“Consumer Banking” Compliance Assessment
“Consumer Banking” Compliance Assessment

“Consumer Banking” Compliance Assessment

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  • Pages: 7 (3535 words)
  • Published: October 20, 2017
  • Type: Research Paper
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The concern entities have evolved enormously over clip. Among the many promotions made in the concern industry is the issue of the creative activity of different runing units. One of the most of import runing units is the conformity unit. Each operating unit is accorded its ain authorizations and footings of mentions. This manner, each unit is made someway independent to the extent that it operates within the demands of the full organization’s ends. In add-on. each operating unit is charged with its duties. This is in line with the intent of the creative activity of the unit in the first topographic point. The figure of the runing units depends on the categories of maps that are identifiable in the full organisation. Furthermore, all the runing units must be able to associate with one another. This is because they are all operating in the best involvement of the full organisation. If one fails. all the others are affected. Therefore, none can work in purdah. It is besides of import to observe that all the units should hold a proper coverage process to the direction and eventually to the board of managers. This is because they are answerable to the board. Understanding the nature of each concern unit is hence really of import. Designation of the elements that constitute the concern unit is besides of import. In this manner. we can appreciate the function of each concern unit, how they link to each other and finally how they contribute to the success of the full concern.

Conformity unit is a really particular unit in the fiscal industry. It is part


icular because its maps are non concern activities but giving advice to other concern units on how to better conformity with the regulations and ordinances. Just like any other operating unit. the effectivity of the conformity unit in dispatching its responsibilities is affected by factors such as footings of mention, authorization, describing duties, answerability and the quality of the staff. All these factors together will see that the unit is successful in its operations or it fails. If it is successful so it is relevant to the full house because it will supply the much needed aid. If it fails, the full house will probably neglect because the conformity hazards will finally catch up with it while unaware. It is hence of import to look critically at the factors that guarantee that the established conformity unit is effectual.

First and first. the footings of mention for the conformity unit predict the effectivity of the unit. The footings of mention enchantment out the specific undertaking that the unit is mandated to transport out. The undertaking should be stated clearly with no ambiguity. For case. in the instance of the conformity unit. the undertaking is to rede the concern on how to follow with the set regulations, ordinances. Torahs and criterions. In add-on, the conformity section monitors the concern activities to happen out whether they are within the ordinances set out. The section besides monitors the behavior of employees to place existent misdemeanors or possible misdemeanors of regulations. process, policies, ordinances and criterions that are guideline

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in the industry. In a nutshell, the responsibility of the conformity section is to make plans that support the firm’s conformity. It is the responsibility of the senior direction and the concern line supervisors that guarantee finally that there is steadfast conformity with Torahs and the ordinances. Furthermore, in the footings of mentions. the aims of the conformity unit must be stated clearly. This manner, the section will hold the background for mensurating its public presentation merely like any other concern unit. The aims of the section may be with respect to how many preparations that will be done at a given clip, how frequently surveillance will be conducted, how frequently policies will be reviewed among others. Last, the intent of being of the section must be clearly understood if the section has to be effectual in dispatching its responsibilities. For case, the section should be made cognizant that its chief intent is to help the direction in placing conformity hazards. measuring them and reding on what should be done to debar their reverberations every bit good as their return. There are set guidelines that dictate the operations of the conformity unit. They stipulate the boundaries of the operations of the section and the bounds of its authorization. If these guidelines and the instructions are adhered to. the effectivity of the conformity unit will be realized in the house. There will be no struggles of involvement between the conformity unit and the direction duties.

The other of import factor that influences the effectivity of the conformity section is the authorization. The authorization of the conformity section should be clearly stated out. To guarantee monitoring of the concern activities and the behavior of the employees. the conformity staff should be given limitless power to entree all the information in all the concern units in the house. The conformity staff should be answerable to the board and the senior direction entirely. For case, say the concern unit in a bank in charge of loan processing is about to perpetrate a offense with regard to the ordinances that govern the operations. A client comes to the office of the concern line director in this concern unit. It happens that the client is a friend of the director. Harmonizing to the set ordinances regulating progressing loans. the client does non run into the standards. The director manoeuvres and bends the regulations in favour of his friend to acquire the loan. This is an issue that touches on conformity. Without adequate authorization on the portion of the conformity staff to look into the behavior of the director in this concern unit. so it would be impossible to unearth such a misconduct. Possibly it could stop up undetected. To this extent, the conformity section would be deemed to hold failed. but merely because it had no authorization over such fortunes.

