1. Accountability layers

The Australian regulatory landscape (including industry Codes) has shifted over the years to bring in tighter personal accountability. Obligations attach to Senior Managers based on the nature and complexity of the business.

A robust risk and compliance framework protects Senior Managers as they manage the challenge of wearing multiple hats.

High-level obligations include:

1. Prudential expectations (APRA):governance, risk discipline, and ensuring the right people are in the right roles, including formal fit and proper assessments of “responsible persons”.
2. Conduct and licensing (ASIC / AFSL):if your business holds (or operates under) an AFSL, the licensee must meet the Corporations Act “general obligations”, including the obligation to deliver financial services efficiently, honestly and fairly, and to maintain organisational competence.
3. Individual accountability (FAR):for general insurers, the Financial Accountability Regime creates an enforceable accountability framework for both the entity and accountable persons (senior executives with actual/effective responsibility over substantial parts of the business).

2. APRA Prudential Standards

2.1 Fit and Proper (CPS 520): it’s not a check-the-box HR process

APRA’s Prudential Standard CPS 520 (Fit and Proper)sets minimum requirements for APRA‑regulated institutions (including general insurers) to determine whether people in positions of responsibility are fit to hold those roles.

The general insurer must maintain a Fit and Proper Policy meeting CPS 520 requirements. Fitness and propriety of a responsible person must generally be assessed before appointment and reassessed annually.

2.2 Fit and Proper is ultimately “owned” by the Board, but executed by management

CPS 520 states that the ultimate responsibility for ensuring fitness and propriety of responsible persons rests with the Board (or equivalent).

In practice, senior management must ensure board reporting is accurate, timely, and defensible, particularly where there are adverse findings, exceptions, or interim appointments.

3. FAR (Financial Accountability Regime): personal accountability for insurance executives

3.1 FAR applies to general insurers

Under the FAR Act’s simplified outline, general insurers are expressly listed as accountable entities.

3.2 Who is an “accountable person”?

The FAR Act describes an accountable person as primarily someone with actual or effective senior executive responsibility for management or control of the entity, or of a significant/substantial part or aspect of operations (including within a corporate group).

So if you run a major function: claims, underwriting, distribution, complaints, risk/compliance, IT/operations, finance, HR/people, or a large business unit, FAR may be relevant, even if your title isn’t “C-suite”.

3.3 What the entity must do under FAR (and why you’ll be involved)

The FAR framework includes:

• Accountability obligations and key personnel obligations , including ensuring responsibilities covering all parts of the business are appropriately allocated to registered accountable persons who are not disqualified;
• Deferred remuneration obligations;
• Notification obligations; and
• Civil penalties may apply if the accountable entity fails to comply with these obligations.

3.4 Practical FAR “behaviours” for senior managers

Even when the FAR paperwork is handled centrally, FAR changes what good looks like in day-to-day leadership:

• Clear responsibility boundaries (“I own this end-to-end”).
• Evidence of oversight (management information, controls assurance, issue management).
• Early escalation and documented remediation.

4. AFSL holder obligations (ASIC)

Firms operating in general insurance providing financial services (financial product advice, dealing in general insurance products including arranging or claims handling and settling) are generally required to hold an AFSL.

4.1 The headline obligation: “efficiently, honestly and fairly” (EHF)

Courts have repeatedly treated s912 A(1)(a) as imposing a real, enforceable standard requiring licensees to “do all things necessary” to ensure services are provided efficiently, honestly and fairly.

A breach of s 912 A(1)(a) is a civil penalty contravention.

Case law frequently emphasises that:

• “Efficiently, honestly and fairly” is a compendious expression with a competence dimension (and ethical dimension).
• The obligation can operate as a stand-alone statutory norm; it does not necessarily depend on proving some other legal duty was breached.

For senior managers, the practical question becomes: what controls, supervision and reporting exist to make EHF true in the lived customer journey?

4.2 Organisational competence and Responsible Managers (RG 105): names on paper are not enough

ASIC’s RG 105 frames the organisational competence obligationas the licensee’s duty under s912A(1)(e) to maintain competence, and ASIC assesses it through the knowledge and skills of “responsible managers”.

Key RG 105 expectations include:

• Responsible managers are used to demonstrate the licensee’s competence.
• You should review competence beforemaking changes such as expanding services/products or replacing a responsible manager.
• Licensees must notify ASIC if responsible managers change.

4.3 ASIC banning/disqualification risk

ASIC action in the market shows a simple but serious pattern: if a key responsible manager is banned (or exits) and the licensee does not replace them promptly, the licensee can be found to no longer meet organisational competence requirements, with the risk of licence suspension.

