Parliament passes FAR Act with expected remuneration provisions

On 5 September 2023, the Parliament passed the legislation to implement the Financial Accountability Regime (FAR), completing the final major recommendation made by the Banking Royal Commission.

The FAR Bill received Assent on 14 September 2023. This means that:

  • For ADIs, FAR will apply from March 2024. For new entrants after that date, FAR will apply from the time they become an ADI or authorised non-operating holding company of an ADI.
  • For the insurance and superannuation industries, FAR will apply from March 2025. For new entrants after that date, FAR will apply from the date they become licensed.

FAR replaces the old Banking Executive Accountability Regime (BEAR), which currently only applies to ADIs (see HERE). FAR extends the existing provisions of the BEAR from ADIs to all general, life and private health insurers and registered superannuation licensees (together, the Accountable Entities –┬ásee HERE).

The most contentious aspect of FAR is that it requires 40% of variable remuneration for accountable persons to be deferred and subject to malus, but in the event that there is no variable remuneration it does not require a proportion of total remuneration to be deferred. Its predecessor, BEAR, did.

© Guerdon Associates 2024
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