Singapore’s IAC Update
Managing Singapore’s Individual Accountability and Conduct Regime
The Monetary Authority of Singapore (MAS) has clarified the shape of its Individual Accountability and Conduct (IAC) Regime as it looks to strengthen the culture of responsibility and ethical behaviour within financial institutions (FI). The regime has many parallels with other accountability regimes that are in flight around the world. Of those, it is the UK’s Senior Managers and Certification Regime (SM&CR) that is furthest along, and from which there are lessons to be learnt. It is worth then comparing MAS’ desired outcomes with some of the insights that SM&CR’s implementation can provide.
Outcome 1
Senior Managers responsible for managing and conducting the FIs core functions are clearly identified.
This requirement on the face of it maybe seems the most straightforward. MAS have defined key roles and responsibilities that will need to be evidenced by FIs. Whilst this is relatively straightforward, there are nuances and complexities that come from managing this over time. Financial firms in the UK who decided to manage this manually soon realised that changes in staff or restructuring of responsibilities made it difficult to use spreadsheets and documents to give a point-in-time view. UK based firms have discovered that when the regulator needs a clear responsibility map for a specific date in the past a more resilient audit solution is required.
Outcomes 2 & 3
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.
The FI’s governance framework supports senior managers’ performance of their roles and responsibilities, with a clear and transparent management structure and reporting relationships.
In the UK corporate governance is evidenced through Responsibility Maps, and even for core firms that are not required to submit a firm wide map, many have opted produce to maps as good governance. For those firms already producing maps for SM&CR they will be aware of the benefits of systemising the approach to ensure that any changes at the firm are automatically updated, then sent for authorisation, and reflected in the map.
Outcome 4
Material risk personnel are fit and proper for their roles, and subject to effective risk governance, and appropriate incentive structures and standards of conduct.
Of all of the ongoing tasks required under SM&CR it is most often the annual Fitness & Propriety (F&P) which requires the most effort. The required information often comes from several different areas of the business and may include regulatory data, performance data, HR information and much more. Keeping all contributing teams synchronised a is non-trivial task when being managed manually and has been a significant driver for companies to adopt technologies such as Trailight’s solution.
Outcome 5
The FI has a framework that promotes and sustains among all employees the desired conduct.
As with the UK regulations F&P process, monitoring conduct and requiring the conduct rules populations to attest to understanding and adherence is well understood by UK financial firms and requires a high degree of co-ordination. Whilst this is a largely administrative task, aggregating the resulting data and producing the right type of management information can produce dashboards that act as an early warning system for people risk.
In conclusion, it was clear from implementation in the UK that requirements seemed straightforward at first, but once firms had initially got themselves over the line, it was the ongoing management of the regulation that proved increasingly complex and drained resources. Many firms in the UK have now implemented a software system such as Trailight’s Individual Accountability (IAR) solution. For those firms that have a presence in both the UK and Singapore, and potentially some of the more forward-thinking firms that do not, the potential answer will be to implement a system in advance of go-live to avoid the pains of compliance and learn the lessons of SM&CR.