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08/09/2021

Financial Accountability Regime (FAR) – Draft Legislation 2021 Update

Further to our August 2020 White Paper, Treasury has now released consultation draft legislation for the proposed Financial Accountability Regime (FAR)[1] and has indicated that legislation is expected to be passed by the end of 2021.

Significantly and fortunately, accountable persons will not be subject to penalties for breaches of their FAR obligations as was previously foreshadowed. Unlike the Banking Executive Accountability Regime (BEAR), there will no longer be any prohibition in respect to indemnification or insurance cover for an accountable person’s breach of FAR.

This paper focuses on how your professional indemnity (PI) and directors and officers (D&O) liability insurance may respond to the proposed new accountability regime.

Interested parties have until 13 August 2021 to make submissions on the proposed draft legislation.

 

[1] Also released is the Financial Accountability Regime Bill 2021 Exposure Draft Explanatory Memorandum, Joint Administration of the Financial Accountability Regime between APRA and ASIC: Information Paper dated 16 July 2021 and Financial Accountability Regime - List of Prescribed Responsibilities and Positions: Policy Proposal Paper dated 16 July 2021

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