In 2020, regulators in Hong Kong and Singapore continue to strengthen their focus on culture and conduct initiatives.
Both the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) have made clear their view that creating and sustaining a culture that promotes good customer and social outcomes should be viewed as a compliance requirement, not just some ‘nice to have’. Both regulators have launched initiatives aimed at developing insight into how the financial institutions under their jurisdiction are working to manage culture and conduct issues amidst the Covid-19 pandemic.
Financial institutions are now expected to monitor global incidents of risk management failures, anticipate and prevent employee misconduct, ensure the firm’s culture and conduct framework is sustainable, and to promote culture efforts across the firm’s global footprint. With the pandemic requiring most firms to alter their mode of operations, including remote working becoming the norm, it’s important for firms to assess whether this has impacted their culture and conduct risk management capabilities.
In March 2017, the HKMA launched a bank culture reform by promoting the adoption of a ‘holistic and effective framework’ for promoting sound culture in banks. More recently, it has emphasized the role of regtech in connection with risk management efforts. MAS has also acknowledged that culture is a key driver of conduct, describing culture as the “shared values, attributes, behavior and norms in an organization” that is driven by “both the ‘hardware’ (e.g. policies and processes) and ‘software’ (e.g. beliefs and values) in an organization.”
In this, the HKMA and MAS are expanding on global regulatory trends that focus on culture and conduct risk governance as key supervisory priorities that warrant c-suite and board-level attention.