General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
May 02, 2018

The APRA Chairman Wayne Byres spoke at the UNSW Center for Law Markets and Regulation Seminar in Sydney. He discussed the five main elements to the Banking Executive Accountability Regime (BEAR): registration, obligations, accountabilities, remuneration, and sanctions. He also highlighted that the BEAR formally comes into effect on July 01, 2018.

This new regime applies to the largest banks from day one; other authorized deposit-taking institutions have a another year before they are subject to the BEAR. The additional transitional provisions also exist within the legislation: from a requirement that allows authorized deposit-taking institutions three months to register their accountable persons, to allowing until the end of 2019 to accommodate the remuneration requirements in pre-existing executive employment contracts. Thus, it will be some time before the BEAR is in full force. He examined each element of the regime and elaborated on the new requirements:

  • Registration. The BEAR prescribes a set of "accountable persons" who are required to be registered with APRA before they can perform their duties, as opposed to the current process that only requires an authorized deposit-taking institution to notify APRA after an appointment. Accountable persons are deemed registered 14 days after they have lodged their registration.
  • Obligations. The new statutory obligations apply to both accountable persons and authorized deposit-taking institutions. These obligations require each to act with honesty and integrity; act with due skill, care,and diligence, and deal with APRA in an open, constructive, and cooperative way.
  • Accountabilities. Each accountable person must have an accountability statement, setting out the aspects of an institution's operations for which they are accountable. Each authorized deposit-taking institution must have an accountability map, showing how the statements come together to cover the totality of an institution's business and risks. Together, the map and accompanying statements establish clarity on the allocation of accountability across the executive team within an authorized deposit-taking institution.
  • Remuneration. The BEAR requires institutions to defer a minimum proportion of an accountable person's variable remuneration—generally 40% for executives or 60% for the CEO of a large bank—for a at least four years. It also requires institutions to have remuneration policies that provide for the reduction in variable remuneration should an accountable person fail to comply with their obligations and to exercise the provision should circumstances warrant it. The basic requirements of the BEAR—a remuneration policy and provision for the reduction of variable remuneration when warranted—are in place today. However, the BEAR introduces the prescribed minimum deferral amounts and terms.
  • Sanctions. These apply at two levels: the authorized deposit-taking institution and the individual. For authorized deposit-taking institutions, the BEAR provides a penalty regime in instances where the institution has failed to meet its obligations under the legislation.

The BEAR strengthens after-the-event sanctions that could apply if things go seriously wrong in an authorized deposit-taking institution. However, its real value is supporting the preventive role of APRA by promoting strong and clear accountability and ensuring that directors and executives who have the primary responsibility for the safe and sound operation of an institution stay focused on that task, added Mr. Byres. According to him, this has been the experience in the UK: "despite the SMR's [Senior Managers Regime] extensive penalty regime, the UK authorities have only needed to use it sparingly because the industry itself has lifted its game." He concluded that although the regulators will play their role, the industry needs to embrace this opportunity and "think beyond the BEAR necessities." 

 

Related Link: Speech

Keywords: Asia Pacific, Australia, Banking, Insurance, BEAR, Accountability Regime, Remuneration, APRA

Related Insights
News

BoE Publishes the Schedule for Statistical Reporting for 2019

BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.

January 16, 2019 WebPage Regulatory News
News

PRA Delays Final Direction on Reporting of Private Securitizations

PRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.

January 15, 2019 WebPage Regulatory News
News

SNB Updates Forms on Supervisory Reporting for Banks

SNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.

January 15, 2019 WebPage Regulatory News
News

BCBS Finalizes Market Risk Capital Framework and Work Program for 2019

BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.

January 14, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for January 2019

EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.

January 11, 2019 WebPage Regulatory News
News

PRA Proposes to Amend Supervisory Statement on Credit Risk Mitigation

PRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.

January 10, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimating Credit Loss Reserves

FASB issued a question-and-answer (Q&A) document that addresses particular issues related to the weighted average remaining maturity (WARM) method for estimating the allowance for credit losses.

January 10, 2019 WebPage Regulatory News
News

FED Updates Reporting and Supplemental Instructions for Form FR Y-9C

FED published the updated reporting instructions and supplemental instructions for the FR Y-9C reporting form. The reporting frequency for FR Y-9C is quarterly, as of the last calendar day of the quarter.

January 09, 2019 WebPage Regulatory News
News

PRA Updates Policy on Liquidity Reporting Under FSA047/048 and PRA110

PRA published the policy statement PS1/19 that provides feedback to responses to the consultation paper CP22/18 titled "Liquidity reporting: FSA047 and FSA048" and the proposal in CP16/18, which intended to correct the level of consolidation of the PRA110 reporting requirements.

January 08, 2019 WebPage Regulatory News
News

FED Proposes to Amend Company-Run Stress Testing Requirements

FED proposed to modify company-run stress testing requirements to conform with the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

January 08, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2468