05 Jun 2017
The global financial services landscape is changing rapidly. Questions of ethics have become leading concerns for regulators and industry alike in the wake of the 2008 Global Financial Crisis. While the general economic and investment climate is recovering, the future remains uncertain. Policies adopted by governments and central banks in response to the crisis have averted a catastrophe, but their longer term impacts on economies, the financial services industry and consumers remain unknown.
Meanwhile, the public’s trust in the industry has been shaken by widespread evidence of questionable business practices and breaches of professional ethics leading to the 2008 crisis. It is not being helped by recurring incidents of misconduct involving prominent industry names at the international level. The general perception is more needs to be done to restore confidence in the sector.
Two ongoing developments add to the urgency of restoring faith in the industry’s ability to act responsibly in keeping with government policy priorities and consumer expectations. One is the shift in the balance of economic power from the West to the East, with developing and emerging economies in Asia now assuming a greater share of future global growth. For a trading nation like Malaysia, this implies increased financial activity, more intense interaction with foreign markets and financial institutions, and greater exposure to global events and risks. The other is the accelerating trend towards digitalisation and FinTech. This covers a broad spectrum of financial products and services aided by digital technology, ranging from remote banking and cashless transactions to sophisticated tools that come with a different set of risks and rewards that are yet to be fully understood. These developments call for a higher level of confidence in the industry.
The Financial Services Professional Board (FSPB), an industry initiative, was launched in Malaysia in September 2014 against this background. Its focus is on setting elevated standards of professionalism and ethics in the industry to regain public confidence and achieve sustainable growth. Its first initiative was a Code of Ethics launched in January 2016.
The Asian Institute of Finance (AIF), in its role as the secretariat for FSPB, commissioned a survey of Malaysian industry practitioners to gauge the industry’s ethical health and to get a baseline reading of FSPB’s impact on the industry. The survey has identified a number of gaps in professionalism and ethics, and a significant role for FSPB to support the industry’s own initiatives to address these gaps. In presenting this report to the industry, AIF would like to convey its readiness to assist the industry leaders and professionals in their efforts to harmonise their existing codes of ethics and professional conduct, and to bring them on par with international norms.