Asia Pacific Financial Services Regulatory Updates, Quarter One 2024

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from the Asia Pacific (AP) region for Q1 2024.

The start of 2024 saw regulators across the region consolidate their upcoming areas of focus. In Hong Kong SAR (HK SAR), the Securities and Futures Commission (HK SFC) highlighted a focus on maintaining market resilience, enhancing the competitiveness of HK SAR globally, leveraging technology to lead financial market transformation, and, like many regulators in AP and globally, enhancing institutional resilience (both operational and financial) and increasing operational efficiency. In other jurisdictions, regulators such as the Australian Securities and Investments Commission (ASIC) released greater detail of their upcoming enforcement and supervisory priorities at a sector level. For the superannuation sector, ASIC’s focus for 2024 is centred on misconduct which may result in member services failures or a failure to protect member balances, and misleading conduct, including greenwashing.

Unsurprisingly, protecting consumers against harm by focusing on misconduct is a key theme for regulators across the AP region in 2024, with several regulators revising existing requirements to strengthen protections for consumers against misconduct and exploitation when dealing with financial institutions. For example, the National Financial Regulatory Authority (NFRA) in Mainland China recently revised the Administrative Measures for Consumer Finance Companies, introducing with it higher admission standards for consumer finance companies, and strengthening the protection of consumer rights and interests. In New Zealand, the Federal Government announced they would no longer repeal the Financial Markets (Conduct of Institutions) Amendment Act, in recognition of the Act’s role in supporting “good financial outcomes for consumers”by imposing responsibilities on financial institutions to treat customers fairly.

Climate and sustainability remains another priority for AP regulators, with regulators focused on three key areas: 1) climate and sustainability disclosure, 2) helping firms identify and manage climate related risks, and 3) reducing complexity surrounding sustainable finance initiatives to help accelerate the green transition towards net-zero.

Legislators and regulators across the AP region have continued to enhance and align their domestic climate and sustainability disclosure regimes and frameworks in Q1 2024, with several regulators affirming their commitment to adopt and develop climate and sustainability focused disclosure regimes (HK SAR), announcing legislation and/or guidance (Australia, Taiwan), or consultation packages (Philippines) to align their current regimes and frameworks to international standards, such as the upcoming International Financial Reporting Standards (IFRS) sustainability-(S1) and climate-(S2) related disclosure regimes.

For firms starting to contemplate the significant requirements of complying with disclosure regimes (particularly those operating across several jurisdictions), consideration and evaluation of requirements and implementation timelines within their relevant jurisdiction(s) as part of comprehensive current state assessment will help to identify potential gaps and areas for uplift as part of the roadmap to compliance with the IFRS S1 and S2 aligned disclosure regimes.

Elsewhere in the region, regulators such as Malaysia’s Bank Negara Malaysia (BNM) released the Methodology Paper on Climate Risk Stress Testing, to help facilitate firms learning and capacity building in addressing risks arising from climate change. In Taiwan, the Financial Supervisory Commission (FSC) launched several initiatives to support regulated entities access and understand the regulatory framework relating to sustainable finance and managing physical climate-related risks within the finance sector.

Finally, the rapid pace of technological change and its potential impacts (and benefits) remains a high priority for AP regulators, with several releasing revised regulations and consultation papers relating to how technology can be leveraged to support modernisation and innovation throughout the financial services industry. For example, the HKMA announced the creation of a new wholesale central bank digital currency project and launched a new stablecoin issuer ‘sandbox arrangement’ for those interested in issuing fiat-referenced stablecoins in HK SAR. In Malaysia, BNM also released a revision to its Financial Technology Regulatory Sandbox Framework, focused on ensuring proportionate regulatory facilitation and improving operational efficiency of existing innovation sandbox procedures. In Japan, the Japan Financial Services Agency (JFSA) released a public consultation on proposed amendments intended to improve the accessibility of financial regulations and laws through digital means. Finally, in Thailand, the Bank of Thailand (BoT) released a consultation paper proposing additional guidelines and regulations for the Virtual Bank Regulatory Framework, which have been drafted to enhance and support greater stability of the wider financial system within Thailand.

It is clear that the new year has not slowed down the regulatory agenda across the Asia Pacific region –regulators continue to transform and shape their regulatory and supervisory priorities to address the ever-evolving risk landscape, as well as continuing their existing programs to address global priority issues, such as increasing resilience across the financial services industry, addressing the impacts of climate change, and helping to facilitate innovation through embracing sustainable finance and technology-led initiatives. For FS firms, keeping up to date with regulatory requirements and expectations will help to reduce the potential for ‘missed turns’ as they navigate through the complex (and sometimes bumpy) road to compliance.

For more information on these updates or other regulatory topics, please get in touch.