25 September 2023

Small banks to BEAR all for APRA

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The Australian Prudential Regulation Authority (APRA) has released an information paper for the smaller banks and lending organisations to ensure they meet their obligations under new accountability rules for senior bank personnel.

The Banking Executive Accountability Regime (BEAR) which establishes heightened standards of accountability among these organisations and their most senior executives and directors, came into force for the larger banks on 1 July this year. It will apply to all others from 1 July 2019.

The regime was established under legislation and is administered and enforced by APRA.

The information paper, based on APRA’s experience implementing the regime for the bigger banks, is aimed at assisting others to prepare to implement the BEAR.

It clarifies APRA’s expectations of how an authorised deposit-taking institution (ADI) can effectively implement the accountability regime.

This includes identifying and registering accountable persons; creating and submitting an accountability statement for each accountable person; and establishing a remuneration policy requiring that a portion of accountable persons’ variable remuneration be deferred for a minimum of four years and reduced commensurate with any failure to meet their obligations.

It expects APRA to be notified of any accountability-related changes or breaches of accountability obligations.

Chair of APRA, Wayne Byres (pictured) said the BEAR presented an opportunity for a major strengthening of accountability among the directors and senior executives of ADIs.

“Many problems that have arisen in the financial system over recent years have had, at their heart, organisational complexity and diffused responsibility,” Mr Byres said.

“By effectively implementing the BEAR, ADIs will genuinely enhance their governance and risk management through much clearer understanding and agreement on individual accountabilities.”

APRA’s 27-page information paper can be accessed at this PS News link.

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