Last October we told you (here) about plans by the Australian government to introduce a new regulatory regime for the financial services sector, to strengthen accountability and compliance and discourage excessive risk-taking. The new rules are set out in the Banking Executive Accountability Regime (BEAR) which has now been passed by the Australian Senate and will be administered by the Australian Prudential Regulation Authority (APRA).
For large authorised deposit-taking institutions (ADIs), BEAR will come into effect on 1 July 2018. The only substantive change to the Bill was to postpone the commencement date for small and medium ADIs by an extra year, until 1 July 2019. The government is due to consult on which companies will be classified as small, medium and large ADIs.
The individual requirements will also be implemented in stages and we await clarity on this as well.
BEAR is part of a broader suite of financial services reforms in Australia, including a Royal Commission inquiry into misconduct in the industry which has also kicked off and has the potential to further impact BEAR and other local remuneration regulation.
According to the Treasurer (the Australian Finance Minister), the government is “delivering on its promise to hold banks and their senior executives to account, with tougher consequences if expectations are not met.” As in many countries, this is a highly political area and many consider that BEAR does not go far enough in addressing the endemic issues.
On the other hand, affected organisations have argued that BEAR is too wide-reaching, overlaps with other obligations and aims to legislate areas that should be left to company management. It would seem however that between BEAR, the Royal Commission and other potential changes, this is just the start of a new era of financial sector regulation in Australia!
Please do get in touch if you would like our assistance with preparing for BEAR or with any other aspect of global compliance for your equity plans and executive remuneration.
Jess and Jordan