APRA releases information paper on BEAR implementation at three large ADIs

The Australian Prudential Regulation Authority (APRA) has released an information paper detailing the findings from its review of the implementation of the Banking Executive Accountability Regime (BEAR) by three of Australia’s largest authorised deposit-taking institutions (ADIs). 

APRA completed its implementation review of the BEAR at Australia and New Zealand Banking Group Limited (ANZ), Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) in February 2020. Westpac Banking Corporation was not included due to an ongoing investigation into potential breaches of the Banking Act 1959.

APRA’s review found that all three of the large ADIs had designed adequate frameworks to implement the BEAR and that this has helped to deliver:

• greater clarity and transparency of individual accountabilities at ADIs;
  
   
• sharpened challenge by boards on actions taken by accountable persons to meet their obligations; and
  
   
• more targeted engagement between APRA and ADIs to deliver prudential outcomes.

As at February 2020, APRA considered that CBA had the most developed approach to implement the BEAR, but that all of the ADIs had further work to achieve clearer and more transparent accountability practices.

All of the ADIs have taken actions and made commitments to address the feedback received. This includes actions and commitments to increase support for implementation of the BEAR, to enhance the use of scenario testing to clarify roles and responsibilities, and to further integrate their breach and consequence management framework with their remuneration frameworks. APRA will assess the effectiveness of these actions and outcomes, and will continue to monitor progress through its ongoing supervisory activities.   

The BEAR is a key regulatory lever for APRA to drive action from ADIs and accountable persons. This information paper shares entity-specific observations and examples of better practice identified in the review as part of APRA’s strategy to transform governance, risk culture, remuneration and accountability (GCRA) across all regulated entities.

The information paper is available on the APRA website at: Banking Executive Accountability Regime.