BEAR in mind about accountability and governance – it is due to commence on 1 July 2019 for medium and small Authorised Deposit-taking Institutions (ADIs).
In February 2018, the Banking Executive Accountability Regime (BEAR) was enacted in Australia to establish clear accountability obligations for Authorised Deposit-taking Institutions (ADIs) and their directors and senior executives. It is also to ensure that clear consequences in the event of a material failure to comply with the BEAR requirements are clearly articulated.
At its core, BEAR requires ADIs and ADI subsidiaries to develop a robust accountability framework and formally communicate to APRA the specific accountabilities of their key executives and directors (“accountable persons”).
ADIs are required to take reasonable steps to discharge specific accountability obligations established by BEAR
Each accountable person is required to act and discharge his or her accountability obligations set out by the BEAR accordingly.
Suitable accountable persons are to be identified and nominated in accordance with the BEAR
An individual is required to be registered with APRA prior to commencing duties as an “accountable person”.
An ADI is required to provide APRA with an Accountability Statement for each accountable person which details the aspects of the ADI’s operation for which the accountable person is accountable for
An ADI is required to provide APRA with an Accountability Map illustrating how collectively the responsibilities of accountable persons cover all aspects of operations of the ADI or ADI group.
ADIs are required to defer a prescribed minimum proportion of an accountable person’s variable remuneration for a minimum of four years
An ADI’s remuneration policy must allow for meaningful downward adjustment should an accountable person fail to comply with his or her accountability obligations.
An ADI is required to provide APRA with an updated accountability statement or accountability map within 14 days after any change
ADIs must notify APRA within 14 days in the event of an individual ceasing to be an accountable person and a potential or confirmed breach of accountability obligations by the ADI or an accountable person.
Don’t poke the BEAR ...
Serious breaches of accountability obligations may result in disqualification of an accountable person and civil penalties if an ADI breaches its obligations under the BEAR.
Understand current environment and business processes
Undertake a gap analysis of current environment and practises against the new BEAR requirements
In collaboration with your management, devise a project plan to address identified gaps
Assist organisation and management in transitioning smoothly to the new regime
Assist in initiating an implementation project and provide support in project management throughout preparation, implementation and post-implementation.
Assist organisation in identifying and appointing appropriate accountable persons based on legislation and APRA registration requirement
Provide support and advisory services in development of accountability statements and accountability map
Develop an organisational accountability framework and governance structure that complement the BEAR
Provide advisory services in project management and conduct post-implementation review.
Design and deliver training to key personnel on the accountability regime and their roles and responsibilities in ensuring ongoing compliance
conduct internal audits and periodic reviews of organisation’s accountability framework and provide reasonable assurance that an ADI is in compliance with the BEAR
Make recommendations to management to continuously improve the ADI’s accountability framework so as to minimise the risks of non-compliance and breaches of accountability obligations by both ADIs and accountable persons.