1Short title
This Act is the Financial Accountability Regime Act 2023.
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Bill homepage (APH)This Act is the Financial Accountability Regime Act 2023.
Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information | ||
|---|---|---|
Column 1 | Column 2 | Column 3 |
Provisions | Commencement | Date/Details |
1. The whole of this Act | The day after this Act receives the Royal Assent. | 15 September 2023 |
This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
The objects of this Act are:
to provide for a strengthened accountability framework for:
financial entities in the banking, insurance and superannuation industries; and
persons who hold certain positions, or have certain responsibilities, related to those financial entities; and
to confer on APRA and ASIC functions and powers (including information gathering, investigation and enforcement powers) that:
relate to obligations under that framework; and
can be performed and exercised in aid of their functions and powers under other laws.
This Act establishes a strengthened accountability framework for financial entities in the banking, insurance and superannuation industries that are regulated by Acts under which APRA is the prudential or principal regulator. These entities are called accountable entities.
The framework is intended to ensure that accountable entities take reasonable steps:
to conduct their business with honesty and integrity, and with due skill, care and diligence; and
to deal with APRA and ASIC in an open, constructive and cooperative way; and
to prevent adverse effects on their prudential standing or prudential reputation; and
to ensure that their senior executives and other key personnel (called accountable persons) meet those same standards of conduct, and take reasonable steps to ensure compliance with applicable laws; and
to ensure that related entities whose business and activities materially and substantially affect the accountable entities (called significant related entities) comply with the framework in the same way as the accountable entities themselves.
Other entities that hold Australian financial services licences or Australian credit licences are not covered by the framework in this Act.
Accountable entities are subject to a series of obligations that enable oversight and enforcement by APRA and ASIC (together called the Regulator). These are enforced mainly through civil penalties for non‑compliance.
Accountable persons are also subject to obligations, which can be enforced by accountable entities through reduction of deferred remuneration, or by the Regulator through disqualification.
A range of compliance and enforcement powers are provided for, including by applying the Regulatory Powers (Standard Provisions) Act 2014.
This Act binds the Crown in each of its capacities.
This Act does not make the Crown liable to be prosecuted for an offence.
This Act extends to every external Territory.
This Act extends to acts, omissions, matters and things outside Australia.
The expression this Act includes the Regulatory Powers Act as it applies in relation to this Act (see section 8).
In this Act:
accountability map: see subsection 31(2).
accountability statement: see subsection 31(2).
accountable entity: see section 9.
accountable person: see sections 10 and 11.
ADI has the same meaning as in the Banking Act 1959.
ADI is short for authorised deposit‑taking institution.
affected person: see section 91.
annual turnover, of an accountable entity during a 12‑month period, has the same meaning as in the Corporations Act 2001.
APRA means the Australian Prudential Regulation Authority.
APRA staff member has the same meaning as in the Australian Prudential Regulation Authority Act 1998.
ASIC means the Australian Securities and Investments Commission.
ASIC staff member means a staff member within the meaning of the Australian Securities and Investments Commission Act 2001.
Australia, when used in a geographical sense, includes the external Territories.
authorised NOHC:
of an ADI—means an authorised NOHC (within the meaning of the Banking Act 1959) of the ADI; and
of a general insurer—means an authorised NOHC (within the meaning of the Insurance Act 1973) of the general insurer.
NOHC is short for non‑operating holding company.
benefit derived and detriment avoided has the same meaning as in the Corporations Act 2001.
civil penalty order has the same meaning as in the Regulatory Powers Act.
civil penalty provision has the same meaning as in the Regulatory Powers Act.
connected entity, in relation to an RSE licensee, means a connected entity (within the meaning of the Superannuation Industry (Supervision) Act 1993) of the RSE licensee.
constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.
constitutionally covered body: see section 13.
decision‑maker for a reviewable decision means:
if APRA made the reviewable decision—APRA; or
if ASIC made the reviewable decision—ASIC.
enhanced notification threshold: see subsection 31(3).
financial year, in relation to an accountable entity or significant related entity:
if the accountable entity or significant related entity is a company that is registered under the Corporations Act 2001—has the same meaning as in that Act; or
if:
the accountable entity or significant related entity is not a company that is registered under the Corporations Act 2001; and
the accountable entity or significant related entity is incorporated or registered under another law; and
a definition of financial year applies in relation to that other law;
has the same meaning as in that other law; or
in any other case—means a period of 12 months starting on 1 July.
