Singapore: Proposed Guidelines on Individual Accountability and Conduct of Senior Managers

The Monetary Authority of Singapore (MAS) has issued a consultation paper in relation to proposed guidelines on individual accountability and conduct on 26 April 2018.

The proposed guidelines fall under the first prong (promote and cultivate) of the MAS’ three pronged approach towards the regulatory and supervisory emphasis on the culture and conduct of financial institutions (FIs) (including but not limited to licensed fund management companies) in Singapore. It seeks to supplement the existing regulatory framework and focus particularly on measures that FIs should put in place to promote ethical behaviour and responsible risk-taking, and strengthen the accountability of senior managers for the actions of their staff and the conduct of the business under their purview. The guidelines are targeted to be issued in the fourth quarter of this year.

This initiative comes shortly after the introduction of similar regimes in the United Kingdom (Senior Managers and Certification Regime and Conduct Rules), Hong Kong (Managers-in-Charge Regime) and Australia (Banking Executive Accountability Regime).

The proposed guidelines intend to achieve five specific accountability and conduct outcomes that FIs are expected to work towards:

• senior managers who have responsibility for the management and conduct of functions that are core to the FI’s operations are 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 FI’s governance framework is supportive of and conducive to senior managers’ performance of their roles and responsibilities. The FI’s 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, and 
• the FI has a framework that promotes and sustains the desired conduct among all employees.

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

The proposed guidelines should be seen as a positive step in creating a sound culture and conduct in Singapore’s finance sector. This will be vital in creating a trusted and ethical financial sector and inspire greater trust in Singapore as a key financial hub.

If you have any questions or would like to find out more, please contact our Singapore team.