APRA and ASIC team up to manage new Financial Accountability Regime
APRA and ASIC team up to manage new Financial Accountability Regime | Insurance Business Australia
Insurance News
APRA and ASIC team up to manage new Financial Accountability Regime
Parliament passed long-awaited bill in September
Insurance News
By
Roxanne Libatique
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have commenced their joint administration of the new Financial Accountability Regime (FAR).
The FAR aims to improve the risk and governance cultures of the Australian insurance, banking, and superannuation industries – including their directors and most senior executives – by strengthening the responsibility and accountability framework for APRA-regulated entities.
the Joint Administration Agreement between APRA and ASIC outlining the framework within which they will work together to administer the FAR
a joint information paper providing guidance for deposit-taking institutions (ADIs) on transitioning from the Banking Executive Accountability Regime (BEAR) to the FAR, supported by the ADI accountability statement guidance and template
“We believe the regime will increase transparency and accountability in financial firms and help embed a culture of accountability for misconduct at an individual level – accountable individuals will need to understand and closely engage with their obligations under the FAR,” said ASIC Deputy Chair Sarah Court.
Transition from the BEAR to the FAR
The BEAR, which came into effect on July 1, 2018, was solely administered by APRA.
Replacing the BEAR, the FAR will come into effect for the banking industry on March 15, 2024, and for the insurance and superannuation industries on March 15, 2025.
Jointly administered by APRA and ASIC, the FAR will apply to insurance companies, superannuation trustees, ADIs, and licensed non-operating holding companies (NOHCs). It will also introduce conduct-focused prescribed responsibilities.
“Just as the BEAR has helped to sharpen risk culture and governance in the banking sector, we expect the FAR to have a similar positive impact in improving standards of accountability across insurance and superannuation. We are working closely with ASIC to ensure a smooth transition from the BEAR to the FAR, and we encourage industry to engage with both regulators in the lead up to the FAR commencing,” said APRA Deputy Chair Margaret Cole.
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