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Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 1
MAS Issues Guidelines on Individual
Accountability and Conduct for Financial
Institutions (w.e.f 10 Sept 2021)
Introduction
With effect from 10 September 2021, all financial institutions ("FIs") regulated by the Monetary of
Authority of Singapore ("MAS") (unless excepted) should implement appropriate policies and processes
to achieve five accountability and conduct outcomes ("Outcomes") set out in the MAS Guidelines on
Individual Accountability and Conduct issued on 10 September 2020 ("IAC Guidelines").
These five Outcomes and specific guidance underpinning each Outcome ("specific guidance") aim to
reinforce FIs' responsibilities in three key areas: (i) promote the individual accountability of senior
managers ("Senior Managers"), (ii) strengthen oversight over material risk personnel ("MRPs"), and
(iii) reinforce conduct standards among all employees.1
The IAC Guidelines take into account MAS' proposals in consultation papers issued in 26 April 20182
("April 2018 Consultation Paper") and 6 June 20193 ("June 2019 Consultation Paper"). The latter
sought feedback on the expanded scope of FIs to which the IAC Guidelines will be applied. MAS has
responded to the feedback received on these consultation papers respectively on 6 June 20194 ("June
2019 Response to Feedback") and 10 September 2020 5 ("September 2020 Response to
Feedback"). For an overview of the April 2018 Consultation Paper, June 2019 Consultation Paper and
June 2019 Response to Feedback, please refer to our previous Update in July 2019, available here.
MAS also issued, on 10 September 2020, FAQs on the IAC Guidelines ("FAQs") and MAS Information
Paper on Culture and Conduct Practices of Financial Institutions ("Culture and Conduct Information
Paper") on good practices in these areas.
This Update highlights key features of the IAC Guidelines, namely its scope of applicability and MAS'
implementation approach, and provides a summary of specific guidance of the Outcomes and several
key considerations for FIs to note in achieving the Outcomes.
1 Paragraph 3 of IAC Guidelines 2 Consultation on Proposed Guidelines on Individual Accountability and Conduct (26 April 2018) 3 Consultation on Guidelines on Individual Accountability and Conduct – Proposed Scope of Application (6 June 2019) 4 Response to Proposed Guidelines on Individual Accountability and Conduct (6 June 2019) 5 Response to Guidelines on Individual Accountability and Conduct - Proposed Scope of Application (10 September 2020)
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 2
1. Scope of Applicability & MAS Implementation Approach
The IAC Guidelines apply generally to all FIs regulated by MAS, except where stated to be specifically
excepted.6
All in-scope FIs will be expected to achieve the five Outcomes.7 FIs will not be considered to have met
the expectations in the IAC Guidelines based solely on adopting the MAS Guidelines on Fit and Proper
Criteria ("Fit and Proper Guidelines"), as this is only one of the expectations in the IAC Guidelines.8
MAS clarified in its 2020 Response to Feedback that the IAC Guidelines apply to registered fund
management companies ("RFMCs") and (non-exempt) payment services firms.9
1.1 Excepted FIs
The IAC Guidelines do not apply to the following FIs: exempt financial advisors, exempt corporate
finance advisors, exempt trust businesses, exempt over-the-counter derivatives brokers, exempt
futures brokers, exempt payment services providers, recognised market operators incorporated
outside Singapore, recognised clearing houses incorporated outside Singapore, licensed foreign
trade repositories, and the Continuous Linked Settlement Bank.10
These excepted entities are those (i) whose scope of activities conducted is limited, and are
subject to minimal business conduct and financial requirements; or (ii) which have minimal
presence in Singapore, or primarily regulated by a foreign regulator.11 Specifically, MAS clarified
that entities exempt from licensing under the Payment Services Act and variable capital
companies ("VCCs") are not within the scope of the IAC Guidelines. 12 Do note that MAS-
regulated fund managers who carry out day-to-day management of VCCs must still abide by the
IAC Guidelines.13
1.2 Group application for local banks and insurance groups
The IAC Guidelines will apply on a group basis for (a) locally-incorporated banks and insurers
("parent bank or insurer") and (b) approved exchanges and approved clearing houses that are
operated as a single group.14
For a parent bank or insurer, this group application approach has two main implications. First, the
specification of Senior Managers' responsibilities should include their responsibilities relating to
6 Section on "Applicability of the Guidelines" in IAC Guidelines 7 Paragraph 3.1 of September 2020 Response to Feedback 8 Paragraph 2.7 of September 2020 Response to Feedback 9 Paragraph 2.6 of September 2020 Response to Feedback 10 Section on "Applicability of the Guidelines" in IAC Guidelines 11 Paragraph 2.4 of June 2019 Consultation Paper 12 Paragraphs 2.11, 2.12 of September 2020 Response to Feedback 13 Paragraph 2.12 of September 2020 Response to Feedback 14 Section on "Applicability of the Guidelines" in IAC Guidelines
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 3
both operations of the parent bank or insurer and, where relevant, the operations of the group.
