A straw poll of the senior management, compliance and risk chiefs, and product gatekeepers at 20 leading international and local private banks has highlighted key insights about the views of these individuals, as well as their organisation’s preparedness, in relation to the many regulatory and compliance requirements in Hong Kong.
Date: Aug 19, 2011
Tags: Regulation, Compliance, Hong Kong
A straw poll of the senior management, compliance and risk chiefs, and product gatekeepers at 20 leading international and local private banks has highlighted key insights about the views of these individuals, as well as their organisation’s preparedness, in relation to the many regulatory and compliance requirements in Hong Kong.
Just over two-thirds of them said increased regulation and compliance burdens are among their top three challenges to business growth.
And a quarter of them ranked this as their greatest challenge.
More specifically, the majority of those surveyed said that greater regulatory convergence across borders – and meeting more stringent requirements as part of this – was the main area of concern.
Anti-money laundering, enhanced know-your-client requirements, increased product regulation, and fee and pricing transparency, were cited as some of the other big challenges for the industry.
When it comes to the impact of the regulatory environment on operating costs, the respondents were virtually unanimous in their view that this is either “very significant” or “significant”.
Yet 65% of them acknowledged that their RMs are only “somewhat” prepared and equipped to meet client risk-management and regulatory requirements.
More concerning is that around 20% of those polled said their RMs are not as ready and able as they should be.
In addition, with far-reaching new rules coming on board regularly, banks need to do an almost constant review of their risk management frameworks. In line with this, roughly 70% of those institutions in the survey claim to have reviewed their risk-management frameworks within the past three months.
The poll showed that only one institution in the survey hasn’t done such a review within the last 12 months.
When asked how they would like the regulators in Hong Kong to adapt their current approach, 60% of the private banks surveyed said their number-one wish is to see less legislation and more best-practice guidelines.
The remainder of them highlighted the need for more consultation with the industry as the preferred route.
Meanwhile, the most-agreed upon way to address the many regulatory and compliance challenges was to enhance front-office controls and training – with around 50% of respondents opting for this route.
The use of IT tools as enablers is also in demand, with roughly 25% of the market practitioners viewing this as a solution.
