Singapore: Proposed Guidelines on Accountability and Conduct

    

The Monetary Authority of Singapore updated its guidance on the 10th September 2020 on the five high-level outcomes that financial institutions should achieve on individual accountability and conduct.

The guidance focuses on five high-level outcomes for financial institutions to promote ethical behaviour, responsible risk-taking, accountability of senior managers and reinforcement of good conduct among staff and business.

The MAS expects firms to review their measures to comply with the five outcomes on the recently published guidelines, the outcomes expected are:

  1. Senior managers’ responsibilities for managing and conducting the FI’s core functions are identified.
  2. Senior managers are fit and proper for their roles and held responsible for the actions of their employees and the conduct of the business under their
  3. The FI’s governance framework supports senior managers’ performance of their roles and responsibilities, with a clear and transparent management structure and reporting relationships.
  4. Material risk personnel are fit and proper for their roles, and subject to effective risk governance, and appropriate incentive structures and standards of conduct.
  5. The FI has a framework that promotes and sustains among all employees the desired conduct.

Source: MAS.gov.sg - Guidelines on Individual Accountability and Conduct

The regulator emphasizes that their aim is not to prescribe “one-size-fits-all” approach to achieve the outcomes. For this reason, the outcomes-based approach, giving flexibility on how each firm will set up their framework to promote a healthy culture, achieve the objectives and meet the five outcomes overtime is recommended.

In addition, the MAS articulated their approach towards culture and conduct, what conduct risk looks like and an overview of the five outcomes on its information paper also published on the 10th September. The examples on the MAS information paper are a result of a surveys and dialogue sessions conducted with banks, insurers and capital market intermediaries.

The information paper is a must-read to all financial institutions regulated by MAS. Read full information paper on MAS.gov.sg

On the paper, the regulator adds that in fact, rules and regulations are not enough to maintain a healthy culture. The MAS highlights that financial institutions should go “the extra mile” to promote a culture of ethical behaviour and compliance. And there are several actions that firms should take to monitor and access culture and conduct and only complying with regulatory requirements or internal rules is not enough.

After all, the guidelines aim to create a healthy culture and promote positive conduct in the financial sector in Singapore, as well as to guide firms that are facing challenges and having difficulties with implementation of the regime.

In a analysis paper recently published by Thomson Reuters Accelus Regulatory Intelligence, Niall Coburn describers positively the objectives of the guidelines: "The MAS guidelines are clearly written and will help financial institutions, senior management and employees to embed a strong culture of responsibility and ethical behaviour, thus ensuring better outcomes for customers and stakeholders while at the same time helping to preserve the longevity of the organisation". 

MCO Conduct Risk solutions help financial services firms address the regulatory obligations of Senior Managers. Contact one of our experts to see how MCO can assist your organisation.