ASIC’s published guidance on administrative action (including banning orders) describes a range of grounds for banning, including where a person has not complied with their obligations under s 912A, or ASIC has reason to believe they will not, or not giving effect to AFCA determinations or engaging in serious misconduct.

4.4 Fit and Proper people

A Licensee’s directors and officers (and directors and officers of controlling entities) are subject to the ‘fit and proper people’, test.

ASIC must consider the specified matters in s913BB Corporations Act, including prior bans/licence history and links to AFCA determination non-compliance.

A fit and proper person has a continuous obligation to be a fit and proper person.

5. Directors and Officers obligations

Even though directors carry statutory duties, modern regulatory practice pushes expectations down to senior leaders through FAR, APRA prudential expectations, and AFSL governance.

That means senior managers must ensure that assessment outcomes, exceptions, interim arrangements, and APRA notifications are properly escalated and documented.

6. General Insurance Code of Practice (GICOP)

The GICOP contains explicit governance commitments that matter to senior managers:

• Prepare an annual compliance report to the Code Governance Committee.
• Have appropriate systems and processes in place to enable the Code Governance Committee to monitor the insurers compliance with the Code.
• Maintain a governance process to report to the Board or executive management on Code compliance.
• Report a Significant Breach of the Code to the Code Governance Committee within 10 days
• Cooperate with the Code Governance Committee in its review of the insurers compliance with the Code and its investigations of any breaches of the Code.

For senior managers, Code compliance needs the same operating rhythm as regulatory compliance: owners, controls, monitoring, board reporting, and remediation.

7. Brokers Code of Practice (Brokers Code)

The Brokers Code includes governance expectations such as embedding the Code in organisational decision making and having governance reporting to the brokers Board/executive management.

For senior managers, Code compliance needs the same operating rhythm as regulatory compliance: owners, controls, monitoring, board reporting, and remediation.

8. Privacy Act and cyber security

8.1 NDB scheme

Entities covered by the Privacy Act must report data breaches likely to result in serious harm to affected individuals under the Notifiable Data Breaches (NDB) scheme.

This requires a robust compliance framework to ensure that entities manage personal information in an open and transparent way in compliance with the Australian Privacy Principles

8.2 What cyber governance looks like for senior managers

Senior manager expectations typically include:

• A tested incident response plan (decision rights, timelines, communications).
• Third-party risk management where vendors handle claims/repair networks/customer communications.
• Executive escalation and board reporting on material incidents and control uplift.

Cyber governance spans APRA regulated insurers, AFSL Holders, Code subscribers and entities subject to the Privacy Act.

9. A practical “Senior Manager Compliance Playbook”

Below is a pragmatic checklist you can use to sanity-check whether compliance is living in your operating model rather than your policy library.

9.1 Governance, fitness and accountability (APRA + FAR)

• Fit and Proper Policy is current, applied, and evidenced.
• Annual fit and proper cadence exists and exceptions are escalated.
• APRA notifications are timely
• FAR responsibility maps are credible; accountabilities cover the whole business; accountable persons are registered and not disqualified.

9.2 AFSL governance (ASIC)

• EHF and organisational competence are embedded in controls and monitoring, not just training.
• Responsible manager coverage is robust; there’s succession planning; ASIC notifications are timely.
• Proactive management of banning/disqualification risk (e.g., what happens tomorrow if a key person is removed).
• Fit and proper people demonstrate the honesty, integrity, competence, and financial soundness to perform their role

9.3 Codes (GICOP + Brokers Code)

• Code compliance is reported to board/executive management; annual compliance reporting is prepared.
• Significant breach definitions are understood and reporting timeframes are operationalised.
• Distribution partners (brokers) are held to consistent standards where multiple codes apply.

9.4 Privacy and cyber

• Operational procedures exist to manage customers personal information
• incident and breach management procedures include privacy breaches
• Cyber governance incorporates that matters raised in recent letters to industry from ASIC and APRA regarding the use of AI

9.5 Incident, breach management and complaints

Senior Managers should ensure that the firms incident, breach and complaints management processes, procedures, systems and training are broad to encompass all obligations including APRA Prudential Standards, AFSL, Code and Privacy requirements.

Conclusion: what regulators (and customers) ultimately measure

As a senior manager, your “compliance obligations” aren’t just a list of laws and standards, they are the expectation that your area of the business is run with demonstrable competence, integrity and control.

• APRAexpects formal governance and fit-and-proper discipline that is continuous and evidenced.
• ASIC / AFSL expectations increasingly look like “prove your system works”, under a standard that courts treat as enforceable and forward‑looking.
• FARmakes accountability personal and structured, aligning responsibility mapping with enforcement and consequences.
• Codes and privacy/cyberincreasingly drive what “good outcomes” means in the customer journey, especially when things go wrong.

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