“Consumer Banking” Compliance Assessment Essay Example

with them. Therefore, it is important to critically examine the factors that ensure the effectiveness of the established conformity unit. The terms of reference for the unit play a significant role in determining its effectiveness.

The foundations of mentioned enchantment articulate the specific task that the unit must carry out. The task should be clearly stated without any ambiguity. For example, in the case of the compliance unit, the task is to advise the business on how to comply with the set regulations and ordinances.

The conformity section is responsible for monitoring business activities to ensure they comply with established regulations and guidelines. This includes assessing employee behavior to identify any violations or potential violations of rules, processes, policies, ordinances, and standards. The ultimate goal of the conformity section is to develop programs that support the organization's compliance efforts. However, it is the senior management and business line supervisors who ultimately ensure strict compliance with laws and regulations.

Furthermore, clear statements must be made regarding the objectives of the conformity unit in order to provide a foundation for measuring its performance. This includes setting goals for the number of preparations to be done within a specific time frame, frequency of surveillance, and policy reviews, among other factors.

The section must clearly understand its intent in order to effectively carry out its responsibilities. For example, the section should be aware that its main purpose is to assist management in identifying, evaluating, and providing advice on how to avoid the impacts and recurrence of compliance risks. There are established guidelines that govern the operations of the compliance unit, including the scope of its responsibilities and authority. If these guidelines and instructions

are followed.

The effectiveness of the conformity unit in the house will be achieved by eliminating conflicts between the conformity unit and the managerial responsibilities. Another important factor that impacts the effectiveness of the conformity department is its authority. It is necessary to clearly define the authority of the conformity department to ensure monitoring of business activities and employee conduct. To achieve this, it is important to grant the conformity staff unlimited access to all information within all business units in the house.

The conformity staff should be accountable to both the board and senior management. For example, if the loan processing department in a bank is about to violate regulations, a client visits the office of the department's director. Coincidentally, the client happens to be a friend of the director. According to the regulations governing loan advancement, this presents a potential violation.

The client fails to meet the standards, while the manager manipulates and violates the rules in favor of his friend to obtain the loan. This raises concerns regarding compliance. However, without proper authorization from the compliance staff to investigate the manager's behavior in this business unit.

It would be impossible to uncover such misconduct, potentially allowing it to go undetected. As a result, it would be considered a failure on the part of the conformity section, but only because it lacked authority over such situations.

Proper reporting of findings by the compliance staff is crucial for the department's effectiveness. The board of managers holds the highest position in the hierarchy, followed by senior management.

The board of directors gives instructions to the senior management staff, who then pass on these instructions to the line directors. The line directors

in turn issue orders to the supervisors of each business unit. It is worth mentioning that the compliance section of the company is not directly involved in the business and is regarded as a non-business department. Ultimately, it is the duty of both the board and senior management to guarantee adherence to rules and regulations, starting from the line directors and business unit supervisors.

Supervisors ensure employees comply with laws, regulations, ordinances, processes, and house standards. The conformity section involves identifying possible violations of compliance. Any identified misdemeanors must be communicated to the appropriate person.

The conformity section directly reports to the board and senior directors to take appropriate action. This is because it is the responsibility of the board and senior directors to ensure full conformity in the entire organization. The ability of the conformity section to report directly to the board helps prevent potential crises resulting from employee misconduct. Additionally, the effectiveness of the conformity unit depends on the competence of its staff members. The staff should be well educated in matters related to state laws that impact the organization.

Compliance officers must possess a comprehensive comprehension of the company's regulations, rules, procedures, and standards to carry out their responsibilities effectively. This understanding is paramount for making well-informed decisions and averting any breaches. Additionally, compliance officers in sales-oriented departments should also be acquainted with the products being sold and their corresponding suppliers as unique agreements may exist with specific providers.

In a certain concern entity in Singapore that sells electronics from Samsung Company, a violation of compliance occurred and went unnoticed. In this case, the sales director decided to purchase electronic devices from Sony Company without informing

the rest of the management team. The reason for this decision was the director believed that Sony products sold better than Samsung products in the same line. A junior compliance officer was inspecting the products in the business stock.

The director observed both Sony and Samsung products without questioning. This is due to his lack of knowledge regarding the business entity's trade with Samsung Company and the implication that the presence of Sony products indicates noncompliance. The regulation of the financial services sector necessitates a careful equilibrium between excessive regulation and insufficient regulation. This is because financial services involve sensitive matters that are susceptible to external influences, and the consequences of external forces are crucial for the survival of the financial industry. The regulation of the financial sector originates from two levels.