Second, material aspects of the group's operations will normally include significant downstream
subsidiaries or other entities, whether located in Singapore or overseas ("downstream
entities").15 To identify significant downstream entities, the parent bank or insurer may consider
a range of metrics such as contribution to the group in terms of assets, profit, revenue, gross
premium, or assets under management.16 For downstream local FIs, the Guidelines continue to
apply at the entity level.17 Please see Annex A to the IAC Guidelines for more details.
1.3 Proportionate application: Smaller FIs (headcount less than 50) not ordinarily expected to
adopt specific guidance in IAC Guidelines
The IAC Guidelines provide FIs with a framework and best practices for strengthening
accountability and standards of conduct, and is not exhaustive or prescriptive.18 FIs must not
adopt a check-list approach, but should review the measures in the specific guidance, and identify
those relevant to achieve the Outcomes, appropriate to the nature, size and complexity of their
businesses:19
FIs with a headcount that is fewer than 50 ("smaller FIs") should still achieve the five
Outcomes, but will not ordinarily be expected to adopt the specific guidance in the IAC
Guidelines. MAS may require these smaller FIs to adopt any of the specific guidance if
there are potential gaps in accountability and oversight, or when necessitated by the nature
and complexity of the FI's operations. 20 Generally, smaller FIs have the flexibility to choose
to adopt and adapt any of the specific guidance as appropriate.21 For clarity, these FIs must
still comply with all requirements in relevant legislation administered by MAS on directors
and key executives.22
FIs with larger number of employees may choose not to adopt specific guidance they have
assessed to be irrelevant to their businesses. However, these FIs must be prepared to
justify their decision and demonstrate how they achieve the relevant Outcomes through
other means.23
(a) Determination of headcount
Typically, headcount will include all personnel (full-time or part-time) that engage in or support
the FI's core management functions ("CMFs"), but ordinarily will not include: non-executive
directors, outsourced service providers, and headcount in foreign offices or related entities, with
15 Paragraphs 1 and 2 of Annex A to IAC Guidelines 16 Paragraph 2 of Annex A to IAC Guidelines 17 Paragraph 3 of Annex A to IAC Guidelines 18 Paragraph 4 of IAC Guidelines 19 Paragraph 4 of IAC Guidelines 20 Paragraphs 4 and 5 of IAC Guidelines 21 Paragraph 3.12 of September 2020 Response to Feedback 22 Paragraph 2.7 of June 2019 Consultation Paper 23 Paragraph 4 of IAC Guidelines
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 4
the exception of overseas-based representatives.24 Please refer to Annex B of IAC Guidelines for
a non-exhaustive list of CMFs.
MAS cautioned FIs not to use outsourcing "purely to game or circumvent"
the IAC Guidelines. MAS may also redefine the scope of this threshold if many FIs are found to be
deliberately circumventing the need to apply the specific guidance through outsourcing
arrangements.25
(a) Threshold
FIs may determine when and how often to assess whether they continue to fall under the
threshold of a "smaller FI", but should do so on an annual basis at a minimum. When smaller
FIs exceed the threshold, they will be given a general transition period of 12 months to adopt the
specific guidance.26 Please refer to the FAQs on this topic which addresses concerns such as
what happens when FIs cross the threshold or fall below the threshold.
