The Financial Stability Board (FSB) on Friday published Strengthening Governance Frameworks to Mitigate Misconduct Risk, which provides a toolkit that firms and regulators can use to tackle the causes and consequences of misconduct.
The toolkit is designed to complement other measures, such as the adoption of industry codes of conduct and reforms to benchmark-setting practices, the FSB says.
Among other things, it includes tools to mitigate cultural drivers of misconduct, strengthen individual accountability, and to combat the “rolling bad apples” phenomenon.
“This toolkit provides firms and supervisors with practical approaches and techniques to improve conduct and strengthen accountability and governance frameworks. It will contribute to financial stability by promoting behaviours that will inspire public confidence in the global financial sector,” says Jeremy Rudin, superintendent at the Office of the Superintendent of Financial Institutions (OSFI) and chairman of the FSB’s working group that led the work.
The FSB plans to publish a consultation in the coming weeks that will provide recommendations for consistent national data reporting on the use of compensation tools to address misconduct risk.