Both external and internal degrees encompass various aspects. External degrees prioritize consumer satisfaction over the financial industry's well-being, aiming to hold financial institutions responsible for the quality of services offered to consumers. These degrees involve external bodies that supervise financial institutions' operations in relation to the services provided to end-users. For example, consumers necessitate truthful information regarding their intended purchases, thereby demanding non-deceptive information.

If entrusted to financial institutions, they may prioritize the quantity of sales over the accuracy of the information provided. They may present deceptive information with the sole purpose of persuading consumers to favor their services. On the other hand, internal regulation aims to uphold the survival of the business in the competitive world. It ensures that the business carves out its own niche and preserves its reputation in this manner.

In Singapore, the Monetary Authority of Singapore (MAS) serves as both the Central

Bank and regulator to maintain a competitive environment with adequate and well-balanced external regulations. It is crucial to strike the right balance in order to avoid harming financial institutions' survival due to excessive regulation or causing consumer suffering due to insufficient regulation.

The Monetary Authority of Singapore (MAS) oversees the regulation of all financial institutions, such as banking and insurance sectors. MAS uses Acts of Parliament as its main means to regulate these institutions.

These Acts form the Torahs that, if broken or violated, result in severe punishment. Some of the key Acts include the Banking Act 1999, the Financial Advisers Act 2005, and the Insurance Act 2002. The MAS also utilizes directives as a tool, which specify the legal requirements for financial institutions. Additionally, notices are issued to specific categories of financial institutions to impose legally binding requirements.

Moreover, the Monetary Authority of Singapore (MAS) utilizes guidelines and codes to regulate fiscal establishments. These guidelines establish the standards for the conduct of these establishments, while codes outline the rules governing their activities. One specific example is the code pertaining to the process of conducting Takeovers and Amalgamations.

Practice Notes are used to provide guidance to financial institutions regarding administrative procedures related to licensing, reporting, and compliance. Circulars, on the other hand, are also valuable documents that are sent to specific financial institutions to share specific information, such as imminent changes. In conclusion.

The policy statements of the MAS provide additional insights into the perspectives held by the MAS on fiscal institutions. The MAS possesses significant authority to regulate all fiscal institutions, including the ability to approve such establishments and oversee their activities. The MAS makes diligent efforts to maintain

equilibrium in regulatory matters, thereby preventing excessive or insufficient regulation.

Excessive regulation stifles creativity and innovation in companies, impeding their ability to address external demands. While the oversight of the MAS restricts the actions of insurance providers, inadequate regulation would have detrimental effects on consumers.

This is because insurance companies are willing to use any ethical or unethical agencies to gain an advantage over their competitors, even if it means harming consumers.

The Insurance Act 2002, Cap 142, includes various provisions that govern the establishment and operation of insurance companies.

For example, only individuals who have received a license from the Authority under this act are permitted to conduct an insurance business in Singapore.

This provision guarantees that all insurance companies operating in Singapore are recognized by the government and reduces the possibility of consumers being deceived by fraudsters.

According to the Act, engaging in insurance business without registration is considered a criminal offense. The Act also provides instructions on the proper procedures for Take-overs in insurance companies to protect consumers from suffering. Additionally, the authority regulates the process of shareholding in insurance companies to ensure that shareholders' rights are upheld and their confidence in the insurance companies they have invested in is increased.

The Monetary Authority of Singapore (MAS) has also issued handbills to insurance companies containing important messages. An example is the circular sent to Chief Executives of insurance companies, dated 18 November 2013. This circular mandated all insurance companies to submit their assets and liability exposures. Guidelines are another significant tool used by MAS to regulate insurance companies.

This text describes two guidelines issued by a company. The first guideline was dated 1st April 2013 and provided instructions on how

to use internal theoretical accounts for liability and capital requirements for life insurance products that include investment warrants with non-linear payouts. The second guideline, issued on 17th May 2013, outlines the standards for enrolling an insurance agent. One of the requirements is that the applicant must be a company, among other criteria.

