The Financial Stability Board (FSB) has developed a toolkit that firms and supervisors can use to reduce misconduct risk and address its widespread incidents.
The new toolkit strengthens governance of misconduct risks in financial institutions and covers information gaps about individuals with a history of misconduct. It also addresses the use of governance mechanisms to mitigate social risk factors that drive misconduct.
The international body, which monitors and makes recommendations about the global financial system, has launched its work plan to develop measures to reduce misconduct risk back in 2015.
The initiative follows on the heels of a series of high-profile misconduct cases that came to light in recent years. The FSB identified several areas for further investigation with the aim to prepare a toolkit for supervisors and financial undertakings in these areas.
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The toolkit provides a set of options based on the shared experience and diversity of perspective of FSB members in dealing with misconduct issues.
The FSB statement further reads:
The toolkit completes a critical element of the FSB’s efforts to promote incentives for good behavior through:
- standards and codes of conduct, such as the FX Global Code, and reforms to benchmark-setting practices;
- the toolkit of measures to address misconduct in wholesale markets developed by the International Organization of Securities Commissions, based on national approaches; and
- FSB’s guidance on the use of compensation tools to promote proper conduct, which will be followed up by recommendations on national data collection on compensation and conduct.