2018年9月6日

Singapore regulator puts senior managers in the spotlight

Recognising that the culture and conduct of financial institutions (FIs) plays a key role in fostering confidence and trust in the financial sector, in April 2018, Singapore’s financial regulatory authority (MAS) issued a consultation paper putting forward certain guidelines on the accountability and conduct of key individuals at FIs (Guidelines).

Objective of the Guidelines

The Guidelines seek to promote the individual accountability of senior managers, strengthen oversight of employees in material risk functions, and reinforce standards of proper conduct among all employees. The Guidelines are intended to supplement the existing regulatory framework through working with industry players and stakeholders to promote a culture of trust and ethical behaviour in the financial sector.

Their scope

Generally, the Guidelines apply to banks, insurers, and capital markets intermediaries and infrastructures, including subsidiaries of foreign banks and insurers incorporated in Singapore having operations in Singapore.

Under the Guidelines, FIs are required to clearly identify the senior managers who have responsibility for the management and conduct functions that are core to the FIs’ operations. 'Senior managers' are individuals who are employed in an executive capacity and are principally responsible for the day-to-day management of the FIs. These include senior managers performing core management functions such as executive directors, chief executive officer, chief financial officer, chief risk officer, and head of business functions.

In addition, FIs are also required to identify employees whose decisions or activities could materially impact the FIs’ risk profile. These include employees in front-, middle-, and back-office functions vested with material decision-making authority or mandates which may lead to significant impact on the FIs’ safety and soundness, or cause harm to a significant segment of the FIs’ customers or other stakeholders.

Conduct outcomes

In assessing whether FIs have complied with the objectives of the Guidelines, MAS will consider whether they have met the following outcomes:

  • senior managers who have responsibility for the management and conduct of functions that are core to the FIs’ operations have been clearly identified
  • senior managers are fit and proper for their roles, and held responsible for the actions of their staff and the conduct of the business under their purview
  • the FIs’ governance framework is supportive of and conducive to senior managers’ performance of their roles and responsibilities. The FIs’ overall management structure and reporting relationships are clear and transparent
  • employees in material risk functions are fit and proper for their roles, and subject to effective risk governance as well as the appropriate standards of conduct and incentive structure
  • the FIs have a framework that promotes and sustains the desired conduct among all employees.

The outcomes-based approach is intended to give FIs flexibility in establishing the appropriate governance and conduct framework to cater to their organisational structure and promote their desired culture, while achieving the objectives and spirit of the five outcomes.

Conclusion

MAS’ initiative to promote a corporate culture of responsible leadership in the financial sector through the Guidelines is broadly in line with the initiatives adopted in other jurisdictions. For example, the UK has implemented the Senior Managers and Certification regime; Hong Kong, the Manager-In-Charge regime; and Australia, the Banking Executive Accountability regime.

Unlike the regulatory approach adopted in the UK, the Singapore approach is consultative in nature. The Guidelines are intended to provide guidance on expected standards of conduct of FIs in conducting their businesses and for MAS to communicate its supervisory expectations in relation to individual accountability and conduct.

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