1 July 2018: Are you getting prepared for the Banking Executive Accountability Regime (BEAR)?

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The Banking Executive Accountability Regime (BEAR) is shaping up to be the most significant piece of business-related legislation hitting this year. We have discussed the details of these reforms on a few occasions:

BEAR

Photo by Scott Webb on Unsplash

By Dr Drew Donnelly, Compliance Quarter.

Since we discussed it last, the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 (the Bill) has been introduced to Parliament, passed through its initial stages in the House of Representatives, and been referred to the Senate Economics Legislation Committee (the Committee). The Committee has received public submissions and will report back by 24 November.

As the Bill is progressing at lightning speed and has a short implementation timeframe (the law if passed, will come into effect on 1 July 2018), you need to start preparing your compliance program now.

While the law itself would come into force in July, some aspects of BEAR have longer lead-in times before full compliance is required. In today’s piece we look at the transition and implementation timeline as it currently stands in the Bill.

Submissions to the Committee on BEAR

It was a recurring theme in public submissions to this Committee that the implementation timeframe was too short:

  • The Australian Shareholders’ Association suggested the implementation timeframe be extended to 12 months;
  • The Australian Bankers’ Association pointed out that the implementation timeline does not take into account the current absence of the Australian Prudential Regulation Authority’s (APRA’s) prudential standards, guidance, practice notes and reporting requirements, which are needed to further specify the broad obligations provided in the proposed law;
  • The Australian Institute of Company Directors suggested a January 2019 commencement date is needed to allow sufficient time for compliance with the new regime.
  • APRA itself submitted that the timeframe was ‘challenging’.

To read the submissions yourself go to https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/BEAR_Bill_2017/Submissions.

Transition and implementation as specified in the current Bill

The latest version of the Bill provides that BEAR provisions will apply from 1 July 2018. However, in some areas, compliance with BEAR will be graduated. This includes:

  • An Authorised Deposit-taking Institution (ADI) would have 90 days to register an accountable person who was in place on 1 July 2018 (see Schedule 1, Part 3, item 15);
  • APRA would have the power to determine, by legislative instrument, how an ADI can meet its requirement to provide an accountability map and statement during the first 18 months of the BEAR (see Schedule 1, Part 3, item 17). It is likely that APRA will use this power so that, initially, APRA requires less comprehensive accountability statements and maps, but increases their expectations over time;
  • An ADI must update its remuneration policies to comply with the BEAR deferred remuneration provisions from 1 July 2018 (see item 2 of the table in subsection 2(1) of the Bill);
  • The remuneration requirements apply to the variable remuneration of an accountable person if the decision to grant the variable remuneration to that person was made on or after 1 January 2019 (see Schedule 1, Part 3, item 16(1));
  • If an employment contract is in place when this law is passed, the ADI should update that contract to reflect the new remuneration policy by 1 January 2020 (see Schedule 1, Part 3, item 16(2)).

The current text of the Bill and explanatory memoranda are available here https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6000.

If you think we could be of any assistance in developing your compliance program for BEAR, please get in contact.

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One Comment

  • Waz

    Yes it will be implemented way too late so the banks can get away with stealing more money from the public in the upcoming 2018 great crash/depression that laws like these are supposed to curb. But nope that won’t happen. Why? Coz the banks actually run australia. That’s why!

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