foreign accountable entity means:
a foreign ADI (within the meaning of the Banking Act 1959); or
a foreign general insurer (within the meaning of the Insurance Act 1973); or
an eligible foreign life insurance company (within the meaning of the Life Insurance Act 1995) that is registered under section 21 of the Life Insurance Act 1995.
general insurer has the same meaning as in the Insurance Act 1973.
internal decision reviewer: see subsection 94(1).
investigator means a person the Regulator appoints under subsection 45(1).
lawyer means a duly qualified legal practitioner and, in relation to a person, means such a practitioner acting for the person.
life company means a body corporate that is registered under section 21 of the Life Insurance Act 1995.
minimum deferral period, for variable remuneration of an accountable person, has the meaning given by subsection 28(1).
Minister rules means the rules made under subsection 104(1).
officer has the same meaning as in the Corporations Act 2001.
private health insurer has the same meaning as in the Private Health Insurance (Prudential Supervision) Act 2015.
reconsideration decision means a decision made under subsection 94(2).
registered NOHC, of a life company, means a registered NOHC (within the meaning of the Life Insurance Act 1995) of the life company.
NOHC is short for non‑operating holding company.
Regulator means either APRA or ASIC, but, if the context requires the reference to be particularly to one of those bodies, then Regulator means that body.
However, ASIC is to perform functions and exercise powers under this Act only in relation to certain persons: see subsection 36(2).
Regulator rules means the rules made under subsection 105(1).
Regulatory Powers Act means the Regulatory Powers (Standard Provisions) Act 2014.
related: the question whether 2 bodies corporate are related to each other is to be determined for the purposes of this Act in the same way as for the purposes of the Corporations Act 2001.
relevant group, of an accountable entity, means the accountable entity and its significant related entities.
remuneration, of an accountable person, has a meaning affected by subsection 25(3).
reviewable decision: see section 91.
RSE licensee means a constitutional corporation, or a body corporate, that:
holds an RSE licence granted under section 29D of the Superannuation Industry (Supervision) Act 1993; and
is not the trustee of a fund that is an exempt public sector superannuation scheme (within the meaning of that Act).
significant related entity has the meaning given by section 12.
subsidiary: the question whether a body corporate is a subsidiary of another body corporate is to be determined for the purposes of this Act in the same way as for the purposes of the Corporations Act 2001.
this Act includes:
the Minister rules; and
the Regulator rules; and
the Regulatory Powers Act as it applies in relation to this Act.
variable remuneration has the meaning given by section 26.
ADIs and authorised NOHCs of ADIs
A body corporate is an accountable entity if both of the following apply to the body corporate:
it is an ADI or an authorised NOHC of an ADI;
it is a constitutionally covered body.
For when a body corporate is a constitutionally covered body, see section 13.
The ADI or authorised NOHC is an accountable entity from the start of the later of:
the day that is 6 months after the commencement of this Act; and
the day on which it becomes an ADI or authorised NOHC, as the case may be.
Other bodies corporate
A body corporate is an accountable entity if both of the following apply to the body corporate:
it is:
a general insurer; or
an authorised NOHC of a general insurer; or
a life company; or
a registered NOHC of a life company; or
a private health insurer; or
an RSE licensee;
it is a constitutionally covered body.
The body corporate is an accountable entity from the start of the later of:
the day that is 18 months after the commencement of this Act; and
the day on which it becomes a body corporate covered by the relevant subparagraph of paragraph (3)(a).
Accountable persons of accountable entities
An individual is an accountable person of an accountable entity if:
either of the following applies:
in the case of an accountable entity other than an RSE licensee—the person holds a position in the accountable entity or in another body corporate of which the accountable entity is a subsidiary;
in the case of an accountable entity that is an RSE licensee—the person holds a position in the accountable entity or in another body corporate of which the accountable entity is a connected entity; and
because of that position, the person has actual or effective senior executive responsibility:
for management or control of the accountable entity; or
for management or control of a significant or substantial part or aspect of the operations of the accountable entity or the accountable entity’s relevant group.
For the definitions of connected entity, relevant group and subsidiary, see section 8.
This section is subject to section 11 (when a person is not an accountable person).
Prescribed responsibilities and positions
An individual is an accountable person of an accountable entity if the person:
holds a position in, or relating to, the accountable entity; and
because of that position has a responsibility, relating to the accountable entity, prescribed by the Minister rules for the purposes of this paragraph.
