Penalties for Poor Culture | Financial Review

Starling Team

The prudential regulator warned Australia’s largest financial institutions they face big financial penalties in the form of capital charges unless risks – including poor culture –  are managed to its satisfaction. The threats were noted in a report released Wednesday.      

This 28-page paper focuses on culture and risk culture. Academics have criticized this term for being difficult to define but this has been recognized in the report.  

“While APRA acknowledges the challenges of measuring and analysing risk culture, it appears there remains significant score for improvement in this area,” the report reads.


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Hong Kong: An Ecosystem Approach to Bank Culture Reform | Regulation Asia

Starling Team

The HKMA is addressing culture and conduct risk by learning from other markets, engaging with other regulators, and exploring new technology, say Jeff Kupfer and Stephen Scott at Starling Trust.

This article focuses on Hong Kong, where regulators are building on their previous efforts to address culture and conduct. The Hong Kong Monetary Authority (HKMA), for instance, is looking to learn from the Australian experience, by asking the financial institutions it oversees to indicate why similar issues would not be a risk domestically.

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Starling presents at Berle XI: Law and Corporate Culture

Starling Team

CEO Stephen Scott was invited to present Starling’s ideas on “Trust & Technology:  a New Paradigm for Culture & Conduct Risk Management,” at the 11th Annual Adolf A. Berle Symposium on Corporation, Law and Society.  Hosted by the University of Seattle Law School, the event took place on May 16th-17th .

The Berle Center facilitates the study of the American and global economic system, and the role of the law in shaping relations among corporations, governments, individuals, and society. Under the direction of Professor Chuck O’Kelley, the Center was launched in 2009 and has since become an internationally recognized center of academic excellence, leadership and knowledge creation in the field of corporation law.

Berle XI featured an interdisciplinary exploration of corporate culture. Organized by Professor Claire Hill, the James L. Krusemark Chair in Law at the University of Minnesota, and Professor Eugene Soltes, the Jakurski
Family Associate Professor of Business Administration at Harvard Business School, the symposium included the scholars from law, economics, accounting, management, sociology, and anthropology, among other fields.

The aim of the group was to consider how best to understand, measure, and change culture with a view to fostering improved outcomes for customers, employees, shareholders, and broader stakeholder communities. Among other notable speakers, the event was joined by Professor Luigi Zingales, the Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago. Zingales was prescient, Scott noted, when he wrote in his 2012 book A Capitalism for the People that, “The twentieth century was characterized by ideologies. The twenty-first century will be characterized by data analysis.”

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Australia: Banking Misconduct + RegTech |Regulation Asia

Starling Team

Starling’s own Jeff Kupfer and Stephen Scott say that Australia may emerge as a world-leader in RegTech adoption as a remedy to banking culture and misconduct issues.

On 30 March, Starling Trust released its annual Compendium, a report on global regulatory activities aimed at promoting improved culture and conduct in the banking sector.

In the first of a series of articles, in collaboration with Regulation Asia, we discussed how the UK Financial Conduct Authority (FCA) has been a definitive leader in driving the global supervisory agenda in relation to culture and conduct risk.

In this week’s article, we spotlight Australia, where issues of banking culture and misconduct took centre stage during 2018.

Read the full piece here.

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Trends For Compliance Professionals | Forbes

Starling Team

The pressure to support growth while reducing cost is causing compliance operating models to evolve. The compliance function is the “second line of defense” in risk management. However, 60% of the professionals that responded to a study by Forbes say the responsibilities that were previously performed by compliance have shifted to operational management.

Addressing regulatory initiatives is still a concern. Improving responsiveness to business needs is the largest driver of transformation in compliance. That said, compliance needs to adopt technologies such as artificial intelligence and natural language processing and artificial intelligence (AI). This will enhance their teams’ skills and improve productivity.

Read more about four emerging trends for compliance professionals.

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