1.4 Definition and role of Board in overseeing FI's implementation
The Board and senior management are responsible for overseeing FIs' implementation of the IAC
Guidelines.27 The IAC Guidelines contain various expectations of the Board in overseeing the
FI's implementation of the Outcomes. For the purposes of the IAC Guidelines, "Board" refers to:
(a) in the case of an FI incorporated in Singapore, the Board of Directors; and (b) in the case of
an FI incorporated or established outside Singapore, a governing body or committee beyond local
management that is charged with oversight and supervision responsibilities for the FI's operations
in Singapore.28
1.5 MAS' supervisory and enforcement approach
(a) Supervisory approach
If MAS finds the FI's implementation of the Outcomes unsatisfactory, MAS may require the FI to
implement additional measures to address the deficiencies.29 If FIs and their Board and senior
management demonstrate an inability or unwillingness to take remedial actions, MAS will take
appropriate supervisory actions depending on the severity and potential impact of the
weaknesses uncovered.30
24 Paragraph 3.8 of September 2020 Response to Feedback; Q/A 1 of FAQs ("Section (I): Headcount for Financial Institutions and Group Policies") 25 Paragraph 3.9 of September 2020 Response to Feedback 26 Paragraph 3.14 of September 2020 Response to Feedback 27 Paragraph 6 of IAC Guidelines 28 Paragraphs 2.26 and 2.27 of June 2019 Response to Feedback 29 Paragraph 2.13 of June 2019 Response to Feedback 30 Paragraph 2.13 of June 2019 Response to Feedback
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
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(b) Consequences of non-compliance
In the event of misconduct, regulatory breaches, or offences, MAS will take the necessary
enforcement action against the FI and/or the relevant director, Senior Manager, or employee.31
In this regard, MAS cautioned that FIs should avoid arrangements that undermine the
accountability of Senior Managers, such as insurance or other agreements that have that have
the effect of indemnifying Senior Managers or other employees against financial penalties for
misconduct or other offences.32
2. Summary of Specific Guidance of Outcomes & Key
Considerations
The five Outcomes are intended to reinforce FIs' responsibilities in three key areas.33
Outcomes Key Areas
Outcome 1: Senior Managers responsible for managing and conducting
the FI's core functions are clearly identified.
Outcome 2: Senior Managers are fit and proper for their roles, and held
responsible for the actions of their employees and the conduct of the
business under their purview.
Outcome 3: The FI's governance framework supports Senior Managers'
performance of their roles and responsibilities, with a clear and transparent
management structure and reporting relationships.
Promoting individual accountability
of Senior Managers
Outcome 4: MRPs are fit and proper for their roles, and subject to effective
risk governance, and appropriate incentive structures and standards of
conduct.
Strengthening oversight over
MRPs
Outcome 5: The FI has a framework that promotes and sustains among all
employees the desired conduct.
Embedding standards of proper
conduct among employees
2.1 Promoting individual accountability of Senior Managers
(a) Summary of specific guidance
Outcome 1: The Board of Directors or Head Office, as applicable, should ensure that:
Senior Managers who have responsibility for functions that are core to the management of
31 Paragraph 2.14 of June 2019 Response to Feedback 32 Paragraph 2.15 of June 2019 Response to Feedback 33 Paragraph 3 of IAC Guidelines; Infographic on IAC Guidelines; Paragraph 1.2 of April 2018 Consultation Paper
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 6
the FI's affairs (including CMFs) are clearly identified;
the identification of Senior Managers accurately reflects actual oversight responsibilities
and decision-making authority, regardless of his or her physical location; and
there is appropriate management oversight over all material aspects of the FI's affairs,
including but not limited to the CMFs.
Outcomes 2 and 3: The Board of Directors or Head Office, as applicable, should ensure:34
robust standards and processes to assess the fitness and propriety of each Senior
Manager, prior to appointment and on an ongoing basis;
clear specification of each Senior Manager's individual areas of responsibility and his or
her appointment and responsibilities in management committees;
appropriate delineation of the FI's overall management structure, including reporting
relationships;
acknowledgement by each Senior Manager of his or her specified roles, responsibilities,
and reporting lines;
approval by the Board or Head Office, as applicable, of each Senior Manager's specified
roles and responsibilities and the FI's overall management structure;
documentation of each Senior Manager's specified roles and responsibilities and the FI's
overall management structure, including timely updates where there are material changes;
appropriate incentive, escalation, and consequence management frameworks;
a succession plan that is regularly reviewed and updated; and
the establishment of a formal mandate, terms of reference and reporting lines for each
management committee.
