Financial Stability Board Reveals Toolkit for Mitigating Misconduct

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.‎‏ ‏

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.‎