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Widely reported financial crime and conduct scandals across Asia Pacific have created pressure for lawmakers and regulators to reform the system. Most regimes are introducing individual accountability to hold senior managers responsible for criminal or unethical actions.
How have the different regimes in Asia Pacific been approaching individual accountability?
Hong Kong fully implemented its Senior Manager Regime in 2017 in which senior management are accountable for fostering good behavior and likewise culpable of misconduct when it arises.
Under the rule, the SFC requires licensed corporations to appoint a manager in charge (MIC) as the person primarily responsible for each core function and submit an organizational chart depicting reporting lines. However, complexities occur when companies have operations outside Hong Kong in different jurisdictions and time zones, or when acting or deputy staff are appointed, or with how the reportable accountability links with the agenda for improving culture.
Despite challenges in the region, the Monetary Authority of Singapore adopted a wait-and-see approach to how new accountability regimes would work before making changes.
In April 2018, MAS issued a consultation paper on proposed guidelines for individual accountability and conduct that would reinforce individual accountability among senior managers, stronger oversight of employees involved in risk, and proper conduct standards to be embedded for all employees. The finalized guidelines are still under review so this will be new for Singapore in 2019.
The fraudulent misconduct in the Australian banking industry were put on public display by the Financial Services Royal Commission. The interim report made it clear that it was felt that the regulators had not enforced existing rules and wanted to see legal action as a result.
In Australia, the view is that remuneration structures play as big a part in misconduct as individual accountability and culture. With the royal commission having been finalized now, it will be interesting to see whether enforcement action from PRA and ASIC will increase as a result.
To read more how effective the individual accountability regimes have been in Asia Pacific, download the full report.
Regulatory regimes in Asia Pacific are being challenged by the need to adapt to rapid technological innovations and an erosion of trust in a sector tainted by high-profile cases of financial crime enforcement. Learn how these challenges are being addressed.
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