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;

  1. 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).
  1. 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.
  1. 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.