MAS chief: Finance must be a force for good
Ravi Menon urges banks to be more transparent, act in customers' best interests
Banks must ensure they deal fairly with their customers and act in their best interests to repair the damage caused during the global financial crisis of a decade ago, Monetary Authority of Singapore (MAS) managing director Ravi Menon said yesterday.
He added that while the global financial system is safer and stronger today, it is not enough.
"Finance needs to be a positive force for good."
Speaking at the Symposium on Asian Banking and Finance, Mr Menon urged banks and financial institutions to be more transparent - especially with customers at risk of losing money.
They also need to be more forthcoming about fees, charges, commissions and the assumptions underlying return projections or estimates, he pointed out.
"Disclosure alone is not enough. Ask any consumer of financial products (who has) to go through hundreds of pages of product disclosure written in unintelligible legalese," he said.
Mr Menon noted that global surveys show the financial sector suffers from a trust deficit.
Financial services was the least- trusted industry, according to the Edelman Trust Barometer, which asked more than 33,000 respondents to rate how much they trust businesses to do the right thing.
"There is also a broader sense that finance has not served the economy or society well," Mr Menon said.
He said "reckless risk-taking and (the) blatant disregard for ethical conduct that we saw in the lead-up to the global financial crisis are a big part of the explanation".
It has also not helped that financial industries in Europe, Britain, Australia and the US have been dogged by "disappointing revelations of financial misconduct and malfeasance".
"Financial institutions in Singapore have generally been better behaved and are better regarded.
"But we have had our problems too, (including) the mis-selling of minibonds and other structured products, the manipulation by traders of financial benchmarks and, more recently, the laundering of 1MDB-related funds through our banking system," said Mr Menon, referring to Malaysia's beleaguered state investment fund, 1Malaysia Development Berhad.
However, he added that financial institutions here have made significant strides in managing money-laundering risks.
MAS too, he said, has been enhancing its surveillance and supervision of money-laundering risks.