Planned changes to reduce compliance obligations for banks and financial services licensees
The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have announced proposed changes to the Financial Accountability Regime (FAR) aimed at reducing compliance burdens without weakening accountability standards.
Under the proposed reforms, APRA and ASIC would remove key functions requirements from the FAR regulator rules, raise the materiality threshold for notifying regulators of changes in accountability, and no longer require information on accountable persons' direct reports in accountability maps. The regulators estimate the changes would reduce reporting obligations for all accountable entities and the approximately 4,500 individuals subject to the regime. Changes to accountability maps are expected to at least halve the number of updates entities must make.
ASIC also plans to reduce requirements for responsible managers to submit evidence of competence under Australian financial services licensing rules, effective from October 2026. The change is expected to benefit approximately 2,000 current Australian financial services licensees.
APRA will separately commence consultation on removing all reporting requirements under its fit and proper regime as part of broader governance reform proposals released alongside the FAR announcement.
The measures form part of APRA and ASIC's contribution to the federal government's Better Regulation reforms, announced in the 2026–27 Budget. The Budget proposals also include legislative changes to the Financial Accountability Regime so that entities would only need to provide accountability statements and maps on request, rather than upfront, and would have more time to register accountable persons. The reforms are also part of the Council of Financial Regulators' wider programme of actions to reduce regulatory burden and improve how regulators collect, share, and use data. APRA and ASIC intend to consult on the changes and implement them by the end of 2026.
"The changes announced 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," said APRA member Therese McCarthy Hockey.
"Through our simplification work, we are focused on reducing regulatory burden while maintaining consumer protections, and that is what these reforms achieve," added Kate O'Rourke, commissioner at ASIC.
The Australian Banking Association, meanwhile, welcomed the proposals.
"This is a commonsense and practical proposal to streamline reporting requirements for banks and reduce administrative costs for regulators," said Simon Birmingham (pictured right), chief executive of the Australian Banking Association.
"It's important that regulators continue to identify areas where they can reduce unnecessary regulatory burden on banks without lowering protections for customers. FAR is an important accountability tool but it needs to be just that: focused on applying effective accountability, not excessive paper shuffling. These changes are a step in the right direction after two years of experience in standing up the regime.
"Australian banks stand ready to work with regulators on this proposal and other measures that will seek to get the balance right between compliance obligations and accountability standards."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