On September 6th, 2013, a guideline was issued to all fiscal establishments instructing them on how to protect the unity of Singapore's fiscal system. The guideline clearly stated that MAS would not tolerate the use of the fiscal system for illegal and criminal activities. As a result, it was mandatory for all fiscal establishments to maintain the integrity of the fiscal systems. Additionally, MAS has also released notices to insurance companies on multiple occasions. One example of such a notice was issued on November 29th, 2013 regarding unsecured credit facilities for individuals.

The provided notice states the requirements that an insurance company must adhere to when granting unsecured credit installation to an individual. These are examples where the MAS has regulatory authority over insurance companies. The MAS governs all aspects of insurance company operations, including establishment and matters of acquisition and mergers. It is crucial for a regulatory body such as the MAS to have control over financial institutions. The MAS is known for promoting transparency and innovation in the operations of financial institutions to foster competitiveness.

In this way, the MAS meets our goal of avoiding excessive regulation of financial institutions. However, it also ensures that transparency, accountability, and integrity principles are followed in their operations. Transparency is important because customers need to know what services they are purchasing from a financial institution.

Once again, these

financial institutions should be held responsible for their actions, whether they result in positive or negative outcomes. As previously stated, all financial institutions must adhere to the principle of unity by not engaging in criminal or illegal activities. In doing so, the MAS is fulfilling our belief that financial institutions should not be inadequately regulated. If all officers are properly trained in handling non-routine and complex matters, there would be no need to designate a specific officer for these issues.

The essence of this statement is that non-routine and complex matters are escalated because the officer who discovers them is not properly trained to handle them. This also occurs when a compliance officer identifies an issue, but their authority is limited to escalating it to a supervisor or director. Firstly, it is important to understand which non-routine and complex issues can arise in compliance matters.

According to the Financial Industry Competency Standards for Compliance, certain matters are considered non-routine and complex. These matters encompass deliberate violations of regulations, guidelines, and policies; insider trading; misconduct; fraud; approval of new products; and approval of advertising and promotional materials by the insurance institution, among others. These are issues that are not addressed by current policies regarding their handling if they occur. A compliance officer does not have the authority to reprimand an employee.

When it comes to firing an employee based on evidence of misconduct, the person in question lacks the authority to do so. In cases like this, it is crucial to have someone who can quickly address issues related to deliberate violations of rules, regulations, and policies in order to prevent any potential compliance issues.

The responsibility of managing complex

and non-routine matters lies with the supervisors and executives of any organization. The compliance officer has the option to escalate these matters when they occur. However, this process takes time as the compliance officer must document all the steps involved and the actions taken by the individual responsible, starting with the head of the compliance department. To empower compliance officers to handle these non-routine and complex matters, there are certain actions that can be taken. Firstly, these officers require proper training to make them aware of the potential occurrence of such matters.

Furthermore, compliance officers need to have the same skills to deal with such problems effectively. While they may not have the authority to directly sanction or dismiss a noncompliant employee, they can communicate such matters as urgent issues to the board. Additionally, competent and well-trained compliance officers may be given additional responsibilities by their supervisors.

Such maps, including the power to discipline and terminate employees for misconduct, may be assigned to supervisors. However, it is the responsibility of these supervisors to conduct follow-up and evaluation to ensure proper execution of the assigned tasks. It is crucial to note that the supervisor remains accountable for these delegated activities. In summary.

If the conformity officers receive sufficient training to effectively handle non-routine and complex matters, the time wasted in preventing potential conformity crises would be avoided. This time wastage tends to occur when supervisors fail to take necessary action in addressing these issues, necessitating the escalation of the matter to the board of managers.

Before the board convenes to discuss the matter, it may already be too late to prevent the crisis and significant damage may have already occurred.

Additionally, the process of escalation is quite lengthy. It begins with the Head of Compliance. A comprehensive report must be prepared outlining the issue, providing relevant background information, and analyzing the impact on the affected business unit, employees, and the entire organization. Whenever feasible, potential recommendations and alternative courses of action should be offered along with their potential consequences.

All of these steps result in unnecessary delays that could be harmful to the organization in the long run. Therefore, training compliance officers and empowering them can help preserve the reputation of the company on time. Additionally, this could also help prevent an impending collapse of the company, such as in cases when employees choose to disregard the established regulations in the operations.

References

1. Scanlan. A. and Purdon. C. 2006. Compliance Program Management for Financial Services Institutions in Today’s Environment. Bus.

Law. 62 p. 735.

MAS Annual Report 2011/20 ( World Wide Web. msa.

Gov. Seaborgium