How the conformity staff report their findings is besides really of import if the section is to be effectual. In order of hierarchy. the board of managers is at the top. The senior direction is the 2nd. The board gives instructions to the senior direction staff. The senior

direction gives instructions to the concern line directors who in bend bid concern unit supervisors. The supervisors give orders to the employees. The conformity section does non play any direct function in the concern, it is hence termed as a non-business section in the house. The board and the senior direction finally enforce conformity with the regulations and the ordinances get downing with the concern line directors and the concern unit supervisors. Then the supervisors guarantee that the employees toe the line in affairs that regard Torahs, regulations, ordinances, process and the criterions of the house. The conformity section is involved designation of the possible misdemeanors of the conformity. If such misdemeanors are identified. they should be communicated to the right individual. The caput of the conformity section studies straight to the board and senior directors for an appropriate action to be taken. This is because, as we have already mentioned above, it is the duty of the board and the senior directors to guarantee full conformity in the full house. The fact that the conformity section can describe straight to the board makes it possible to debar a possible crisis that could ensue from misconduct of employees.

Another factor that influences the effectivity of the conformity unit in a house is the quality of the staff members. The staff should be good educated in affairs that regard the province Torahs that affect the house. In add-on. they should hold a good apprehension of the regulations, ordinances, process and criterions of that house, This cognition will assist them in doing proper determinations when transporting out their responsibilities. This is because it is impossible to state when a misdemeanor has happened or is about to go on if one does non cognize what was supposed to done in the first topographic point. The issue of quality of staff arises besides in concern units that are involved selling procedure. It is of import for the conformity officers to cognize the line of merchandises that are being sold and the providers who supply them. This is because some concern entities enter into understandings with certain providers. For case, in a certain concern entity in Singapore that sells electronics from Samsung Company. the undermentioned misdemeanor of the conformity was committed and went unidentified. In this peculiar case. the director in charge of gross revenues decided that he could order some electronic devices from Sony Company without informing the remainder of the direction squad. The ground why this director decided to make such a thing unmindful of its effects to the full concern was because he thought that Sony merchandises sold more than Samsung merchandises of the same line. One junior conformity officer was inspecting the merchandises in the concern stock. He noticed both Sony and Samsung merchandises but did non inquiry. This is because he did non cognize that there was a trade between the concern entity and Samsung Company and that presence of Sony merchandises meant that the director was non compliant.

The ordinance of the fiscal services sector requires a delicate balance being maintained between over-regulation on the one manus and under-regulation on the

other. This is because fiscal services are delicate affairs that are sensitive to any external alterations and the impact of any external force is important in the endurance of the fiscal industry. Regulation of fiscal industry emanates from two degrees. These degrees include external and internal degrees. External ordinances are the most important because they basically target satisfaction of the consumer of the services and non needfully the wellbeing of the fiscal industry. They are meant to do the fiscal establishments disciplined in footings of their services to their consumers. They are made by external organic structures that oversee how the fiscal establishments operate with regard to the quality of services that the terminal user receives. For case, the consumer requires to cognize the truth about the services that they are about to buy. Therefore, they require information that is non deceptive. If left to the fiscal establishments. they would non care the truthfulness of the information they give but the measure of the gross revenues. They would give deceptive information that is merely aimed at converting the consumers to wish their services. Internal ordinance is aimed at keeping the endurance of the concern in the universe of competition. It ensures that the concern shapes its niche and maintains its repute. This manner. it ensures that the concern maintains the competitory ambiance. Excessively much external ordinance would hold ruinous effects in footings of endurance of fiscal establishments. Too small ordinance would take to enduring of the consumers. A balance is hence paramount to be maintained.

