Page 36 - Annual Report 2020
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Customer and Investor Protection Rules Technology enhancements and resources Bank and Insurance Supervision (BIS) International Financial Reporting
2019 (CIPR) and Customer Dispute Standard (IFRS) 17 (insurance contracts)
The Regulatory Authority continues to maintain, optimise The BIS team was responsible for the ongoing
Resolution Scheme Rules 2019 (CDRS)
and extend the XBRL and Business Intelligence (BI) supervision of 13 corporate and investment banks Building on the survey results in late-2019, the
platforms. In 2020, the Regulatory Authority upgraded and 14 insurers in 2020. Activities included regular
A central role of the Regulatory Authority is to ensure Regulatory Authority closely interacted with senior
the BI platform to utilise a best-in-class application review and monitoring of prudential returns, high-
appropriate, effective and timely consumer protection. management at insurers to monitor progress in
that enhances supervisors’ ability to generate level meetings with senior management, bilateral and
During 2020, the division continued to uphold the effectively implementing IFRS 17 in conjunction with
customised data reports and integrate third-party trilateral meetings with governing bodies and external
Regulatory Authority’s level of appropriate, effective IFRS 9 by the extended deadline of January 2023.
and market-derived data to analyse risks better. auditors, as well as areas of focus highlighted here.
and timely consumer protection by conducting a
combined thematic review on the Customer and
The analytical data model for banking entities was Areas of focus in 2020: Risk assessment visits (RAVs)
Investor Protection Rules (CIPR) 2019 and Customer
enhanced by introducing an anomaly detection algorithm
Dispute Resolution Scheme Rules (CDRS) 2019. • Credit risk and asset quality: Work mainly
using expected value projections against reported values. BIS conducted ten RAVs at banks and insurers
focused on assessing the impact of the COVID-19 during 2020. The RAVs focused on business
The anomaly score supports the return review process
The assessments commenced in October 2020 pandemic, resulting in deteriorating macro-
and helps identify emerging issues for further analysis. models, credit risk/asset quality, operational risk and
and were conducted via a questionnaire addressing economic conditions impacting banks’ asset quality. business continuity, and compliance and conduct
cross-sector and sector-level questions for regulated Supervision evaluated the adequacy of banks’ risk (including AML/CFT). RAVs at investment
banks, insurers and investment management credit risk management, operations, monitoring, banks also covered equity investment/market
companies. The questionnaire was designed to and reporting. Specific emphasis was placed on risk. Overall, the results of the RAVs conducted
assess the measures put in place to protect clients banks’ capacity to identify any deterioration in asset were satisfactory, with similar results to 2019.
and investors interacting with QFC Firms. quality, appropriately making timeous provisions,
and internal and prudential reporting in this area.
The analysis of firms’ responses indicated that • Business models and profitability drivers: Investment Management, Advisor
CIPR requirements for Customer classification Supervisory efforts focused on assessing the and Securities Supervision (IMAS)
were not fully implemented according to the sustainability of business models in the context of
definitions provided in the Rulebook. Most the challenging macro-economic environment. IMAS was responsible for the ongoing supervision of 10
firms’ interpretation of the Advertisement rules • Operational resilience, cyber risk and business investment managers, 7 insurance intermediaries and
was not sufficient and required further analysis continuity: Supervisors focused on the adequacy 15 advisory firms during 2020. Certain firms reported
from Supervision on CIPR content in 2021. of firms’ crisis risk management frameworks monthly and others quarterly. Return reviews were
and their ability to adapt and implement them conducted during the month after submissions were
The results indicated that CDRS requirements were appropriately in the context of the COVID crisis. received, and this offsite supervision was augmented
generally well implemented, suggesting that firms Furthermore, supervisors engaged with firms’ senior by regular interactions with senior management at
refer typically to the appropriate scheme, particularly management and governing bodies on IT and cyber firms and risk assessment visits. Three new investment
for those with retail customers. However, Supervision risk management practices and governance. management firms were authorised during the year.
analysis recommended that some firms may need to • Client verification and perfection of documentation:
enhance their internal complaints handling processes. Mechanisms and standby arrangements to remediate
increased risk emanating from the inability to
In communicating the review findings to regulated conduct face-to-face meetings were examined.
firms, the Regulatory Authority stated expectations that
each firm’s governing body would fully recognise their
responsibilities to protect customers and investors.
T ABLE OF C ONTENT S
