Legal News: Financial Services Legislation To Be Tabled In Current Parliament Sitting

KUALA LUMPUR, June 12 (Bernama) — The new financial services legislation, which will increase the general duties and responsibilities of the board of financial institutions, will be tabled in the current Parliament sitting, says Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz.

The new legislation will emphasis on specific key considerations in the responsibilities undertaken by the board of directors under the Companies Act.

She said boards would need to have regard to the interest of depositors and policyholders, the long-term viability of the institution and to have in place reasonable standards of fair dealings.

“The statutory duties will also include an explicit duty and oversee the effective design and implementation of a sound control environment,” she said when opening the Financial Institution Directors Education Forum.

Zeti said corporate governance practices in the financial industry has come under significant scrutiny following the recent global financial crisis with increased pressure on the management, board of financial institutions and regulators.

Against this environment, a number of areas would become more important to reinforce the effectiveness of boards and sound governance, she said.

Zeti also said board-level engagements on risk issues must be strengthened further.

This can be achieved if boards have a sound understanding of the institution’s business model and grasp the changing complexion of risks to which the institution were exposed to, she added.

Besides, the governor said with the growing expansion of financial institutions in scale and complexity, there was a need to inject greater diversity into boards to enable them to collectively deal with a range of issues.

“This needs to be embedded within the framework for board renewal and succession,” she said, adding that boards must objectively evaluate their own performance and examine ways in which their effectiveness can be improved.