(b) Key Considerations
Definition of Senior Managers
Senior Managers are individuals who are principally responsible for the day-to-day management
of the FI, regardless of title or physical location.35
Decision-making authority of Senior Managers
Each FI has the discretion to identify its Senior Managers who are in substance responsible for
running the FI's ongoing operations in Singapore. However, according to specific guidance
underlying Outcomes 1 and 2, FIs should not designate individuals based overseas as Senior
Managers if the relevant decision-making authority has in substance been vested locally, and
34 Paragraph 3.3 of IAC Guidelines 35 Paragraph 3.5 of June 2019 Response to Feedback
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 7
likewise, FIs should not designate individuals based in Singapore as senior managers if the
decisions driving the FI's day-to-day business are effectively taken overseas.36
Identifying Senior Managers performing CMFs
The list of CMFs at Annex B of the IAC Guidelines presents core functions relating to the
management of an FI's day-to-day affairs that MAS would normally consider to be performed by
Senior Managers. The list is intended as a general guide and is not exhaustive.37 For group
entities where supervision of the different activities of the Singapore office occurs under
circumstances where decisions are substantively made from the head office, overseas personnel
may have to be designated as senior managers.
Multiple CMFs and shared responsibilities
The IAC Guidelines do not mandate reporting structures for FIs. FIs should review how each CMF
applies in the context of their operations in Singapore and where applicable, across the group.
Seniority within the organisation is a factor that FIs should consider in identifying Senior
Managers.38
FIs should consider designating Senior Managers for CMFs which are relevant to their
circumstances but are presently not assigned to anyone.39 FIs may deviate from the list of CMFs
if any of the CMFs are inapplicable to their circumstances.40 Similarly, if a function is not listed,
FIs should identify individuals who would be considered Senior Managers by virtue of their
seniority, decision-making authority, and responsibilities.41
Individual accountability does not absolve the collective accountability of management
committees and vice versa.42 In setting up management committees, FIs should establish a
formal mandate and articulate the terms of reference and reporting lines for each committee.
Individual Senior Managers constituting the committee must clearly understand matters under their
purview, and how these interact with the FI's business and risks. For instance, each Senior
Manager is responsible for deciding the issues to be raised at the meeting to facilitate a more
informed decision-making by the committee.43
MAS clarified that FIs may designate a Senior Manager to be responsible for more than one CMF.
In such instances, FIs must clearly specify the Senior Manager's responsibilities for each CMF and
36 Paragraph 3.11 of June 2019 Response to Feedback 37 Paragraph 3.19 of June 2019 Response to Feedback 38 Paragraph 1.3 of IAC Guidelines 39 Paragraph 1.4 of IAC Guidelines 40 Paragraph 1.5 of IAC Guidelines 41 Paragraph 1.5 of IAC Guidelines 42 Paragraph 3.4 of IAC Guidelines 43 Paragraph 3.5 of IAC Guidelines
Client Update: Singapore 2020 OCTOBER
Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 8
ensure there is no conflict of interest inherent in or arising from being responsible for more than
one CMF.44
MAS also stated that FIs may adopt shared responsibility structures where appropriate and
justified. Shared responsibility for a function should not dilute responsibilities or accountability for
that function.45
Assessments of Senior Managers' fitness and propriety
FIs may apply the guiding criteria set out in the Fit and Proper Guidelines, and other factors
relevant to the FI. The criteria for assessing Senior Managers' fitness and propriety should be
aligned with the expectations that the Board has of Senior Managers.46
MAS stated that FIs have the discretion to determine the frequency and approach for such
