Under the Financial Accountability Regime, APRA and ASIC expect accountable entities and individuals to take reasonable steps to prevent breaches, manage risks, and ensure effective governance. FAR introduces clear accountability mapping, registration of accountable persons, and consequences where responsibilities are not properly discharged.
Expanded Answer
FAR applies to banks, insurers and superannuation trustees, and is being extended more broadly over time. It requires entities to identify accountable persons, clearly define their responsibilities, and ensure those individuals have appropriate authority and oversight. Regulators expect responsibilities to be documented and aligned with actual decision-making and control.
In practice, FAR shifts focus from collective responsibility to individual accountability. Accountable persons must take reasonable steps to ensure compliance, including maintaining effective risk management, oversight of operations, and escalation of issues. Entities must also maintain accountability statements and maps, and notify regulators of breaches or changes in roles.
Risk increases where accountability is unclear, roles are duplicated or fragmented, or individuals cannot demonstrate how they exercised oversight. FAR is closely linked to governance and compliance systems, particularly for AFS licensees interacting with APRA-regulated entities.
Why it matters
FAR increases personal accountability for senior roles. Failures in governance or oversight can now lead to individual consequences, not just organisational penalties, raising the stakes for directors, executives and responsible managers.
Practical guidance
- Map accountable persons and clearly define their responsibilities and decision-making authority.
- Document how reasonable steps are taken to manage risks and oversee operations.
- Review governance structures to ensure accountability is clear, practical and aligned with actual roles.