Featured Product

    Pat Brennan of APRA Speaks on Implementation and Next Steps for BEAR

    October 23, 2018

    Pat Brennan, Executive General Manager Policy and Advice Division of APRA, examined how APRA expects authorized deposit-taking institutions to implement and maintain the Banking Executive Accountability Regime (BEAR) regime. He highlighted that BEAR is relevant for all authorized deposit-taking institutions, regardless of their size and complexity. He also added that APRA recently released an information paper on the implementation of BEAR and it will be releasing additional information on the enforcement of this regime in due course.

    Mr. Brennan emphasized that the obligations of both the authorized deposit-taking institutions and their accountable persons are to deal with APRA openly, constructively, and cooperatively; authorized deposit-taking institutions must and take steps to prevent matters that would adversely affect their prudential standing or prudential reputation. In addition, an authorized deposit-taking institution is required to take reasonable steps to ensure its accountable persons meet their accountability obligations. He further explained that BEAR requires authorized deposit-taking institutions to identify who is accountable for each area. All accountable persons are required to have an accountability statement describing their areas of responsibility and this statement must be provided to APRA. BEAR requires that each authorized deposit-taking institution should provide to APRA an accountability map showing lines of reporting and responsibility. He added “... at the center of identifying and documenting accountability, there is proportionality in the regime; it is not a case of one size fits all. The clearer the starting point on accountability, consistent with good governance and a strong risk culture, the more straightforward implementing BEAR will be.”

    Next, Mr. Brennan stated that an accountability statement needs to be a clear articulation of what an individual is accountable for in practice and the outcome expected of each responsibility. Given BEAR is a prudential regime, attention may be given to the allocation of key functions of prudential significance, including accountability for the management of prudential risks with respect to those responsibilities. These statements will generally reflect individual accountability. While joint accountability is recognized in the BEAR regime, in practice areas of presumed joint accountability can often be found to be suitably distinct through the process of preparing clearly articulated accountability statements. Where joint accountability genuinely exists, however, this should be explicitly identified and defined. APRA expects the accountable persons to be closely involved in the development of their accountability statement, as, at the time of registration, the accountable person will sign his/her statement.

    He added that BEAR requires a minimum portion, most commonly 40%, of an accountable person’s variable remuneration to be deferred for a minimum of four years. It also requires authorized deposit-taking institutions to have remuneration policies that provide for the reduction in variable remuneration if an accountable person fails to meet obligations; authorized deposit-taking institutions can exercise this provision if circumstances warrant it. APRA commenced industry engagement on BEAR immediately after the legislation was passed and has discussed BEAR with industry associations on a number of occasions. APRA looks forward to actively engaging with the sector more broadly on this important development. In terms of next steps, “APRA will shortly write to authorized deposit-taking institutions that will be subject to BEAR from July 01, 2019 requesting submission, in the coming months, of an initial draft list of accountable persons and draft accountability statements. APRA will provide feedback on these drafts to help prepare for formal submission as July 01, 2019 approaches.” Finally, without detracting from the effort required to implement BEAR, he emphasized it is a proportionate regime—most evidently in the numbers of accountable persons, the size of potential penalties, and the remuneration requirements.

     

    Related Link: Speech

    Keywords: Asia Pacific, Australia, Banking, BEAR, Governance, Accountability Regime, Proportionality, APRA

    Related Articles
    News

    BCBS Consults on Principles for Operational Risk and Resilience

    BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.

    August 06, 2020 WebPage Regulatory News
    News

    FSI Note Discusses Challenges Associated with COVID Relief Measures

    The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.

    August 06, 2020 WebPage Regulatory News
    News

    HKMA Announces Repayment Deferment Under Payment Holiday Scheme

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.

    August 05, 2020 WebPage Regulatory News
    News

    ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal

    The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.

    August 05, 2020 WebPage Regulatory News
    News

    MAS Announces Key Initiatives to Support Adoption of SORA

    MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.

    August 05, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    News

    PRA to Extend Temporary High Balance Coverage Amid COVID Crisis

    PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.

    August 04, 2020 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC

    EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.

    August 03, 2020 WebPage Regulatory News
    News

    EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10

    EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.

    August 03, 2020 WebPage Regulatory News
    News

    EC Sets Out Updated Technical Information for Solvency II Calculations

    EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.

    August 03, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5635