assessments. Generally, such reviews should be conducted annually at a minimum, or as and
when necessary, such as where matters which impact or call into question a Senior Manager's
fitness and propriety arise.47 FIs should take reasonable steps to obtain necessary information
such as conducting the appropriate screening and due diligence checks.48
For foreign FIs where Senior Managers are appointed by the Regional or Head Offices, FIs may
rely on assessments by the Regional or Head Office, where the FI is satisfied that such
assessments are appropriate and sufficient to determine the Senior Managers' fitness and
propriety.49
Specification and Acknowledgement of Responsibilities and Reporting Lines
MAS will not typically require FIs to regularly submit the roles and responsibilities of Senior
Managers. However, MAS may engage FIs on the rigour of their screening and hiring processes
and review the effectiveness of FIs' governance frameworks.50 Also, each FI may determine the
details that should be specified on each Senior Manager's responsibilities.51
Each Senior Manager should, in acknowledging his or her responsibilities, have sufficient clarity
over the duties entailed, and such acknowledgement should minimally be obtained at the point of
his or her appointment. Thereafter, such acknowledgement should be reviewed as and when
there are significant changes to the Senior Manager's responsibilities.52
44 Paragraph 3.25 of the June 2019 Response to Feedback 45 Paragraph 3.26 of the June 2019 Response to Feedback 46 Paragraph 3.51 of June 2019 Response to Feedback 47 Paragraph 3.52 of June 2019 Response to Feedback 48 Paragraph 3.53 of June 2019 Response to Feedback 49 Paragraph 3.54 of June 2019 Response to Feedback 50 Paragraph 3.2 of IAC Guidelines 51 Paragraph 3.56 of June 2019 Response to Feedback 52 Paragraph 3.58 of June 2019 Response to Feedback
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Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 9
MAS cautioned FIs not to treat the specification of Senior Managers' responsibilities and reporting
lines as a paper exercise, and should act with the aim of strengthening their governance
arrangements.53
Succession Planning and Handover Procedures
The Board is responsible for instituting a succession planning process that best meets the FI's
needs on an ongoing basis, aligned with the Guidelines on Risk Management Practices.54 The
timeline for succession planning and frequency of reviewing the same depends on inter-related
factors, such as the FI's organisational complexity and size, particular experience and skills for
the FI's business, and the competitive dynamics of the labour market.55
As handover processes and information are FI and role-specific, each FI should establish the
relevant handover policies and procedures, and ensure that these are observed by both incoming
and outgoing Senior Managers as far as practicable.56
2.2 Strengthening oversight over MRPs
(a) Summary of specific guidance
Outcome 4: The Board and senior management of FIs should ensure that appropriate standards
and processes are in place to:57
identify and assess the fitness and propriety of MRPs, prior to their appointment and on an
ongoing basis thereafter;
facilitate effective risk governance; and
subject MRPs to standards of proper conduct, regular training, and appropriate incentive
structures.
MAS may engage FIs and assess the appropriateness of their identification of MRPs in achieving
Outcome 4.58
(b) Key Considerations
Definition and Criteria for Identifying Material Risk Personnel
53 Paragraph 3.58 of June 2019 Response to Feedback 54 Paragraph 3.72 of June 2019 Response to Feedback 55 Paragraph 3.70 of June 2019 Response to Feedback 56 Paragraph 3.71 of June 2019 Response to Feedback 57 Paragraph 4.3 of IAC Guidelines 58 Paragraph 4.2 of IAC Guidelines
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Funds & Investment Management, Financial Institutions
© Rajah & Tann Singapore LLP | 10
MRPs are individuals who, pursuant to their authority, can significantly impact the FI's safety and
soundness, or cause harm to a significant segment of the FI's customers or other stakeholders.
