Banking Executive Accountability Regime update

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Act 2018 defers the commencement date for certain obligations of small and medium authorised deposit-taking institutions (ADI’s) under BEAR to 1 July 2019. BEAR will apply to large ADI’s from 1 July 2018.Who are small, medium and large ADIs? Background.

The BEAR Act amends the Banking Act to regulate “accountable persons” defined as holding actual or effective senior responsibility for the management and control of the ADI or a significant or substantial part of the ADI and by reference to particular responsibilities.

Treasury has published a draft legislative instrument defining small, medium and large ADIs, in order to set out how particular obligations of the BEAR will apply. Particular elements of the BEAR will apply differently depending on ADI’s size, including the commencement date, deferral of variable remuneration and the maximum civil penalty for breaching the BEAR.

The draft legislative instrument provides that:

  • a small ADI would have less than or equal to $10 billion on a three year average of total resident assets;
  • a medium ADI would have between $10 billion and $100 billion on a three year average of total resident assets; and
  • a large ADI would be any ADI with greater than or equal to $100 billion on a three year average of total resident assets.

Separately the Parliamentary Joint Committee on Corporations and Financial Services for the Life Insurance Industry has recommended that the Banking Executive Accountability Regime, financial product design and distribution obligations, and financial product intervention powers for ASIC, should apply to life insurance and life insurers.

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