The Financial Accountability Regime (FAR) will come into force on March 15 2025 for the insurance and superannuation industry. 

FAR will apply first to the banking industry on March 15 next year, the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission (ASIC) announced last week. 

APRA and ASIC announced the start dates for FAR after legislation for the Hayne royal commission recommendation received royal assent last month. 

The two regulators have commenced joint administration of FAR and have prepared an information package to help financial services businesses get ready for the regime. 

FAR replaces and extends the Banking Executive Accountability Regime (BEAR) with significantly tougher accountability obligations. 

Unlike BEAR, which applies only to the banking sector and was overseen solely by the prudential regulator, FAR applies to all APRA-regulated entities and introduces conduct-focused prescribed responsibilities on directors and most senior executives. 

Penalties for directors and executives who fail to comply with FAR are severe. They can be penalised with a loss of income or disqualified from working in the sector. 

“Just as the BEAR has helped to sharpen risk culture and governance in the banking sector, we expect the FAR to have a similar positive impact in improving standards of accountability across insurance and superannuation,” APRA Deputy Chair Margaret Cole said. 

She says APRA is working closely with ASIC to ensure a smooth transition from BEAR to the new regime and urged industry to engage with the two regulators in the lead up to the commencement of FAR. 

ASIC Deputy Chair Sarah Court says FAR will provide accountability in relation to conduct failures. 

“We believe the regime will increase transparency and accountability in financial firms and help embed a culture of accountability for misconduct at an individual level – accountable individuals will need to understand and closely engage with their obligations under the FAR,” Ms Court said.