Authorized institutions in Hong Kong have until 2 March 2018 to demonstrate compliance with the following circular on Culture, issued earlier this year:
http://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2017/20170302e2.pdf
The Circular sets out three pillars for promoting sound bank culture as follows;
- Governance
- The values & ethics of the organization should be set out clearly in written form (e.g. Code of Conduct or other).
- Senior Management should lead by example.
- Ongoing communication and ownership of risk & culture reform (e.g. regular communication on culture initiatives, appointment of conduct risk champions etc).
- Incentive Systems
- AIs should review existing recruitment, performance and promotion/bonus systems to ensure that the desired values and behavior is being promoted in practice.
- Over reliance on sales/revenue targets in evaluating performance should be avoided. Consideration of the "total customer relationship" and promoting corporate values should also be taken into account.
- Clear procedures should be set out where staff is engaged in undesirable conduct / practices.
- Assessment and Feedback Mechanisms
- An effective escalation channel should be implemented (e.g. whistle-blowing hotline), with independent oversight, timely reporting of any illegal or unethical conduct.
- Obtaining qualitative feedback from staff on culture reform initiatives (surveys, focus groups).
- Sharing and promoting best practices and lessons learned (via training and case studies).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.