In its Outlook Report, the Deloitte Asia Pacific Centre for Regulatory Strategy predicts that regulatory trends in 2016 will, as in the past few years, be largely driven by international developments.
According to the report, the program of policy development and supervisory focus can be grouped into three major themes: resilience, culture and conduct, and technology.
Overlaying these critical themes will be the equally complex issue of implementation, according to Kevin Nixon, lead partner of the Deloitte Asia Pacific Centre for Regulatory Strategy.
“APAC financial institutions will continue to face elevated implementation challenges within an ongoing policy environment that has significant strategic implications,” Mr Nixon said.
“Our paper outlines the moving pieces in 2016, from substantial changes in how capital requirements are calculated, to the associated and ongoing reforms such as total loss absorbing capacity (TLAC) and recovery and resolution planning designed to end ‘too-big-to-fail’, to the ever-constant pressure to improve and demonstrate good conduct and culture,” he said.
“Digital innovation will play a major role in altering the environment for delivery of financial services.”
According to Janson Yap, Deloitte’s Asia Pacific Enterprise risk services leader, financial institutions in Asia Pacific are under increasing pressure to meet international regulatory timelines while managing varied local regulatory requirements.
“Our aim is to help organisations navigate these challenges by taking a forward looking view of regulation and its implications on business strategy,” he said.
The Deloitte Global Change, Regional Context paper suggests that strategic impacts and implementation programs are best managed in a total reform context.
Mr Nixon said implementing individual requirements, as well as adapting business strategy to regulatory initiatives, is best done with an understanding of policy intent and future reforms. Understanding this in a holistic context is vital.
“International trends continue to define the landscape, and local regulators and institutions need to adapt according to the local environment,” he said.
“This complex ecosystem therefore needs to ensure global policies take into account varying circumstances. Given China will assume the presidency of the G-20 in 2016, there will be a heightened opportunity for the region and its institutions to voice their opinions on the international agenda.
“This is the time to understand and outline the challenges and possible responses across the region’s diverse financial systems, economic needs and stages of development.”
In Australia, financial institutions have a comprehensive local agenda to manage following the government’s recent adoption of nearly all recommendations of the Financial System Inquiry, Mr Nixon said.
He added that while some of these are aligned with, and dependent on, global policy outcomes (such as mortgage risk weights), there is a significant local body of work through 2016 and beyond.