Regulators warn of possible issues with FAR reporting

APRA deputy chair Margaret Cole and ASIC deputy chair Sarah Court have sent a letter to superannuation trustees reminding them of their obligations under the Financial Accountability Regime (FAR) before it takes effect next year.

The FAR commenced for the banking industry on 15 March 2024 and takes effect for the insurance and superannuation industries on 15 March 2025.

It imposes a strengthened responsibility and accountability framework on APRA-regulated entities, their directors, and most senior executives.

The letter outlines observations on the registration and notification lodgments made by banking entities since FAR commenced and identified areas that require further consideration.

In addition, it reiterated and highlighted for banking, insurance, and superannuation entities specific aspects consistent with previously released FAR guidance.

"Accountable entities should have robust frameworks in place to ensure that registration and notification submissions are complete and comply with applicable obligations under the FAR," the letter said.

"APRA and ASIC expect an accountable entity's board to be able to demonstrate appropriate oversight and to be prepared to attest to the adequacy of the entity's FAR framework and its compliance with FAR obligations."

The regulators said they had observed possible gaps in the assignment or notification of prescribed responsibilities, including responsibilities associated with prescribed positions.

"Accountable persons may hold general responsibilities in addition to any prescribed responsibilities and positions, and these responsibilities should be separately identified in the relevant FAR forms," the regulators said.

ASIC and APRA also noted that there were multiple accountable persons jointly holding prescribed responsibilities - something they are against.

"The regulators consider individual accountability to be the clearest form of accountability. Apart from board members, jointly held responsibilities should be kept to a minimum," they said.

Cole and Court said banking, insurance and superannuation entities are encouraged to review the observations and areas for further consideration.

"Where entities fail to comply with their obligations under the FAR, the regulators may take further action, including once the FAR takes effect for the insurance and superannuation industries," the letter read.