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

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7311