Aligning conduct with outcomes in financial services

A framework for compliance with guidelines on individual accountability and conduct in Singapore

Prior to the Global Financial Crisis, supervisory expectations were largely focused on the Board and Senior Management as collective bodies. But, in its aftermath, one major reaction was widespread frustration at how accountability for serious failures of financial institutions could not seemingly be attributed to individuals, and how few senior executives faced regulatory sanctions despite the profoundly adverse impact of their actions.

For many leading regulators around the globe, individual accountability is seen as a key requirement to align a financial institution’s conduct with the achievement of the desired regulatory outcomes of financial stability and fair treatment of consumers. The aim is for individuals – particularly those at the Board and Senior Management levels – to be held accountable for failings within their areas of responsibility.

Broadly speaking, the objectives of most current regulatory efforts are centred on achieving greater clarity on the responsibilities allocated to senior individuals by requiring financial institutions to formalise and document key roles. In some jurisdictions, regulators have also introduced requirements aimed at improving standards of conduct at all levels.

Closer to home in the Asia Pacific region, we are similarly witnessing significant regulatory efforts aimed at improving governance structures. Specifically, three individual accountability regimes are beginning to take shape – the ones in Australia and Hong Kong SAR are already in force, and the one in Singapore will take effect from 10 September 2021.

In this report, we will take a look at the global patchwork of individual accountability regimes, and present a framework to support financial institutions in Singapore with the formulation and implementation of their compliance strategies. At various junctures throughout the report, we will also highlight some of the key features of the Guidelines on Individual Accountability and Conduct (IACG) issued by the Monetary Authority of Singapore (MAS), as well as the results of a brief poll on the topic that we conducted with executives across various financial services sectors in Singapore.

Aligning conduct with outcomes in financial services
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