Asia Pacific Financial Services Regulatory Updates, Quarter Two 2022

The Deloitte Asia Pacific Centre for Regulatory Strategy is pleased to share with you the key regulatory updates from our region for Q2 2022.

Resilience in a time of ongoing uncertainty: The first six months of 2022 has been extraordinarily challenging, and the impacts of ongoing disruption from the COVID-19 pandemic, geopolitical conflicts, supply chain issues, and inflation continue to be felt throughout the region.

However, our regulators and the industries they supervise continue to adjust rapidly to these changing events, whilst maintaining a focus on ensuring financial stability across the region. There has also been the adoption of a long-term view on key developments that may impact the regulatory landscape in the Asia Pacific (AP) region, such as climate change and sustainability, the rise of RegTech and digital assets, and resilience.

Despite the sharp deterioration in market outlooks and an uncertain recovery pathway and timeframe, the focus on conduct and culture remains across the AP region. Over the last quarter, several AP regulators released new or revised guidelines relating to consumer and public protection for consumers of financial services (FS) and digital assets – highlighting the important role of conduct and culture in strengthening trust and resilience in the FS industry.

Focus on uplifting climate related disclosures and transitioning to a more sustainable, resilient and green economy: As the region grapples with turbulence in energy markets and the growing impact and increasing frequency of natural disasters, regulators across the AP region continue to focus their efforts on the transition to a more sustainable, resilient and green economy. Regulators are largely looking to facilitate this transition through the development and implementation of regulation and guidance, and uplifts to climate related disclosures.

Over the last quarter, New Zealand introduced new legislation, requiring certain financial institutions to make climate related disclosures from financial years commencing in 2023, in alignment with recommendations from the Task Force on Climate-Related Disclosures (TCFD). In addition, regulators in China Mainland and Malaysia published guidance to support financial institutions with the implementation of climate-related disclosures, joining regulators in jurisdictions such as Australia and Singapore in publishing guidelines to support better practice in relation to climate disclosures.

There is no doubt transitioning to a more sustainable, resilient and green economy remains at the top of the agenda for many across the region, with a number of jurisdictions such as Singapore, Japan, China Mainland, and the Philippines releasing information papers and guidelines on what ‘good practice’ looks like in relation to climate risk management, and embedding sustainability considerations for financial institutions across the banking and insurance sectors.

The evolution and growth of the digital wave continues: Technology continues to have an increasing impact on the AP region in terms of how regulators will look to address and adopt rapidly growing digital assets. AP regulators have been, and continue to, pay close attention to the potential risks Decentralised Finance (DeFI) and digital assets (such as crypto assets and stablecoins) may pose, whilst also appreciating the potential of these assets to transform the operation of not only financial markets, but also how consumers engage with the FS industry.

Over the last quarter, regulators in Australia, Thailand and South Korea published several letters to industry outlining their perspectives on the risks digital assets may pose, and expectations for financial institutions when engaging with consumers and activities associated with digital assets. In addition, regulators across the region have been assessing how these technologies can be used in financial services, with both Hong Kong SAR and Japan releasing the results of recent studies on the development and usage of central bank digital currencies.

In a separate capacity, regulators are also looking to parallel the industry's digital innovation through the adoption of increasing prevalent variations of 'RegTech'. The various challenges of ensuring regulation in its current state is ready to transition remains. However, the anticipated benefits of automation and enhancements to burdensome regulatory activities encourage the continued exploration of RegTech.

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