The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have issued a joint letter detailing observations from the banking industry’s implementation of the Financial Accountability Regime (FAR).
Introduced in March 2024, the FAR aims to improve risk and governance practices across regulated entities. It will expand to cover insurance and superannuation industries by March 2025.
The letter highlighted areas requiring further attention by banking entities and reaffirms guidance previously provided under FAR. APRA and ASIC expect entities to ensure their compliance frameworks are robust and that boards demonstrate clear oversight of FAR obligations.
Key FAR compliance challenges identified
Banking entities are encouraged to evaluate their registration and notification processes under the FAR. Specific gaps in compliance include incomplete lodgments and insufficient board oversight.
The regulators emphasised the need for boards to attest to the adequacy of their FAR compliance frameworks and provide comprehensive documentation of their efforts.
For insurance and superannuation entities preparing for the regime’s implementation, the observations outlined in the letter and its appendix are critical for readiness.
Non-compliance with FAR obligations could result in regulatory action once the framework takes effect for these industries in 2025.
ASIC and APRA call for proactive engagement
APRA and ASIC have called on entities to review the observations and guidance in the published letter.
The proactive approach is designed to mitigate risks and enhance governance culture across the financial sector. The letter is available on APRA’s website, and entities are urged to act on the insights provided to avoid potential penalties.
APRA and ASIC introduced FAR to replace the Banking Executive Accountability Regime (BEAR), extending its scope to all APRA-regulated entities.
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