On 16 June 2026, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) jointly announced a suite of changes to the Financial Accountability Regime (FAR) designed to reduce the administrative burden on regulated entities without lowering accountability standards. These reforms are a sensible recalibration of the regime's operational requirements.
Summary of key changes
The proposed reforms centre on three principal changes to the regime's regulatory architecture:
- Removal of key functions requirements from the FAR regulator rules: APRA and ASIC will remove the prescribed list of key functions that accountable entities must assign to accountable persons and record in the FAR register. Under the current framework, changes to key function assignments constitute material changes requiring notification to the Regulators, and the prescribed key function lists for ADIs, insurers and RSE licensees were only finalised in March and July 2024 respectively. Removing this layer of prescription will significantly reduce the volume of notifications entities are required to make, particularly for large groups where internal restructures and leadership transitions frequently alter key function allocations.
- Raising the materiality threshold for change notifications: The regulators will raise the threshold at which entities must notify APRA and ASIC of changes to their accountability arrangements. This will provide entities with greater flexibility to manage routine organisational changes, such as title changes, minor reporting line adjustments and intra-group transfers, without triggering formal reporting obligations through APRA Connect.
- Removal of direct reports information from accountability maps: Entities will no longer be required to include information about accountable persons' direct reports in their accountability maps. The Regulators estimate that this change alone will at least halve the number of updates entities need to make to their maps. This is a particularly welcome development for large corporate groups, where changes to direct reports were one of the most frequent triggers for map updates – often without any substantive change to the accountability framework itself.
APRA Member Therese McCarthy Hockey said:
The changes announced today get the balance right, ensuring the benefits of clarified accountabilities are retained in a proportionate way while allowing entities to get on with running their businesses."
In addition, ASIC will streamline responsible manager Australian financial services licensing requirements for FAR entities by reducing requirements to submit evidence of competence from October 2026, benefiting approximately 2,000 current AFS licensees. APRA will also consult on removing all reporting requirements under its fit and proper regime as part of its broader governance reforms (discussed further below).
APRA and ASIC intend to consult on these changes and implement them by the end of 2026 and will support the government in its legislative changes to the FAR.
A positive development for regulated entities
These reforms are a constructive step toward a more proportionate and efficient regulatory framework that prioritises meaningful accountability over administrative process.
ASIC Commissioner Kate O'Rourke noted the reforms align with ASIC's multi-year program of regulatory simplification (ASIC Report 830: Regulatory simplification progress report), highlighting ASIC's progress in making regulation clearer, more accessible and easier to navigate.
The direction of travel is consistent with developments in comparable jurisdictions. In the United Kingdom, regulators are undertaking substantive reforms to the Senior Managers and Certification Regime (SMCR), the framework upon which FAR is modelled, with a focus on cutting unnecessary complexity and halving the administrative burden for firms, while ensuring that individual accountability remains robust (source here, here and here). APRA's own Corporate Plan for 2025–26 expressly recognises the need to address overlaps between its fit and proper reporting obligations and the statutory requirements under FAR, identifying the removal of unnecessary or duplicative rules as a priority across banking, insurance and superannuation (source here). The FAR reforms announced today are a direct and welcome manifestation of that commitment.
Concurrent APRA governance reforms: Removing fit and proper reporting overlap
A significant additional development, released on the same day, is APRA's commencement of the final phase of its governance review. APRA has published an updated draft of Prudential Standard CPS 510 Governance (CPS 510) which proposes to (source here):
- Remove duplicative fit and proper reporting: with FAR reporting now in place, APRA proposes to remove routine fit and proper notification forms for responsible persons. The Regulators estimate this change would mean forms are no longer required to be submitted for approximately 6,000 individuals.
- Harmonise governance standards: the new CPS 510 combines five existing prudential standards into one, setting consistent governance minimums for all APRA-regulated entities across banking, insurance and superannuation.
- Strengthen substantive governance requirements: notwithstanding the streamlining, the updated standard also strengthens requirements for board governance, conflicts management and the fitness and propriety of directors and executives.
- Enable greater board delegation: boards will have more flexibility to delegate APRA's board requirements in other prudential standards to committees and senior management, enabling directors to focus on the matters most essential to financial and operational resilience.
APRA Chair John Lonsdale said:
Alongside lifting expectations, we've sought to strike the right balance between safety and efficiency. In allowing boards more freedom to delegate lower value compliance matters and reducing reporting, our goal is to ensure boards have capacity to direct their attention to the issues of most importance."
This consultation is open until 28 August 2026, with the final standard and related guidance planned for release in late 2026 and expected to take effect from early 2028. See our article APRA’s governance overhaul: implication for regulated entity boards .
Looking ahead
These reforms form part of the Council of Financial Regulators' broader package of actions to reduce regulatory burden and improve how regulators collect, share and use data. The forthcoming consultation on the FAR reforms will provide further detail on the revised materiality thresholds, transitional arrangements and the interaction between rule changes and the Government's legislative amendments. The CPS 510 consultation (open until 28 August 2026) will also warrant close attention from entities managing the intersection of governance and accountability obligations.
These developments will be closely monitored as the consultations progress and further guidance will follow as the final rules are confirmed. In the meantime, entities subject to FAR obligations should begin considering how these changes may affect their current compliance processes. In particular, entities should:
- Assess whether current notification and mapping processes can be simplified in anticipation of the reforms, while continuing to meet existing obligations until the changes take effect.
- Consider the implications of a shift toward 'on request' provision of accountability statements and maps for their document management and governance systems.
- Review the interaction between their FAR compliance frameworks and fit and proper reporting processes, with a view to eliminating duplication once the CPS 510 reforms are finalised.
- Engage with the APRA CPS 510 consultation and the FAR rule consultation to ensure entity-specific concerns are raised with the Regulators.
Should you require any assistance with your FAR arrangements, please let us know.