If an individual holds a position in an accountable entity that is a position prescribed by the Minister rules for the purposes of this subsection, then:
the individual is an accountable person of the accountable entity; and
for the purposes of this Act, the responsibilities associated with that position are responsibilities that cause the individual to be an accountable person of the accountable entity.
The Minister rules:
may prescribe responsibilities relating to accountable entities for the purposes of paragraph (2)(b); and
may prescribe positions in accountable entities for the purposes of subsection (3).
For example, the Minister rules could prescribe responsibilities relating to accountable entities for the purposes of paragraph (2)(b) by reference to one or more of the following:
a level of responsibility;
responsibility for a matter;
accountable entities of a particular kind.
Accountable persons of foreign accountable entities
An individual is an accountable person of an accountable entity that is a foreign accountable entity if the person:
has a responsibility of a kind mentioned in subsection (1) or (2); or
holds a position of a kind mentioned in subsection (3);
in relation to a branch of the accountable entity that is operating in Australia.
Accountable persons of significant related entities
An individual is an accountable person of a significant related entity of an accountable entity if:
the person holds a position in the significant related entity; and
because of that position, the person has actual or effective senior executive responsibility:
for management or control of the accountable entity; or
for management or control of a significant or substantial part or aspect of the operations of the accountable entity or the accountable entity’s relevant group.
For the definitions of relevant group and significant related entity, see section 8.
Alternative tests
An individual can be an accountable person of an accountable entity (other than a foreign accountable entity) because of one or more of subsections (1), (2) and (3). An individual can be an accountable person of a foreign accountable entity only because of subsection (5).
When persons are not accountable persons
A person is not an accountable person of an accountable entity, or of a significant related entity, if each of the person’s responsibilities that would (apart from this subsection) cause the person to be an accountable person of the entity is either:
a responsibility excluded under subsection (2) in relation to the entity; or
a responsibility excluded under subsection (3) in relation to a class of accountable entities or significant related entities that includes that accountable entity or significant related entity.
For the purposes of paragraph (1)(a), the Regulator may, by written notice given to an accountable entity or a significant related entity, exclude specified responsibilities.
For the purposes of paragraph (1)(b), the Regulator rules may exclude specified responsibilities relating to:
a specified class of accountable entities; or
a specified class of significant related entities.
Relationship with other provisions
This section has effect despite section 10.
Notice not a legislative instrument
A notice under subsection (2) is not a legislative instrument.
Significant related entities of accountable entities other than RSE licensees
Subject to subsection (2), a body corporate is a significant related entity of an accountable entity that is not an RSE licensee if all of the following apply to the body corporate:
it is a subsidiary of the accountable entity;
it, or its business or activities, has (or is likely to have) an effect on the accountable entity, or the business or activities of the accountable entity, that is material and substantial;
it is a constitutionally covered body;
it is not an accountable entity itself.
For the definition of subsidiary, see section 8.
For when a body corporate is a constitutionally covered body, see section 13.
A body corporate is not a significant related entity of an accountable entity (the first accountable entity) if:
the body corporate is also a subsidiary of another accountable entity; and
that other accountable entity is a subsidiary of the first accountable entity.
Company A is a subsidiary of the authorised NOHC of an ADI, and also a subsidiary of the ADI. Both the ADI and the authorised NOHC are accountable entities. Under this subsection:
if the business of Company A has a material and substantial effect on both the ADI and the authorised NOHC—Company A would be a significant related entity only in relation to the ADI; but
if the business of Company A did not have a material and substantial effect on the ADI—Company A would not be a significant related entity in relation to either the ADI or the authorised NOHC.
Significant related entities of accountable entities that are RSE licensees
A body corporate is a significant related entity of an accountable entity that is an RSE licensee if all of the following apply to the body corporate:
it is a connected entity of the accountable entity;
it, or its business or activities, has (or is likely to have) an effect on the accountable entity, or the business or activities of the accountable entity, that is material and substantial;
it is a constitutionally covered body;
it is not an accountable entity itself.
For the definition of connected entity, see section 8.
Material and substantial effect
For the purposes of paragraphs (1)(b) and (3)(b), in determining whether a body corporate has (or is likely to have) an effect on an accountable entity, or the business or activities of an accountable entity, that is material and substantial, the following matters may be taken into account:
the nature of the body corporate’s business or activities;
the scale of the body corporate’s business or activities;
the nature and extent of any interdependency between the body corporate and the accountable entity;
any organisational, financial or administrative arrangements between the body corporate and the accountable entity;
any other relevant matter.
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