The Monetary Authority of Singapore (MAS) will closely observe the country’s financial institutions to make sure they have the right organizational culture, as the regulator seeks to go beyond mere compliance and minimise the risks consumers could face due to financial misconduct.
“Close attention does not necessarily mean that MAS will introduce more rules,” Lee Boon Ngiap, assistant managing director for capital markets at MAS, said on Monday at the annual lunch of the Life Insurance Association Singapore (LIA).
According to Lee, ethical shortcomings were one of the root causes of the troubles many financial institutions encountered during the 2008 global financial crisis. He said that the financial industry is still wracked by severe misconduct even nine years after the crisis.
“We are interested in looking beyond the existence of a compliance and control framework to assess if financial institutions have a supporting culture that incentivises their employees and agents to do the right thing, rather than just doing what’s legal,” he added.
Lee said that efforts to promote a positive culture should start at the board and senior management level, with the necessary structures in place to monitor the conduct of the organization’s employees and agents.
Data from CCP Research Foundation reveals that 20 global financial groups, many of which are heavily involved in insurance, have incurred conduct costs (fines, damage settlements, etc.) totalling US$307 billion from 2011 to 2015, a 27.6% increase from the previous five-year period.
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