MRPs may include employees in front, middle, and back office functions, as applicable to the FI,
as well as any other employee with supervisory capacity over such functions who are not Senior
Managers.59
The IAC Guidelines distinguish Senior Managers (subject to expectations under Outcomes 1 to 3)
and MRPs (subject to the expectations under Outcome 4).60 Direct supervisors of MRPs are also
considered MRPs, unless they have already been designated as a Senior Manager. The direct
supervisors of groups of individuals who may not individually be considered MRPs, but whose
activities could collectively have a significant impact on the FI's risk profile, should be considered
MRPs.61
FIs should take into account two primary considerations in identifying MRPs. First, the risks that
an FI is exposed to due to the nature, size, and complexity of its business. Second, the individuals
who have the authority to make decisions or conduct activities that could materially impact this
risk profile, regardless of whether they are physically based in Singapore or overseas.62
Therefore, in identifying MRPs, the Board and senior management of FIs should establish criteria
that consider63 the financial and non-financial risks which the FI is or may be exposed to, as well
as the materiality of the impact that an individual's decisions or activities could have on the FI's
risk profile, based on appropriate quantitative and qualitative indicators. The IAC Guidelines
details non-exhaustive examples of what quantitative and qualitative indicators may include.64
Expectations for MRPs
Given the nature of MRPs' role, FIs must subject MRPs to more stringent oversight and higher
conduct standards than non-MRPs.65 To assess MRPs' fitness and propriety, FIs may apply the
guiding criteria set out in the Fit and Proper Guidelines and any relevant factors with regard to the
nature and risk implications of the particular mandates or authority vested with the MRP. At a
minimum, a review of a MRP's fitness and propriety must be done once a year, or as and when
any matters arise which could potentially affect a MRP's fitness and propriety.66
Ultimately, the Board and senior management are responsible for implementing necessary
policies and procedures to govern the activities of MRPs and enforce risk ownership. For instance,
the incentive structure for MRPs should be symmetric with risk outcomes and sensitive to the time
59 Paragraph 4.1 of IAC Guidelines 60 Paragraph 4.7 of June 2019 Response to Feedback 61 Paragraph 4.8 of IAC Guidelines 62 Paragraph 4.4 of IAC Guidelines 63 Paragraph 4.4 of IAC Guidelines 64 Paragraphs 4.5, 4.6 of IAC Guidelines 65 Paragraph 4.1 of IAC Guidelines 66 Paragraph 4.17 of June 2019 Response to Feedback
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© Rajah & Tann Singapore LLP | 11
horizon of risks, and incentivise proper conduct.67
MRPs in Risk Management and Control Functions
MAS stated that the Board and senior management should ensure that MRPs in risk
management and control functions are accorded the necessary stature and authority.68
MRPs in risk management and control functions should be: (i) suitably trained and possess the
relevant experience and expertise to monitor and manage the FI's risks and internal control
environment;69 and (ii) independent from the business functions of the FI to ensure proper checks
and balances.70 Thus, compensation structure for MRPs should minimise potential conflicts of
interest and ensure that their independence is not compromised. It is inappropriate for MRPs in
risk management and control functions to have KPIs that are linked to revenue or sales.71
2.3 Embedding standards of proper conduct among employees
(a) Summary of specific guidance
Outcome 5: In addition to complying with existing legislation and guidelines on fostering sound
conduct of FIs and their employees, the Board and senior management should ensure that a
framework is in place which addresses the standards of conduct expected of all employees, and
provides consistent and effective communication of the expected standards of conduct,
appropriate policies, systems, processes, and engagement strategies.
(b) Key Considerations
Conduct framework
The Board and senior management must establish appropriate framework to enforce the desired
standards of conduct, and monitor and manage the FI's conduct risks on an ongoing basis. The
FI's conduct framework should be integrated with HR processes over the employee's life cycle72
and reviewed regularly to ensure adequacy and effectiveness.73
The Board and senior management should also identify the appropriate metrics for monitoring
conduct, and include quantitative and qualitative indicators of positive and negative conduct.74
MAS provided examples of these metrics in its June 2019 Response to Feedback. The Board
67 Paragraph 4.18 of June 2019 Response to Feedback 68 Paragraph 4.20 of June 2019 Response to Feedback 69 Paragraph 4.21 of June 2019 Response to Feedback 70 Paragraph 4.22 of June 2019 Response to Feedback 71 Paragraph 4.23 of June 2019 Response to Feedback 72 Paragraph 5.3 of June 2019 Response to Feedback 73 Paragraph 5.4 of IAC Guidelines 74 Paragraph 5.6 of June 2019 Response to Feedback
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and senior management must monitor these indicators over time to identify trends and potential
conduct risks, assess root causes, and take necessary mitigating actions.75 To reinforce individual
conduct and formally assess their behaviour, the Board and senior management can consider
incorporating risk and control KPIs within the employees' incentive structure.76
Codes of conduct must clearly and comprehensively set out the standards that all employees
are held to, as well as complement the existing policies which guide employees' conduct.77 These
codes must be regularly communicated and reinforced78 to ensure employees understand their
responsibilities therein.
Notifying MAS of Material Adverse Developments
The Board and senior management should notify MAS as soon as it is aware of any material
adverse developments. The FAQs provide guidance in assessing the materiality of adverse
developments.79 Generally, these refer to developments which include misconduct, lapses in risk
management and controls, or breaches in legal or regulatory requirements that can potentially
cause widespread disruption to the FI's day-to-day operations and/or significantly impact the FI's
customers and other stakeholders, or the safety and soundness of the financial system in
Singapore.80
The Board and senior management should also notify MAS in a timely manner of any information
that may have a material negative impact on the fitness and propriety of Senior Managers or
MRPs.81
Whistleblowing Programme
FIs should have a formal whistleblowing policy that sets out whistleblowing channel(s),
procedures to ensure anonymity, adequate protection of employee whistleblowers and the
handling and investigation of complaints.82 Employees must be made aware of the whistleblowing
policy and feel safe to raise issues through credible escalation mechanisms other than their usual
reporting lines.83 MAS stated that it will review all relevant information raised by whistleblowers
seriously and take further action if necessary.84
75 Paragraph 5.7 of June 2019 Response to Feedback 76 Paragraph 5.8 of June 2019 Response to Feedback 77 Paragraph 5.4 of June 2019 Response to Feedback 78 Paragraph 5.5 of June 2019 Response to Feedback 79 Q/A 7 of FAQs ("Section (V): Accountability and Conduct Outcomes Five") 80 Paragraph 5.3 of IAC Guidelines 81 Paragraph 5.3 of IAC Guidelines 82 Paragraph 5.12 of June 2019 Response to Feedback 83 Paragraph 5.11 of June 2019 Response to Feedback 84 Paragraph 5.14 of June 2019 Response to Feedback
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Concluding Remarks
The IAC Guidelines is a part of, and underscores, MAS' regulatory and supervisory emphasis on a
strong culture of responsibility and ethical behaviour in FIs. FIs should also refer to the Culture and
Conduct Information Paper which covers good practices in areas in addition to those in the IAC
Guidelines to promote a culture of ethical behaviour, such as hiring, communication channels,
monitoring and assessment, and performance management.
If you have any queries on the above development, please feel free to contact our team members below
who will be happy to assist.
Client Update: Singapore 2020 OCTOBER
© Rajah & Tann Singapore LLP | 14
Contacts
Arnold Tan
Co-head, Funds and
Investment Management
T +65 6232 0701
Regina Liew
Head, Financial Institutions
Group
T +65 6232 0456
Anne Yeo
Co-head, Funds and
Investment Management
T +65 6232 0628
Larry Lim
Deputy Head, Financial
Institutions Group
T +65 6232 0482
Please feel free to also contact Knowledge and Risk Management at [email protected].
Client Update: Singapore 2020 OCTOBER
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Our Regional Presence
Rajah & Tann Singapore LLP is one of the largest full-service law firms in Singapore, providing high quality advice to an impressive list of clients. We place strong emphasis on promptness, accessibility and reliability in dealing with clients. At the same time, the firm strives towards a practical yet creative approach in dealing with business and commercial problems. As the Singapore member firm of the Lex Mundi Network, we are able to offer access to excellent legal expertise in more than 100 countries. Rajah & Tann Singapore LLP is part of Rajah & Tann Asia, a network of local law firms in Singapore, Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Thailand and Vietnam. Our Asian network also includes regional desks focused on Brunei, Japan and South Asia. The contents of this Update are owned by Rajah & Tann Singapore LLP and subject to copyright protection under the laws of Singapore and, through international treaties, other countries. No part of this Update may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Singapore LLP. Please note also that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. It is to your advantage to seek legal advice for your specific situation. In this regard, you may call the lawyer you normally deal with in Rajah & Tann Singapore LLP or email Knowledge & Risk Management at [email protected].
