New misconduct reporting measures put heat on Singapore FIs

MAS proposed new misconduct reporting requirements and mandatory reference checks for FIs.

The Monetary Authority of Singapore (MAS) opened feedback for a set of amendments that it wants to make on misconduct reporting requirement. Amongst the changes, MAS proposed to apply the misconduct reporting requirements to registered fund management companies (RFMC) and make reference checks mandatory for financial institutions (FIs) when recruiting staff.

Stephen Banfield, partner at Withers KhattarWong, commented that the new measures are a “welcome step” to enhance Singapore’s reputation as a financial services hub.

“They are aimed at ensuring a greater level of consistency in the detection of past impropriety by representatives of fund managers and other types of financial institutions, as well as the reporting of misconduct going forward,” he said.

However, Singapore’s existing rules do “work well” at the moment so the changes’ effects to curbing misconduct in financial institutions may only be “incremental,” Banfield said.

“Imposing a higher level of diligence on the past behaviour of fund manager representatives should help to ensure that only the right people assume these positions,” he added. “This is what the MAS refer to as stemming ‘rolling bad apples.’ With a greater level of assurance around the integrity of the representatives of financial institutions, one would expect a lower level of misconduct going forward.”.

Banfield said he doesn’t anticipate that this will have any significant impact on businesses and investment in Singapore.

“These are positive steps which support the already excellent reputation of Singapore as a financial services hub. Further tightening of the rules around misconduct detection and reporting can only benefit the ecosystem as a whole,” he concluded.