Key Steps for Financial Institutions

Since the Financial Accountability Regime (FAR) went live, most organisations have now developed baseline governance processes to administer the FAR obligations. As organisations move from implementation to business as usual, we expect more time will be spent on exploring and testing reasonable steps obligations. 

Many organisations are still in the process of building out the full suite of reasonable steps guidance. We recommend organisations consider the following artefacts to support Accountable Persons (APs) to execute against obligation:

• Standardised Reasonable Steps Template: I like to refer to these as guide cards, they help APs establish baseline activities to meet obligations and identify enhancements. These “living” documents should be reviewed and updated periodically as processes evolve over time.
• Handbook: offers practical advice for APs as to what activities constitute reasonable steps, capturing them in the guide card, maintaining appropriate evidence (something we expect will evolve and be refined over time within organisations), and setting timeframes for periodic assessments to keep the guide card current.
• Attestations: from APs that might be aligned to control attestations or annual required minimum distribution (RMD) sign offs.
• Testing Plans: Formalise the independent review and assessment of reasonable steps and related documents like Accountability Statements by the appropriate team - Office of the FAR, Line 2 Risk, or Line 3 Internal Audit. An initial review post-go-live is recommended to confirm APs are on track and obligations are consistently met, facilitating prompt enhancements.

Looking ahead, digitising reasonable steps guide cards by leveraging Governance, Risk and Compliance systems and other real-time data feeds will become better practice in the industry. Some organisations have started down this road. This will provide real-time support for APs and enhance the efficiency and effective execution of accountabilities.

FAR has provided organisations with an opportunity to take stock of governance frameworks and recalibrate. This, combined with the Australian Prudential Regulation Authority’s (APRA’s) recently released Governance Review Discussion Paper, which is currently open for consultation, should prompt entities to continuously improve their governance arrangements.

We are proud to have supported a wide range of banks, insurers and super funds through the FAR implementation. We bring a pragmatic and practical approach that considers where organisations are at on their risk and governance journey. Combining this with our governance, risk and culture expertise, we are well placed to continue to support clients through their maturity journeys.