In Singapore, the Monetary Authority of Singapore ( MAS ). besides being the Central Bank. itis the establishment that is charged with the duty of modulating all fiscal establishments including the banking and insurance sector. The MAS uses many instruments to modulate fiscal establishments. First and first. it uses Acts of Parliament to modulate fiscal establishments. These Acts constitute the Torahs that if broken or violated culminate to a terrible punishment. Among the most of import Acts are the Banking Act 1999. the Financial Advisers Act 2005 and the Insurance Act 2002. Another instrument that the MAS uses is directives. They directives spell out the legal demands of the fiscal establishment. Notices are besides issued to certain category of fiscal establishments to enforce certain demands that are lawfully adhering. Furthermore, the MAS applies guidelines as an instrument to modulate fiscal establishments. Guidelines dictate the best pattern criterions that govern the behavior of the specified establishments. Codes are besides applicable because they set out the regulations regulating the behavior of fiscal establishments with respect to the public presentation of certain activities. Examples of codifications are those that govern how Takeovers and Amalgamations can be done. Practice Notes are used to steer the fiscal establishments on administrative processs that pertain to the affairs of licensing. coverage and conformity. Circulars are besides really utile. They are paperss sent to specified fiscal establishments to go through peculiar information such as alterations that can be anticipated in the close hereafter. Finally. the policy statements of the MAS give more information on the outlooks of the MAS on the fiscal establishments. The

MAS has huge powers to modulate all the fiscal establishments. Among its powers is the power to O.K. fiscal establishments and to command their operations.

The MAS strives so hard to keep the balance in the ordinance affairs to avoid over-regulation and under-regulation. Over-regulation hinders the creativeness and inventions of the companies. The insurance forces would experience restricted in the manner they respond to the external demands if the MAS proctors the company’s every move. On the other manus. if the insurance companies were to be left unregulated or under-regulated. the consumers would endure greatly. This is because the insurance companies would utilize any agencies. whether ethical or unethical to derive an advantage over the rivals at the disbursal of the consumers. Harmonizing to the Insurance Act 2002. Cap 142 has several commissariats that dictate how insurance companies should be created and operated. For case, it is merely a individual who has been licensed by the Authority under the Act who can transport out an insurance concern in Singapore. This proviso ensures that all the insurance companies are recognized by the province of Singapore and that there is no opportunity that a consumer may be conned by a fraudster. Harmonizing to the Act, anyone who claims to transport out insurance concern while unregistered is apt to a condemnable discourtesy. The Act besides gives guidelines that pertain to how Take-overs should be done in the insurance companies. Without proper Take-over processs. the consumers may endure. The authorization besides dictates how shareholding to the insurance companies is done. This manner, the rights of the stockholders are maintained and their assurance in the insurance companies to which they have portions is boosted.

The MAS has besides issued handbills to the insurance companies to convey of import messages. An illustration of the round issued to the insurance companies Chief Executives is that dated 18 November. 2013. It required all the insurance companies to subject their assets and liability exposures. As already stated. guidelines are another of import tool through which the MAS regulates the insurance companies. An illustration of a guideline that is dated 1st April. 2013. It was a guideline on the usage of internal theoretical accounts for liability and capital demands for life insurance merchandises incorporating investing warrants with non-linear payouts. Besides. on 17th May 2013, a guideline sketching the standard for the enrollment of an insurance agent was issued. It requires that the applicant be a company among many other demands. On 6th September 2013, a guideline was issued to all the fiscal establishments steering them on how to safeguard the unity of Singapore’s fiscal system. It flatly stated that MAS would non digest the usage of the fiscal system to carry on bastard and condemnable activities. Therefore. all fiscal establishments were required to continue the unity of the fiscal systems. Notices have besides been issued on several occasions by the MAS the insurance companies. An illustration of the notice is that issued on 29th November 2013 with respect to the unbarred recognition installations to persons. This notice provided demands that an insurance company has to follow to when allowing unbarred recognition installation

to an person.

