Australia: The Banking Executive Accountability Regime (BEAR)

How does BEAR affect your business?

Get ready for BEAR

The Banking Executive Accountability Regime (BEAR) will be implemented in stages from as early as 1 July 2018.

Authorised deposit-taking institutions (ADIs), their subsidiaries, Australian branches of foreign ADIs, and those in director and senior executive roles in these institutions will be required to meet heightened accountability obligations in addition to deferred remuneration and notification obligations.

Further guidance on implementation and transitional arrangements will be released by the Australian Prudential Regulation Authority (APRA).

BEAR will significantly impact many aspects of your organisation. Regardless of your size, you may need to conduct a comprehensive review of and make substantial changes to your policies and procedures relating to governance, employment, compliance/risk and training.

We anticipate the Government expanding BEAR to all other financial services entities. Accordingly, we also recommend that the broader financial services industry become BEAR ready.

To discuss how BEAR affects you and your business, submit a contact request via our online form.

Time is running out

  • If you are a large ADI, 1 July 2018 is your start date. However, some aspects of BEAR may have a longer transition period for full compliance.
  • If you are a small or medium ADI you need to be ready to start complying on 1 July 2019.

We can help you

Our multi-disciplinary team of legal and compliance experts is ready to support your organisation to embed BEAR. We will leverage our extensive global experience implementing equivalent accountability regimes for large financial institutions to provide practical insights and guidance to your team.

To help you be BEAR ready, we can provide you with dedicated regulatory services tailored specifically to the precise needs of your organisation, as well as a range of resources from our BEAR implementation and compliance Toolkit. Our BEAR Toolkit includes:

  • a project plan covering required work streams
  • accountability maps and accountability statements
  • an overarching BEAR policy together with harmonising existing breach reporting, whistle-blowing and remuneration policies
  • employment law clause banks and online training modules, a remuneration policy that reflects BEAR and advice regarding impact on employment contracts
  • practical advice and pro-forma templates for registering Accountable Persons or notifying APRA of changes to your Accountable Persons
  • breach notification templates
  • a hand-over policy and practical documents for the handing-over of responsibilities
  • BEAR awareness training for your staff
  • factsheets on various aspects of BEAR to assist you with understanding what is required and how you can ensure compliance
Have you thought about...
Whistleblowing policies and procedures?

New laws are expected to be introduced in Australia to enable greater disclosures and afford more protections for whistleblowers. Our UK experience highlighted an increase in whistleblower claims once the Senior Manager & Certification Regime (a regime similar to BEAR) was introduced.

Do you have effective whistleblower policy and procedures in place to deal with reports of misconduct relating to BEAR?

Ensuring that your Australian operations are compliant with BEAR obligations (for foreign ADIs)?

Foreign ADIs registered with APRA, and maintaining a branch in Australia, will need to comply with BEAR. This could mean that the head of your Australian operations is covered by the regime. BEAR also requires that a foreign ADI provide APRA with several Accountable Persons (depending on its presence in Australia) to ensure that its operations in Australia are appropriately covered.

If you are registered as a foreign ADI, do you understand how BEAR will impact your organization?

Having a system to adequately document decisions and keep clear audit trials to evidence your compliance with BEAR?

Accountable Persons will be held responsible for their actions and conduct within the organisation. Our UK experience shows that decision-making takes longer and there are additional administrative burdens on staff at all levels.

How adequate is your system of documenting and recording all decisions and their reasons across all levels of the organisation? Have you considered how to appropriately balance the need to document these decisions with the administrative burden of doing so?

Accountability for cybersecurity and data protection at all levels of senior management?

With the increase in global incidents of hacks and cyber-breaches into systems of financial institutions, the responsibility for protecting the information of individuals extend right up to board-level.

Data protection policies, procedures and considerations span across the entire organisation. Chief Information Officers will be Accountable Persons but directors and other senior executives and managers could also be held accountable under BEAR for decisions relating to data protection and cybersecurity if it is within their responsibilities.

Do you have data protection and cybersecurity policies and procedures that ensure all Accountable Persons have oversight and are properly equipped to deal with your organisation's cybersecurity responsibilities?

Mapping potential conflict between roles and responsibilities?

One of the objectives of BEAR is to map roles and responsibilities across ADIs to ensure that there are no gaps and ideally, no overlap, between who is accountable. This mapping will also ensure that APRA can clearly identify the specific responsibilities of each Accountable Person as well the area of the ADI that the Accountable Person has effective management and control.

How will you deal with any conflict between the roles and responsibilities of Accountable Persons in order to develop Accountability Maps and Statements for APRA?

Corporate culture rather than a box ticking exercise?

BEAR does not just mean developing controls and procedures that potentially add to costs of doing business. BEAR is about building a sustainable and healthy corporate culture that helps you maintain growth in the highly competitive business landscape.

Are you using tailored financial and non-financial incentives to support your organisation's core corporate culture values, setting the right tone from the top, building an environment for open communication and engagement with staff?

We can help you in your journey to build a sound corporate culture.

Regulation Tomorrow blog

View our latest articles relating to BEAR on our Regulation Tomorrow blog.

External sources

The Australian Prudential Regulation Authority (APRA)

Australian Bankers' Association Inc. (ABA)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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