Australia Tackles Senior Management Responsibility

The Banking Executive Accountability Regime (The BEAR) is APRA’s (Australian Prudential Regulation Authority) latest endeavour at improving the operating culture of ADIs, increasing transparency and accountability in the Australian banking sector.

The BEAR creates obligations on all Australian authorised deposit-taking institutions (ADIs) to comply with four main obligations:

  1. Accountability:Obligations of the ADI and Obligations of an Accountable Person
  2. Key Personnel:An ADI must ensure that the responsibilities of the accountable persons (as well as the accountable persons for its subsidiaries) cover all parts or aspects of the operations of the ADI and its subsidiaries
  3. Deferred Remuneration:The BEAR also focuses on remuneration of accountable persons which is based upon the achievement of specified objectives
  4. Notification:Provide APRA with Accountability Statements for each Accountable Person and an Accountability Map for the ADI and its subsidiaries. Notify APRA of certain events (e.g. accountable person change, breach of the BEAR etc)

In addition to this, APRA will have new and strengthened powers to:

  • Remove and/or disqualify persons from ADIs for breaching the BEAR
  • Seek penalties for a breach of the BEAR, ranging from $10.5 million for smaller ADIs to $210 million for larger ADIs.

 

Size Matters: Small/Medium/Large

The Government has indicated that ADI thresholds and BEAR commencement dates are as follows:

  • Small: an ADI with less than or equal to $10 billion on a three-year average of total resident assets (BEAR commencement: 1 July 2019)
  • Medium: ADI has between $10 billion and $100 billion on a three-year average of total resident assets (BEAR commencement: 1 July 2019)
  • Large: ADI is an ADI with greater than or equal to $100 billion on a three-year average of total resident assets (BEAR commencement: 1 July 2018)

The BEAR uses the ADI size to determine how certain rules are applied, including:

  • the commencement date
  • the deferral of variable remuneration
  • the penalties for breaching the BEAR

 

The BEAR Maestro Solution from Dynamic-GRC

Our BEAR Maestro-Solution helps small and medium sized ADI’s to “take reasonable steps” and meet their BEAR obligations.

We have pre-built templates for our BEAR solution which guide the “accountable person” through the BEAR requirements. In addition, our templates record the salient information, identify potential shortcoming and manage these through to resolution – we have a total solution to help you prove your BEAR compliance.

The Maestro Solution consists a number of pre-built Maestro-Templates, these templates are presented as attestations (Maestro-Forms) to respondents within the ADI and cover the following areas of the BEAR:

  • onboarding of new Accountable Persons – help ensure that they understand their obligations and those of the ADI under the BEAR;
  • conduct an annual Accountable Person review of the BEAR – help ensure that they keep up to date with the BEAR;
  • perform ongoing oversight of the BEAR by the person responsible within the ADI – perform a regular review to confirm APRA notification obligations under BEAR are being met.

As is normal with the Dynamic-GRC Maestro Solutions, each ADI can customise each Maestro-Template as they see fit or simply use as is.

 

If you want to talk with us about your BEAR requirements and how our GRC platform can help you then: