On April 26, 2018, the Monetary Authority of Singapore (MAS) issued a Consultation Paper on Proposed Guidelines on Individual Accountability and Conduct (First Consultation Paper) where the MAS proposed to issue a set of guidelines (Proposed Guidelines) to promote the individual accountability of senior managers, strengthen oversight of material risk personnel and reinforce standards of proper conduct among all employees of financial institutions (FIs). The Proposed Guidelines set out five accountability and conduct outcomes (Outcomes) that FIs are expected to work toward (see Annex A below). Please click here to view our client briefing on the First Consultation Paper issued on May 23, 2018.
On June 6, 2019, MAS issued its response to the feedback received on the First Consultation Paper, particularly in relation to the scope and application of the Proposed Guidelines. On the same date, MAS issued a separate consultation paper (Second Consultation Paper) setting out the proposed applicability of the Proposed Guidelines and revised list of core management functions (i.e., core functions relating to the management of a FI’s day-to-day affairs that MAS would normally consider to be performed by senior managers).
This briefing focuses on the key updates pursuant to the MAS responses and Second Consultation Paper that may affect Singapore fund management companies (FMCs), including FMCs that hold a capital markets services license (CMS Licensees) and registered fund management companies1 (RFMCs)2. We set out in the table below a summary of the key updates.
Key Updates Pursuant to the MAS Responses to Feedback and the Second Consultation Paper
Proposal | Summary | |
1 |
Scope of application |
|
2 |
Proportionate application |
|
3 |
Refined Definition of Senior Manager |
“Senior managers” refer to individuals who are employed by, or acting for or by arrangement with, the FI, and are principally responsible for the day-to-day management of the FI.
|
4 |
Revised List of Core Management Functions |
|
5 |
Refined Definition of Head of Compliance |
“head of compliance”, who is principally responsible for monitoring and managing the financial institution’s compliance with regulatory requirements under the applicable laws and regulations, as well as internal policies and procedures. |
6 |
Material Risk Personnel |
|
7 |
Annual Reviews of Fitness and Propriety |
|
8 |
Whistleblowing Programme |
A formalised whistleblowing programme, including the whistleblowing channel(s) available to employees, procedures to ensure anonymity and adequate protection of employees who raise concerns over the FI’s policies, practices, or activities via these channel(s), and procedures for handling whistleblower complaints.
|
9 |
Implementation Timeline |
|
Invitation for Comments
Please refer to the Second Consultation Paper for full details on the Proposed Guidelines. The deadline for comments and feedback to be submitted to the MAS is July 22, 2019.
We are collating comments from clients and industry participants for submission to the MAS. If you have comments on the proposals that you would like us to submit on your behalf, please contact any of the lawyers listed below.
1 RFMCs are registered fund management companies exempted from holding a capital markets services license under paragraph 5(1)(i) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations.
2 This briefing is not exhaustive as it focuses on CMS Licensees and RFMCs.
3 Refer to paragraph 5.19(iii)(d) of the First Consultation Paper.
ANNEX A
Outcomes under the Proposed Guidelines
Outcome 1 |
Senior managers who have responsibility for the management and conduct of functions that are core to the FI’s operations are clearly identified. |
Outcome 2 | 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. |
Outcome 3 | 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. |
Outcome 4 | Material Risk Personnel are fit and proper for their roles and subject to effective risk governance as well as the appropriate standards of conduct and incentive structure. |
Outcome 5 | The FI has a framework that promotes and sustains the desired conduct among all employees. |
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