The Financial Accountability Regime (FAR) imposes personal accountability on directors and senior executives of insurers and super trustees. FAR took effect for the insurance and super sector on 15 March 2024. It replaced the older Banking Executive Accountability Regime (BEAR) and extends similar obligations to the insurance and super industries.
FAR does not directly change your policy terms or your benefit. It changes the regulatory accountability framework for the people running the insurer. The summary below sets out the key facts and what it means in practice.
What FAR is
FAR was enacted under the Financial Accountability Regime Act 2023 (Cth). It imposes:
- Accountability obligations on directors and senior executives ('accountable persons') to conduct their roles with honesty, integrity, due skill, care, and diligence.
- Key personnel obligations on the regulated entity to register accountable persons, maintain accountability statements describing each person's responsibilities, and ensure the executive accountability framework operates effectively.
- Notification obligations to notify APRA and ASIC of accountable persons, changes, and material breaches.
- Deferred remuneration obligations for variable remuneration of accountable persons, with at least 40% deferred for at least four years and subject to clawback.
FAR is jointly administered by APRA (prudential regulator) and ASIC (conduct regulator). This dual oversight reflects the dual nature of the obligations: prudential safety and consumer-conduct fairness.
When FAR applies to the insurance and super sector
- 15 March 2024: FAR commenced for the insurance and superannuation sectors. From that date, all panel life insurers and super trustees are subject to FAR.
- The banking sector had been subject to FAR since 15 March 2024 (after BEAR was replaced); the insurance and super extension took effect on the same date for the wider regulated population.
How FAR replaced BEAR
The Banking Executive Accountability Regime (BEAR) was the predecessor regime applying only to authorised deposit-taking institutions (ADIs). FAR repealed BEAR and extended the accountability framework to:
- Authorised deposit-taking institutions (banks)
- Life and general insurers
- Private health insurers
- Registrable superannuation entity licensees (RSE licensees, the trustees of super funds)
The insurance and super extension was the major change from BEAR to FAR.
What FAR means for life insurance consumers
FAR does not change your policy terms, your sum insured, or the way claims are assessed under the PDS. The regulatory effect operates upstream of consumer cover:
- Senior executive accountability: directors and senior executives of panel life insurers and super trustees are personally accountable for the operations of their areas, including claims handling, complaints management, product design, and consumer conduct.
- Clearer responsibility lines: each accountable person has a documented accountability statement registered with APRA and ASIC, making it clearer who is responsible for specific functions when issues arise.
- Deferred remuneration with clawback: variable remuneration for accountable persons is partly deferred and can be clawed back if obligations are breached, which sharpens the incentive to maintain good conduct.
- Regulator action: APRA and ASIC can take action against accountable persons individually for breaches, including disqualification from holding accountable-person roles.
How FAR sits alongside other consumer-protection frameworks
FAR is one layer in a stack of consumer protections that apply to life insurance:
- Insurance Contracts Act 1984 (Cth): governs the contract between insurer and insured, including the duty to take reasonable care not to make a misrepresentation (s20B), insurer remedies (s28, s28A-D), cancellation (s51), and utmost good faith (s29).
- Life Insurance Act 1995 (Cth): governs the life-policy contract and the regulation of life insurers.
- Life Insurance Code of Practice 2019 (LICOP): industry code committing panel insurers to claims-handling timeframes (acknowledge within 10 business days; decide within 6 months for straightforward claims, 12 months for complex), plain-English communication, and complaints handling.
- Design and Distribution Obligations (DDO) under Corporations Act Part 7.8A: requires insurers to design and distribute products consistent with the needs of identified target markets, set out in Target Market Determinations (TMDs).
- Australian Financial Complaints Authority (AFCA): external dispute resolution; complaints to AFCA are binding on insurers if the complainant accepts the determination.
- APRA prudential standards: capital adequacy, risk management, and operational standards (the LPS series of Life Insurance Prudential Standards).
FAR adds personal accountability on top of these existing frameworks. It does not replace any of them.
Where to learn more
- APRA's FAR page at apra.gov.au sets out the regime, accountable-person registration, and the deferred-remuneration rules.
- ASIC's FAR page at asic.gov.au sets out the conduct-side obligations.
- The Financial Accountability Regime Act 2023 (Cth) is available at legislation.gov.au.
- The Life Insurance Code of Practice 2019 is published by the Council of Australian Life Insurers at cali.org.au.
Common considerations
- FAR is structural regulation, not policy regulation. It changes how insurers are governed, not what your cover does.
- If you are dealing with an insurer's complaints process and feel a senior decision-maker is not taking responsibility, FAR is part of why those roles now carry personal accountability.
- For complaints, the practical pathway is unchanged: insurer's internal dispute resolution first (30 days), then AFCA if unresolved (45 days for super matters).
- ASIC MoneySmart at moneysmart.gov.au and the AFCA website at afca.org.au are the consumer-facing entry points for understanding how the protection framework applies in practice.
Regulator anchor: Financial Accountability Regime Act 2023 (Cth); jointly administered by APRA and ASIC; commenced for insurance and super on 15 March 2024; sits alongside the Insurance Contracts Act 1984, Life Insurance Act 1995, Life Insurance Code of Practice 2019, Corporations Act DDO, and AFCA.