When it comes to how variable remuneration for SMEs and small businesses is being applied within the BEAR framework, there were only seven submissions from industry.
In the release from the Australian Prudential Regulation Authority (APRA) that accompanied their letter response to industry, they said none of the submissions have raised significant concerns “…and have not resulted in any material changes to the wording or schedule”.
The final legislative instruments 37 EA (4)(b) of the Banking Act will be published before this phase of the BEAR comes into force.
But what was addressed in the letter?
The letter indicated three submissions that made suggestions how the minimum amount of the variable remunerations can be calculated; however, the regulator indicated this would require change in the definition of the total remuneration.
The letter indicated word changes where it comes to ‘determination’, as the wording aligns with the BEAR legislation and wording changes might create conflicts.
For the submissions that were looking for relief from the BEAR, the regulator indicated in their letter that:
APRA can only exempt an ADI from having to comply with certain BEAR obligations if an ADI can demonstrate to APRA’s satisfaction that complying with such obligations would result in an actual contravention of corresponding foreign laws by the ADI. It has been APRA’s longstanding position that administrative challenges is not an adequate reason for granting exemptions from any obligations under the BEAR.
There was also a submission related to accountable persons from foreign ADIs:
APRA acknowledges that where an accountable person of a foreign ADI holds a position in a non-ADI related body corporate which does not relate to his/her accountable person role, the portion of this individual’s variable remuneration that does not relate to his/her accountable person role should be excluded from the definition of variable remuneration for the purposes of the BEAR. APRA has amended the wording of paragraph 2(b) of the schedule accordingly.