The implementation of the Banking Executive Accountability Regime will drive and improve outcomes and accountability for all ADIs says APRA.
APRA executive general manager of policy and advice division Pat Brennan made the comments at the COBA 2018 conference held in Melbourne.
Mr Brennan said that the new legislation would be an important asset in clearing the lines of accountability in institutions.
“The BEAR will drive improved prudential outcomes in the ADI industry by establishing clear and heightened expectations of accountability for directors and senior executives, and for the ADIs as well,” he said.
Regardless of the size and complexity of an ADI, driving improved outcomes for customers was good for everyone said Mr Brennan.
“Improving governance and outcomes is clearly very welcome, but that alone cannot guarantee that poor outcomes will not occur, and again this is a relevant consideration for all ADI,” he said.
Mr Brennan said that BEAR had two levels of sanctions, one for individuals and one for the ADI with the punishment varying depending on the size of the institution.
“In the case of an individual failing to meet their accountability obligations under the legislation, APRA can disqualify them – that is to remove them from their role. Should an ADI fail to meet its obligations, APRA can approach the courts to apply a pecuniary civil penalty,” he said.
Mr Brennan said the obligations under BEAR were to act with honesty and integrity, due care and diligence, and to deal with APRA in a cooperative way and take steps to prevent misconduct.
“In addition, an ADI is required to take reasonable steps to ensure its accountable persons meet their accountability obligations,” he said.
The BEAR requires ADIS to identify who is the accountable person for each specified area and that APRA is provided with an accountability map from the ADI and an accountability statement from each accountable person said Mr Brennan.
“At the centre of identifying and documenting accountability, there is proportionality in the regime; it is not a case of “one-size-fits-all”. The clearer the starting point on accountability, consistent with good governance and a strong risk culture, the more straightforward implementing BEAR will be,” he said.
Mr Brennan said that APRA looked forward to engaging with the sector on the implementation of BEAR and welcomed ADIs to submit draft lists of accountable persons and accountability statements.
“APRA will provide feedback on these drafts to help prepare for formal submission as 1 July 2019 approaches,” he said.
Mr Brennan said BEAR was not a one-off exercise, it was to be the state of a new, ongoing regime that would improve the industry.
“This means there will be maintenance over time – for example when there are changes of senior staff or reallocation of responsibilities.
“This also means there is opportunity for the benefits mentioned earlier to be enhanced and built on over time,” he said.
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