Financial Accountability Regime (FAR)
Treasury are currently consulting on the Federal Government’s proposal to extend the ADI BEAR-like accountability requirements to other APRA-regulated entities and directors/senior executives in accordance with the government's response to several Hayne Commission recommendations. This will be known as the Financial Accountability Regime (FAR). See Treasury’s Proposal Paper dated 22 January 2020 at https://treasury.gov.au/sites/default/files/2020-01/c2020-24974.pdf .
A useful comparison of BEAR to FAR is set out in Attachment A of this proposal paper – notably, the number of executive roles and responsibilities caught by the regime are to be increased, as are the actual obligations of those who are accountable persons, and the maximum penalties have increased.
The aim of FAR – as with most of the other newly introduced governance requirements post the APRA CBA Report in May 2018 and Hayne Royal Commission - is accountability and consequence. This should already be an existing focus on the governance and remuneration agendas of all major corporates in Australia, regardless of whether they operate in the financial services sector. But, this is particularly so in terms of the FAR, as the Government has indicated that following the implementation of the FAR to APRA-regulated entities, they will consult on extending it to other ASIC regulated entities outside of financial services. Therefore, all large Australian corporates should consider themselves on FAR notice.
In terms of timing, the deadline for submissions to Treasury on the proposal paper is 14 February 2020, and the Government has indicated an intention to introduce the FAR legislation in FY20.
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