Compliance Clarified – a podcast by Thomson Reuters Regulatory Intelligence
Season 5, Episode 3: Evolving conduct risk standards
May 31, 2022
Susannah Hammond, Host of the Compliance Clarified podcast, discusses the evolving supervisory approach to conduct risk with guests Helen Chan and Mike Cowan. They explore the concept of conduct risk, the different regulatory approaches in Hong Kong, Singapore, and the UK, and the importance of good customer outcomes. The podcast also highlights the need for regulating the regulatory perimeter and improving customer treatment, addressing vulnerable customers, and promoting competition.
39:03
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Quick takeaways
- Regulators worldwide prioritize customer well-being over tick-box compliance, urging firms to embed conduct risk through training, processes, policies, and a commitment to ethical conduct.
- Regulators in Asia are increasingly proactive in addressing conduct risk, influenced by enforcement trends in the US and UK, which can pose risks to firms operating in Asia.
Deep dives
Conduct Risk and Regulatory Expectations
Conduct risk encompasses various actions or inactions that can result in customer detriment or negatively impact market stability. Regulators worldwide aim to prioritize customer well-being over a tick-box compliance approach. However, despite the principles-based nature of regulation, firms have interpreted and implemented the concept of treating customers fairly differently, leading to issues. Conduct risk remains a significant challenge, with regulators observing ongoing bad practices in firms' cultures, products, sales techniques, and customer service. The regulators emphasize the need for conduct risk to be embedded firmly within firms, involving training, processes, policies, and a strategic commitment to ethical conduct.
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