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Product Responsibility Delay

This month, the Australian Prudential regulator announced it would be delaying consultation on product responsibility proposed in the extension of the Banking Executive Accountability Regime (BEAR).

In a letter to industry, APRA wrote, “At this stage, APRA is reviewing its proposed approach to product responsibility. APRA will be giving careful consideration to the alignment of product responsibility with the timing and content of the Government’s proposed extended accountability regime as recommended by the Royal Commission.”

According to APRA, the intention of the delay is to ensure the proposal is aligned with the implementation of the Royal Commission’s recommendations. The industry can expect more information in the first half of 2020.

Royal Commission recommendations & product responsibility

The focus on product responsibility began with Recommendation 1.17 from the Royal Commission Recommendations, early in 2019, which states:

After appropriate consultation, APRA should determine for the purposes of section 37BA(2)(b) of the Banking Act, a responsibility, within each ADI subject to the BEAR, for all steps in the design, delivery and maintenance of all products offered to customers by the ADI and any necessary remediation of customers in respect of any of those products.

When the Royal Commission report was released in early 2019, Treasurer Josh Frydenberg said that:

In APRA’s June letter to industry about product responsibility under the BEAR regime, the prudential regulator writes that while he understands that the objective of the proposal is to ensure that authorised deposit-taking institutions (ADIs) should have clarity around the accountability of senior executives around products offered by the organisations, it did not think that the CEO should hold ‘end to end’ accountability for all the products offered by an organisation.

Four broad proposals were highlighted in the industry letter when it comes to the product responsibility:

Scope accountability

  • APRA proposes a broad interpretation of what is in scope of end-to-end accountability, including not only all steps in the design, delivery and maintenance of all products offered to customers by an ADI or ADI group but also extending to issues such as customer remediation, linkages to IT systems and data quality, outsourcing, and incentive arrangements. This goes beyond an explicit consideration of processing and administrative errors and including but not limited to expansion to customer experience and outcomes.

Coverage of Products

  • APRA proposes that a single-point accountability for a given product would be required for all products offered by an ADI or ADI group, rather than just retail products, as both retail and other products have the potential to impact the prudential standing and prudential reputation of an ADI. This would include but not limited to products, services, white-label or other-branded products.


  • Recommendation 1.17 proposes a legislative instrument, to be determined under paragraph 37BA(4) of the Act, to add an additional particular responsibility for end-to-end product responsibility. APRA proposes the following additional particular responsibility:

For the purposes of paragraph 37BA(2)(b)(ii) of the Banking Act 1959, a particular responsibility includes senior executive responsibility for end-to-end product management of a product or product group offered by the ADI or the relevant group of bodies corporate that is constituted by the ADI and its subsidiaries, including but not limiting to all steps in the design, delivery, maintenance and any necessary remediation of customers in respect of any such product or product group.

An ADI would be expected to reflect this responsibility for a given product or product group in the individual accountable person’s accountability statement and to have it clearly delineated in the institution’s accountability map.

Joint Accountability

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  • To reinforce clear points of accountability for any given product, APRA proposes that, where more than one accountable person is identified as accountable for a given product or product group, joint accountability is applied to the accountable persons involved to ensure no gaps or dilution in the end-to-end accountability. Accordingly, all relevant accountable persons will be equally accountable for that given product or product group. This joint accountability should not be taken to apply automatically across different identified products or product groups.


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