The Treasury Department is inviting submissions for draft Ministerial Rules for the Financial Accountability Regime (FAR).
The consultation follows the introduction of the FAR Bill 2022 in Parliament by Finance Services Secretary Stephen Jones. FAR legislation was introduced by the previous Morrison government, but passage was halted after Parliament was dissolved for the May general election.
The FAR Act implements the key recommendations of the Royal Hayne Commission, which called for the Banking Executive Accountability Regime to be extended to other industries regulated by the Australian Prudential Regulation Authority (APRA), including general insurance.
A Treasury Department justification states that the FAR Act introduces a new accountability system for institutions and their officers in the banking, insurance and pension sectors. The regime is jointly regulated by APRA and the Australian Securities and Investments Commission (ASIC).
Mr Jones says in a statement the ministerial rules would prescribe specific responsibilities and positions that result in an individual being subject to the FAR for each industry.
The rules also establish an increased reporting threshold, i.e. the total asset size above which a company must meet additional reporting requirements, and how a written record of an examination in a proceeding can be authenticated as prima facie evidence of the statements it has recorded.
Specifically, for general insurance, a general insurer satisfies the enhanced reporting threshold at any time during a fiscal year when its total assets at the beginning of the entity’s fiscal year are US$2 billion or more.
McCabes director Mathew Kaley says the FAR rules are mostly consistent with an earlier Treasury Department paper released last year, except in two areas related to responsible persons and non-operational holding companies.
The FAR minister’s rules do not require a responsible person to be appointed with “end-to-end product responsibility” as proposed last year.
For non-operating holding companies, it is proposed that only board members need to be appointed as accountable persons. The CEO, CFO, CRO and Head of Internal Audit do not need to be appointed as NOHC Accountable Persons as proposed last year.
The FAR law will come into force the day after Royal Assent is received and is expected to apply to general insurers 18 months after coming into force, around March 2024.
The closing date for entries is October 7th.
Click here for the synopsis draft.