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The Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (also known as the Banking Royal Commission or the Hayne Royal Commission) made several recommendations in its final report on Australia’s financial industry.

The Commission’s recommendations included extending the Banking Executive Accountability Regime (BEAR), which applied to Authorised Deposit-Taking Institutions (ADIs), to all entities regulated by the Australian Prudential Regulation Authority (APRA).

The Commission’s recommendations to broaden the scope of APRA’s regulatory overview and co-regulation by both the Australian Securities and Investments Commission (ASIC) and APRA were aimed at strengthening accountability, responsibility, and transparency within Australia’s financial services industry.

A significant outcome of the Commission was the Financial Accountability Regime Bill 2023 (FAR), which replaces the Banking Executive Accountability Regime (BEAR) and brings an expanded scope of regulation to other financial services firms, including banking, superannuation, and insurance entities—and associated non-operating holding companies (NOHCs).

The legislation covering the FAR incorporates two pieces of legislation and three legislative instruments. The FAR Act 2023 sets out the far framework, while the minister rules prescribe positions and responsibilities that attract accountability obligations and the regulated entities that are subject to enhanced obligations under the legislation.

Join our expert panellists for this in-depth, on-demand discussion, FAR Sighted: the Changes for Australian Financial Firms.

Phil Haultain, General Counsel at GRC Solutions and Kelly-Ann McHugh, APAC Director at MyComplianceOffice (MCO), explain the implications of FAR for financial services firms, their related entities, and associated and accountable persons under the new regime.

This discussion includes:

00:00 🎦 Introduction

04:00 📚 A quick background of the FAR and key drivers for the regime’s inception.

6:33 🤔 To which firms and officers does the FAR apply? Learn the three tests that determine whether a person is deemed an accountable person of an accountable entity.

15:22 📝 Obligations under the FAR for accountable entities and accountable persons, including accountability, key personnel, notification, and deferred remuneration obligations.

32:20 🔔 Enhanced notification obligations, which include the submission of accountability statements and an accountability map to the regulator and notification of material changes within 30 days

34:36 🧾 The transitional rules for ADIs under the FAR (Consequential Amendments) Act and additional information that must be lodged relating to an ADIs accountable persons.

35:48 🔍 A deeper dive into the deferred remuneration obligations and how they impact specific accountable persons. For example, for ADIs, these obligations will first apply to the minimum deferral period that commences in the first financial year that begins after 15 September 2024. For other accountable entities, these obligations apply to minimum deferral periods that first commence on or after the 15 March 2025.

37:30 💡 The core set of obligations applying to accountable persons in being accountable for conducting business with honesty, integrity, due care, skill, and diligence, dealing cooperatively and constructively with regulators, and taking reasonable steps to prevent breaches of relevant law and protect the prudential standing and reputation of their accountable entities.

38:42 🫰 Civil penalties for failing to comply with the FAR legislation enforced by ASIC and APRA, including up to $782.5 million for corporations and $1.5 million for individuals.

40:42 🙋‍♂️ Audience questions, including referring to the FAR within internal policies and procedures.

44:14 💻 The management perspective of enhancing licensing and regulation and “fit and proper” requirements to cater to roles, functions, and responsibilities—and how regulatory technology (RegTech) can help.