Prepare now: New Financial Accountability Regime isn’t far off
(Sponsored article) When the Banking Executive Accountability Regime (BEAR) took effect in Australia in October 2018, authorised deposit institutions had a short window in which they needed to comply. It’s reasonable to expect the same will be true of the Financial Accountability Regime (FAR) when it officially becomes law.
No one knows for certain when FAR will be implemented. The original aim was for the end of 2020, but this changed in March so that financial institutions could prioritise responding to the global health crisis.
It is also important to note that there will be an implementation period after the legislation is passed.
The upshot
If you don’t want to be scrambling to comply with FAR, start preparing now. Given its broad scope and the severity of the proposed penalties for breaches, early preparation is a prudent course of action.
Steps to take now
Although the obligations currently proposed under FAR are quite broad, there are a few initial steps financial institutions will need to take and processes they will need to put in place to comply:
1. Register accountable leaders. Entities will be required to ensure that the responsibilities of “accountable persons”
(e.g., senior executives and board members) cover all aspects of the entity’s and its significant subsidiaries’ operations.
In other words, entities will need to demonstrate that responsibility for its various products and processes map to a specific leader. The sooner organisations begin sorting out those details, the better.
2. Create accountability statements. Accountability statements list and describe the responsibilities of each accountable executive. Accountable leaders must formally accept and sign off on these statements, which then must be registered with APRA and ASIC.
3. Notify regulators of changes in accountability or breaches. When they become aware of a breach of their FAR obligations, entities will need to notify APRA and ASIC of the breach within a certain amount of time. Entities will also need to notify regulators of changes in accountability—e.g., when an executive leaves an organisation and a replacement is hired.
The RSA Archer Accountability Management solution is designed to help organisations comply with BEAR, FAR and similar accountability regulations in the UK, Singapore and elsewhere. RSA Archer will hold a demonstration of this system during a webinar ‘Prepare now: The Financial Accountability Regime is coming’ on 24 September 2020 at 11.00 AM AEST.
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