All the above are illustrations where the MAS has regulative authorization over the insurance companies. We have seen that it regulates all the stairss of the operations of insurance companies from constitution to affairs of coup d'etat and amalgamations. It is imperative that such a province organic structure like the MAS should hold control over fiscal establishments. The MAS is known to heighten unfastened operations in the fiscal establishments in order to advance fight and spirit of inventions. This manner, the MAS fulfills our statement that fiscal establishments should non be over-regulated. On the other manus. the MAS ensures that transparence. answerability and unity rules are upheld in the operations of these fiscal establishments. It ensures transparence because the consumers need to cognize what sort of services they are about to buy from a fiscal establishment. Again, these fiscal establishments are to be held accountable for their operations when they lead to positive or negative consequences. As already mentioned. all the fiscal establishments are supposed to continue the rule of unity by non transporting out their operations to progress condemnable and illicit activities. In this mode, the MAS is carry throughing our statement that fiscal establishments should non be under-regulated.

The demand to intensify “Non-routine and Complex Matters” to a designated officer would non originate if all the officers are decently trained in covering with such issues. This statement merely means that escalation of non-routine and complex affairs is done because the officer who detects such an issue is non trained adequately to manage it. This besides happens when a conformity officer identifies an issue. but so his or her authorization is limited to intensifying it to a supervisor or director.

First and first, it is of import to cognize which are these non-routine and complex issues that can originate in affairs of conformity. Harmonizing to the Financial Industry Competency Standards for Compliance. the undermentioned issues constitute non-routine and complex affairs. They include issues such as knowing breaches of ordinances. guidelines and policies ; insider dealing; misconduct; deceit; sign-off new merchandise; sign-off advertisement and promotional stuffs by the insurance establishment among others. These are issues that are non covered by the bing policies on how they should be handled in instance they happen.

A conformity officer has no power to censure an employee. He or she has no power to fire an employee on the evidences of misconduct. If this is the instance so. issues such as knowing breaches of ordinances. guidelines and policies need person who can decide them so fast to debar any conformity crisis. The power to cover with the complex and non-routine affairs is in the custodies of the supervisors and the executives of any house. The conformity officer is left with an option to intensify such affairs whenever they arise. This procedure of escalation takes clip because the conformity officer has to document all the stairss involved every bit good as the action taken by the appropriate individual to whom the affair has been reported get downing with the caput of conformity section.

There are certain things that can be done to authorise conformity officers to be

able to cover with these non-routine and complex affairs. First. these conformity officers need proper preparation to do them cognizant of possibilities of happening of such affairs. Furthermore. they need to be equipped with equal accomplishments to get by with such issues when they occur in order for them totake appropriate and rational stairss. Although they may non be given powers to bump or fire a disobedient employee, they can be given a agencies through which they can turn to such affairs to the board as a affair of urgency. In add-on. when these conformity officers are trained adequately and are competent. supervisors may depute some maps to them. Such maps may include the power to bump and to fire misconducting employees. However, it is the duty of these supervisors to carry on a follow-up and reappraisal to guarantee that the delegated maps are performed decently. Most of import is the fact that the supervisor remains responsible for such delegated activities.

In short. if the conformity officers are adequately trained so that they can adequately manage the non-routine and complex affairs. the wastage of clip in debaring possible conformity crisis would non happen. This wastage of clip occurs particularly if the supervisors don’t take the necessary action to manage such issues. This requires that the affair should be escalated to the board of managers. Before the board sits to discourse the issue, it may be excessively late to debar the crisis and adequate harm would already hold occurred. Furthermore, the procedure of escalation is really drawn-out. It starts with the Head of Compliance. A complete brief demand to be prepared explicating the issue and giving any relevant background information and the impact or the deductions for the involved concern unit. the forces and the full organisation. Where possible, possible recommendations and alternate class of action should be provided and their possible deductions. All these stairss cause unneeded holds at could be damaging to the organisation in the long tally. Therefore, developing conformity officers every bit good as authorising them can assist salvage the repute of the house in clip. In add-on, this could besides assist salvage an at hand prostration of the house like in instances when employees decide to ignore the set ordinances in the operations.


  1. Scanlan. A. and Purdon. C. 2006. Compliance Program Management for Financial Services Institutions in Today’s Environment. Bus. Law. 62 p. 735.
  2. MAS Annual Report 2011/20 ( World Wide Web. msa. gov. seaborgium )