The Australian Prudential Regulation Authority (APRA) has cautioned superannuation funds and others against relying too heavily on consultants when it comes to implementing the proposed new Financial Accountability Regime (FAR).
APRA deputy chair, Helen Rowell issued warning against letting consultants “drive” the process.
She stated that the regulator had observed that entities were more likely to have challenges implementing the Bank Executive Accountability Regime (BEAR) requirements when they engaged consultants to do it for them.
“APRA observed that the entities more likely to face challenges implementing the BEAR requirements were those that engaged consultants to do it for them, including drafting their accountability statements and maps, rather than utilising consultants to facilitate structured internal discussion and assist (rather than drive) their development,” Rowell said.
“Institutions may well wish to use external advisors to facilitate, provide structure or challenge their internal dialogue, however it remains the responsibility of each institution to own and drive its understanding of how accountability works within its organisational structure,” she said.
“Furthermore, accountable persons should be involved early and deeply in the process as they are the ones who must meet their FAR obligations and ultimately bear the risk of breaches should they not do so.”
The APRA deputy chair also pointed to some of the opposition which emerged to expanding the BEAR beyond the banking industry to superannuation and insurance but pointed to the fact that the Royal Commission had “uncovered a number of issues in superannuation and insurance requiring improvement, including fees for no service and management of conflicts of interest.”
