s dedicated webpage.

FEP is watching this space closely and is committed to keeping industry informed

We are developing products and training solutions to assist accountable entities under FAR Regulator Rules.