Following up on last year's Bank Culture Reform, the Hong Kong Monetary Authority is poised to require financial firms to assess their own compliance cultures, prepare for regulatory reviews on the subject and take part in 'culture dialogues.'

The regulator will require financial firms to review and report the arrangements they have made in relation to 'governance,' along with their policies and procedures in relation to corporate culture and the implementation of "the enhancement measures in fostering a sound bank culture with respect to the circular last year." For the avoidance of doubt, the self-assessment exercise is meant to be an opportunity for AIs to reflect on any insights they have gleaned, lessons they have learnt and problems they have encountered while taking these "enhancement measures," but not a "check-box type compliance exercise," as the regulator puts it.

When compliance officers send questions to their board members as part of their firms' self-assessment exercises, these are to include the following.

1. How does your board see its role in relation to establishing your institution’s culture and behavioural standards that promote prudent risk-taking and fair treatment of customers?
2. What proactive steps did your board (including relevant board-level committee(s)) take in driving your institution’s culture enhancements?
3. Regarding the progress of culture reform at your institution, what have you learnt from fostering a sound culture within your institution?
4. In your view, what are the most salient indicators (quantitative and/or qualitative) that you would use to measure and assess your institution’s culture?
5. Based on the indicators mentioned above, what tangible outcomes have you seen from fostering a sound culture within your institution?
6. Looking forward, what are your institution’s priorities on culture reform over the coming twelve months (i) in relation to the three pillars [governance, incentive systems and an assessment/feedback mechanism], and (ii) among the business units in your institution (or other categorisation that you see appropriate), and which do you expect to be the most difficult to achieve?
7. Looking forward, how does your institution encourage/motivate your staff at all levels to adopt and adhere to your institution’s desired culture and behavioural standards?
8. If your institution is a part of an overseas-incorporated institution, how does your cultural programme interface with that of your head office and what adjustments have been/will be made having regard to local circumstances?
9. Is there any additional contextual information which you feel is relevant in understanding the progress of culture reform at your institution?