Majority of banks and financial services companies in Singapore not very clear about conduct risk

07 October 2014

But 9 in 10 say conduct risk regulations are impacting the way they do business

8th October, 2014: A series of high profile financial scandals around the world have forced financial services companies to focus on conduct risks, such as how customers are treated, how risky products are sold and how conflicts of interest are dealt with.

Managing conduct risk is the hot topic in the banking and financial services community right now. Yet, a new survey has found 7 in 10 organisations in Singapore do not have a very clear view of how conduct risk relates to their business.

The survey was conducted by specialist recruitment firm Robert Half and involved 350 senior business leaders working in the banking and financial services sector, including 75 respondents from Singapore. Four markets were surveyed – Hong Kong, Singapore, Japan and the United Kingdom.

In Singapore, 91 per cent of CFOs confirmed that the current regulatory focus on conduct risk was having a significant (20 per cent) or moderate (71 per cent) impact on their business operations and practices.

However, when asked if their company had a very clear view of conduct risk, only 27 per cent of Singapore financial services leaders said yes. This is well behind the UK (42 per cent) and slightly better than their Japanese counterparts (25 per cent).

TABLE 1: Do you think your organisation has a clear view of how conduct risks relate to your business and operations?

 

All Countries

Hong Kong

UK

Japan

Singapore

         

All Firms

Small
(1-499 employees)

Medium
(500-999 employees)

Large
(1000+ employees)

Very clear view

31%

27%

42%

25%

27%

19%

44%

26%

Adequate view

61%

61%

51%

64%

71%

78%

50%

74%

Unclear view

7%

12%

7%

8%

3%

3%

6%

0%

Don't know

1%

0%

0%

3%

0%

0%

0%

0%

In Singapore, mid-sized firms (500 to 999 employees) have the clearest view about conduct risk in their business (44 percent). On the other hand, small firms (1 to 499 employees) have the lowest level of clarity (19 per cent). And just 26 per cent of senior financial services leaders of large firms (1000+ employees) said their organisation is very clear about conduct risk.

Ms Stella Tang, Managing Director of Robert Half Singapore said it was not surprising that mid-sized firms were the most clear on issues relating to conduct risk.

“Small firms often lack the expertise and the resources to fully understand how conduct risk impacts them. Large firms engage in more complex dealings so you would expect their senior business leaders to have a tougher time getting a handle on conduct risk. Mid-sized firms have enough resources to manage the risk, and usually engage in a more limited range of activity than larger firms, so there are lesser areas for conduct risk to occur.”

“Few acts do more harm to an organisation’s reputation than a scandal involving misleading vulnerable consumers. Being caught selling inappropriate and risky products to the elderly or less educated can destroy a company’s brand – as well as the investor’s life savings.”

“Banks and financial services companies are taking conduct risk seriously and are committing more resources to the issue. The survey found 59 per cent of Singapore firms intend to hire more permanent staff to deal with conduct risks while 63 per cent will hire additional interim staff.”

“Enlisting the help of an external consultant is favoured by 35 per cent of companies while only five per cent are doing nothing at all,” Ms Tang said.

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