The prudential regulator has signalled that the financial services sector, as well as the regulator itself, would have to work hard to integrate the new regime by the 1 July 2018 deadline.
APRA made the comments in a submission to the Senate economics legislation committee’s inquiry into the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017.
“Following passage of the legislation, both APRA and the banking industry will have a great deal of work to do to implement the accountability regime by the scheduled commencement date of 1 July 2018,” the submission read.
“APRA expects that this timeframe will be challenging.
“For this reason, the legislation provides some additional transition arrangements in some areas.”
Described as “legislation with teeth” by Treasurer Scott Morrison, the BEAR regime will afford the regulator powers to “more easily remove or disqualify executives, dish out substantial fines to banks when they fail to crack down on bad practices, and claw back remuneration from individuals”, the Treasurer said earlier this month.
The submission outlined that the BEAR regime would require authorised deposit-taking institutions (ADIs) to identify “accountable persons within an ADI”, to have them registered with APRA prior to commencing duties, to provide APRA with “accountability statements and maps” that described the roles and responsibilities of accountable persons, and to establish “a core set of behavioural expectations” of the ADI and its accountable persons.
The proposed BEAR regime would also afford APRA “enhanced examination powers” and “a stronger penalty regime”.
The submission stated there were “a number of areas that APRA will need to consider” in the process of integrating the new regime with APRA’s framework, such as accounting for overlap “between the existing set of responsible persons under APRA’s Fit and Proper framework, and the accountable persons under the BEAR”.
“APRA will consider how to best update the concept of responsible persons following the initial implementation of the accountability regime,” the submission said.
“At a minimum, there are likely to be efficiencies in aligning the process for notification to APRA.”
Additionally, the BEAR regime would also have elements of long-term applicability “to other APRA-regulated industries”.
“For example, the concept of accountability maps and statements may enhance an APRA-regulated entity’s governance and risk management by establishing a clearer view of accountabilities,” the submission said.
“While this could be achieved through broader legislation at some future time, it may be more readily implemented by APRA enhancing its own prudential standards.”
In the opening statement before the House of Representatives standing committee in September, APRA chairman Wayne Byrnes said the BEAR regime strengthened APRA’s mandate and that its core objectives would be “difficult to argue against“.
