APRA and ASIC Propose FAR Streamlining

The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have launched a consultation on proposed changes to streamline aspects of the Financial Accountability Regime (FAR), aiming to reduce regulatory burden for entities while maintaining strong accountability standards.

The FAR, which was enacted in September 2023, was designed to strengthen governance, transparency and individual accountability across APRA-regulated financial institutions. It requires banks, insurers and superannuation trustees to clearly allocate responsibility among their directors and most senior executives, meet specified accountability and notification obligations, and defer a portion of variable remuneration for accountable persons.

The regulators propose removing “key functions” from the information that entities must report for inclusion in the Register of accountable persons. Currently, firms must identify which prescribed key functions are assigned to each accountable person. The regulators say this provides useful context but is not necessary to identify accountable persons or understand their areas of accountability.

The proposal would also simplify accountability maps for enhanced entities — larger firms subject to more stringent FAR reporting requirements — by removing the expectation that they identify an accountable person’s direct reports. Because those reporting lines can change frequently, the regulators say the requirement generates repeated updates without being essential to understanding where accountability sits.

ASIC and APRA estimate the changes will reduce reporting requirements for all accountable entities, covering approximately 4,500 accountable people, and halve the number of required updates to accountability maps. “These proposed changes maintain strong accountability settings while minimising reporting requirements and supporting efficiency and productivity,” said APRA Deputy Chair Therese McCarthy Hockey. “They will allow entities to spend less time on administration and more time running their businesses.”

The consultation period is open until October 2, 2026. Subject to feedback, the regulators intend to finalize the changes by the end of 2026, with the new rules expected to take effect in early 2027. The Australian government also plans to consult on broader reforms to the primary FAR legislation, which will be managed through a separate Treasury process.

In an In Focus article contributed to Starling's 2023 Compendium, Raihan Zamil and Ruth Walters, both Senior Advisors at the Financial Stability Institute, detailed the philosophy behind Individual Accountability Frameworks and reviewed how they have evolved in recent years.

"It goes without saying, but it is individuals and not abstract corporations that commit corporate wrongdoing," they wrote. "So, the question becomes, who is to blame? While individuals who commit the alleged infraction should obviously be held to account, bank executives should also be held personally accountable if they contributed to the broader context that enabled such breaches to occur or if they failed to properly oversee individuals in their areas of responsibility." ▸ Read More