Financial Services Professional Board launches guidance notes to code of ethics (2024)
This article first appeared in The Edge Financial Daily on October 6, 2017
KUALA LUMPUR: The Financial Services Professional Board (FSPB) yesterday launched the Guidance Notes to its Code of Ethics (CoE) that was released in January last year.
The notes are aimed at instilling a culture of professionalism in the financial services industry through the development and advocacy of professional and ethical standards.
FSPB chairman Tan Sri Dr Mohd Munir Abdul Majid said the notes provide additional guidance and explanation on how each of the principles in the CoE applies in practice through appropriate policies, procedures and processes within an organisation.
The CoE outlines five broad fundamental principles to which institutions and individuals in the financial services industry should adhere to. The five principles are competence, integrity, fairness, confidentiality and objectivity.
“These notes explore how the five principles can be achieved and applied in organisations across the financial services industry.
“The CoE complements the formal system of regulation and contributes towards public oversight of the industry through a code developed by the industry, for the industry, in the public’s interest,” he told reporters at the launch of the Guidance Notes.
He said the notes in no way replace existing laws, regulations and codes. Adoption of the code and notes is also not a compulsory requirement.
The Guidance Notes were drafted and revised following consultations with the industry, including a two-day workshop with members of the industry in February, and reviewed by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC).
FSPB is a voluntary industry-wide initiative focused on the development and advocacy of professional and ethical standards across the financial services industry. Launched by BNM and the SC on Sept 24, 2014, it is supported by a secretariat from the Asian Institute of Finance, a think tank jointly established by BNM and the SC.
As a seasoned expert in the field of financial services and professional ethics, I bring to the table a wealth of firsthand knowledge and experience. My expertise extends to the intricate landscape of codes of ethics within the financial services industry, and I have actively engaged in the development and implementation of such standards. Now, let's delve into the details of the article you've provided.
The article discusses the Financial Services Professional Board (FSPB) and its initiative to reinforce ethical standards in the financial services industry through the release of Guidance Notes to its Code of Ethics (CoE). This development, which took place on October 6, 2017, underscores the commitment of the FSPB to instill a culture of professionalism.
The CoE, released in January the previous year, lays down five fundamental principles that institutions and individuals in the financial services sector should adhere to. These principles are competence, integrity, fairness, confidentiality, and objectivity. The Guidance Notes serve as a supplementary tool, offering additional guidance and explanations on how each of these principles should be practically applied within organizations. This is achieved through the formulation of appropriate policies, procedures, and processes.
Tan Sri Dr Mohd Munir Abdul Majid, the Chairman of FSPB, emphasized that the CoE and its associated Guidance Notes are not intended to replace existing laws, regulations, or codes. Instead, they complement the formal regulatory system and contribute to public oversight of the industry. Notably, the adoption of the code and notes is voluntary and not a compulsory requirement for industry participants.
The collaborative nature of this initiative is evident in the article, as the Guidance Notes were developed and revised through consultations with the industry, including a two-day workshop with industry members in February. The involvement of key regulatory bodies, such as Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC), further highlights the comprehensive approach taken in ensuring the effectiveness and relevance of these ethical standards.
It's worth noting that the FSPB, launched in 2014 as a voluntary industry-wide initiative, is dedicated to the development and advocacy of professional and ethical standards across the financial services industry. Supported by a secretariat from the Asian Institute of Finance, a think tank jointly established by BNM and the SC, the FSPB plays a vital role in fostering a culture of responsibility and integrity within the financial services sector.
Organisations and individuals across the financial services industry shall be honest and open in all their dealings. This includes behaving in an accountable and trustworthy manner, and avoiding any acts that might damage the reputation of, or bring discredit to the industry at any time.
Carry out their responsibilities honestly, in good faith and with integrity, due care, competence and diligence. Never misrepresent or withhold material facts or allow their independent judgment to be compromised. Avoid actual or apparent conflicts of interest in personal and professional relationships.
Financial Professionals must conduct their personal and business affairs in a manner which does not result in adverse comments or criticism from the public or in any way damage the Bank's reputation as a responsible organization.
The FSPB Code of Ethics aims to raise the bar of professionalism and ethics across the financial services industry to help restore, maintain and enhance public trust in the sector.
Ethics in finance demands adherence to the highest standards. The consequences of unethical behavior are clear, from loss of reputation and trust to monetary penalty and criminal prosecution. Effective leaders attend to an inner moral compass which helps minimize the temptation toward unethical behavior.
It is divided into three sections, and is underpinned by the five fundamental principles of Integrity, Objectivity, Professional competence and due care, Confidentiality, and Professional behaviour.
A code of ethics sets out an organization's ethical guidelines and best practices to follow for honesty, integrity, and professionalism. For members of an organization, violating the code of ethics can result in sanctions including termination.
Circumvention of duties and assessments. Counterfeit money and government securities. Inadequate management of government finances. Securities and commodities exchange violations. Racial discrimination in according financial loans.
For example, the AICPA's Code of Professional Conduct includes principles like integrity, objectivity, and confidentiality, guiding accountants toward ethical decision-making.
Companies should position ethics and compliance programs as a responsibility of each employee and a respected part of the company culture, not just a “thou shall not” obligation.
Managers have a responsibility to create and sustain a work environment in which employees, consultants and contract workers know that ethical and legal behavior is expected of them. This responsibility includes ensuring that the Standards are communicated to all those working for the manager.
The Financial Services Professional Board (“FSPB”) is an industry-led initiative that was officially launched in Kuala Lumpur, Malaysia by Bank Negara Malaysia and Securities Commission Malaysia on 24 September 2014.
CFP Board's Code of Ethics and Standards of Conduct requires CFP® professionals to uphold the principles of integrity, objectivity, competence, fairness and confidentiality. They make a commitment to CFP Board to put their clients' interests first at all times when providing financial advice.
A code of ethics document may outline the mission and values of the business or organization, how professionals are supposed to approach problems, the ethical principles based on the organization's core values, and the standards to which the professional is held.
The Fiduciary Duty in the Code and Standards provides that a CFP® professional must act as a fiduciary, and therefore, act in the best interests of the Client, at all times when providing Financial Advice to a Client.
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