Posted: 15 Dec. 2020 05 min. read

APRA releases information paper on BEAR implementation by large ADIs

In late 2019 through early 2020, APRA conducted a review of how three of the four major banks implemented the Banking Executive Accountability Regime (BEAR). On 11 December 2020, APRA released an Information Paper with key observations and better practices arising out of that review. It’s important to BEAR in mind these banks’ practices will have no doubt progressed since this review, but this is a useful snapshot.

We’ve prepared a summary of the big-ticket items from the review as ADIs consider how their BAU processes may need to mature, and other APRA-regulated entities consider their implementation of the forthcoming Financial Accountability Regime (FAR) regime.

Impacts of BEAR

BEAR’s purpose is to encourage cultural change and enhance accountability – to drive significant improvements in the operating culture of ADIs, and reinforce standards of conduct. APRA’s review identified that BEAR had resulted in a stronger understanding of the end-to-end accountability obligations of individuals, which enabled sharper challenge by boards, and facilitated more targeted engagement with APRA.

BEAR Frameworks

All three banks had at least adequate frameworks, but all were not equal, and some needed to mature further. Elements of some practices that needed to improve included:

  • Providing support to accountable persons (APs) (including both board members and executives) to embed the regime
  • Having clear, simple, and strong breach and consequence management processes to support the regime, and that integrate with the remuneration framework
  • Monitoring of individuals’ reasonable steps and conducting periodic scenario tests to identify gaps in accountabilities
  • Embedding the key principles in ongoing risk management
  • Routine monitoring and understanding the actions taken by individual APs to fulfil their obligations

Where appropriate for the size and scale of the organisations, centralised BEAR teams were seen as meaningful support for APs, including to lead initiatives to strengthen the operating effectiveness of the regime. However, it is important to consider the independence of the team so they can freely advise the board or executives – noting that it becomes harder to understand the needs of APs if they were too distanced from the core business.

In addition, centralised BEAR teams play a key role in defining and maintaining accountabilities in a robust way, as well as having frameworks to support APs to take reasonable steps and monitor practices.

APRA suggests that, over time, ADIs can undertake periodic assurance to continue to mature their understanding of their implementation and embedding of their regimes.

Advice and Guidance to APs

One tension that was noted in the review was between setting prescriptive standards for APs to meet, in comparison to providing guiding principles. The concern that, if standards are too prescriptive, it can reduce the individual agency or accountability for the individual to understand and meet their obligations.

Monitoring how APs comply

APRA has encouraged monitoring, including how the reasonable steps that APs take align with the entity’s obligations, and for entities to consider whether APs have enough support to discharge them. This would clearly embed accountability in decision-making and developing periodic reporting.

Scenario Testing and Handover Protocols

Better practice is to not only conduct scenario testing for executives and directors prior to the commencement of the regime, but to do so on a regular basis, and include APs’ direct reports.

The handover of an AP role from one to another can be a crunch point in AP obligations – APRA favours guidance such as an information checklist to support the handover, and scenario testing to facilitate a deeper understanding of accountability by examining handover.

What can Non-Executive Director APs make of this review?

BEAR is very much aligned with existing Directors’ duties, so their BEAR obligations are based on using existing tools such as Board performance assessments, and regular reflection on whether existing practices are sufficient to demonstrate reasonable steps. NEDs should reflect on the entity’s governance arrangements and how their own individual practices help them to demonstrate how they and the ADI are meeting their accountability obligations.

How should executive APs consider this review?

APRA would like to see executive APs consider how to more deliberately align actions and records with the ADI’s expectations on reasonable steps.

Maintaining Accountability Statements

ADIs should have robust practices to create and maintain accurate accountability statements over time, including:

  • Reflecting business changes in individual AP statements
  • Working to clearly define and allocate accountabilities and avoiding joint accountability where possible
  • Considering the use of account statements to strengthen key focus areas such as the voice of risk
  • Having a due diligence process to maintain accuracy, including periodic review and testing of statements

Breach Identification, Investigations and Consequence Management

BEAR reinforces the alignment between accountability and consequence management. Since ADIs need to report breaches of BEAR to APRA, they need processes for the identification, investigation and determination of those potential breaches.

Better practices for breach and consequence management include:

  • Defining breaches in a practical way to inform consequence management decisions
  • Defined escalation processes with timely information on breaches
  • Clear principles-based processes to inform the decision to commence an investigation, including criteria to engage external parties to assist
  • Defined processes and guidelines (including worked examples) as to consequences that can be applied across a spectrum of severities
  • Demonstrated link between how ADIs have used the framework in practice to drive the intended risk behaviours and outcomes

So, where to from here?

APRA will continue to embed BEAR into its ongoing supervisory activities, as we expect it will ultimately do for FAR, and use it to influence ADIs and APs to take preventive or remedial action. APRA is already requiring ADIs to assign specific risks or issues that APRA is concerned about to individual APs, and required changes in accountability statements to reflect accountability for completion of remediation activities and give weight in remuneration scorecards for their resolution.

However, if those actions don’t produce the expected outcomes, APRA will get “constructively tough” and is prepared to use formal enforcement actions.

What should ADIs and other APRA-regulated entities do now?


ADIs should reflect on how their own BEAR BAU arrangements are operating, and whether they meet the better practices outlined in APRA’s review.  This could be through approaches including a health check or a more thorough post-implementation review.

Other APRA-regulated entities

At the same time, as they continue or commence implementation of the Financial Accountability Regime, other APRA-regulated entities will be able to use these insights to support their implementation and ultimate transition to BAU.

How can Deloitte help?

Deloitte has been supporting ADIs on BEAR implementation since late 2017, and our approach on BAU activities strongly aligns with the approaches outlined in APRA’s review. If you require a gap analysis and Post-Implementation Review or other support with improving your approach, please let us know.

Visit our Accountability Regime homepage here.

More about authors

Rosalyn Teskey

Rosalyn Teskey

Partner, Audit & Assurance

Rosalyn is a partner in Deloitte's Melbourne office in the Governance, Regulation and Conduct practice. She specialises in supporting firms to design and assess frameworks to treat customers fairly, including the development of conduct, product governance, sales practices and complaints handling frameworks. Rosalyn co-leads our Accountability practice and leads Deloitte’s Design and Distribution and product governance offering.