APRA and ASIC roll out final rules for Financial Accountability Regime

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have released final guidance for insurers and superannuation trustees as they prepare for the Financial Accountability Regime (FAR).

FAR, which is already in effect for the banking sector, will apply to the insurance and superannuation sectors starting March 15, 2025. The regime introduces a strengthened accountability and responsibility framework aimed at enhancing risk governance among APRA-regulated entities, including their directors and senior executives.

Final rules and information for the Financial Accountability Regime

Key updates in the latest guidance include:

• an amendment to the regulator rules detailing key functions information for the FAR register of accountable persons specific to the insurance and superannuation sectors. This is outlined in the Financial Accountability Regime Regulator Rules Amendment Instrument No. 1 of 2024 and the Financial Accountability Regime Act (Information for register) Regulator Rules 2024.
• a joint letter from APRA and ASIC summarising key issues from the consultation process, including the application of key functions.

See LinkedIn post here.

The updated guidance package also includes:

• a revised information paper to help entities and accountable persons understand and comply with FAR obligations, now reflecting the final key functions and their descriptions
• an updated guide and template for accountability statements to assist entities subject to FAR’s enhanced notification obligations
• reporting form instructions for insurance and superannuation entities to submit the required information to APRA and ASIC

See LinkedIn post here.

Consultation on Financial Accountability Regime

These updates follow a joint public consultation on the draft regulator rules amendment and draft key functions descriptions for the insurance and superannuation sectors.

In March, APRA and ASIC finalised the rules and released additional guidelines for the adoption of FAR.

The package included:

• regulator rules, outlining the specifics for entries in the FAR register of accountable individuals
• transitional rules, which serves as a guide for authorised deposit-taking institutions (ADIs) on reporting existing accountable persons under the Banking Executive Accountability Regime (BEAR) as they move to FAR
• guidance on defining ADI key functions
• directions for completing reporting forms, aimed at helping banking entities submit the required details to APRA and ASIC

During the same month, APRA and ASIC published additional resources, including several components designed to facilitate compliance with FAR across various sectors.

The guidance materials are available on the Financial Accountability Regime pages of the APRA and ASIC websites. For details on the regulators’ responses and non-confidential consultation submissions, refer to the FAR consultation page.

This publication completes the FAR guidance materials package. Additional information on industry engagement and implementation timelines can be found on APRA’s FAR implementation page for insurance and superannuation entities.