BSP to require financial firms to set rules on filing of cases vs personnel
THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to require financial firms to come up with guidelines on the filing of legal cases against erring personnel to help mitigate operational risks.
In a draft circular released on its website, the central bank said it is seeking to amend the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions to mandate BSP-supervised financial institutions (BSFIs) to implement “board-approved policy governing the process and criteria to determine when to file cases against erring personnel, including dismissed directors, officers and employees.”
“This aims to reinforce measures, including filing of legal cases, to deter misconduct and promote discipline in the BSFIs for the protection of the depositors and other financial consumers,” it added.
Under the draft rules, banks must set up an “appropriate” operational risk management framework, which should include guidelines on the management of human resource-related risks, the BSP said.
“One of the major sources of operational risk is ‘people risk.’ In this regard, banks shall embed in their enterprise-wide risk management framework measures to identify, measure, monitor, and control human resource related risks,” the central bank said.
Banks will also be required to implement policies and risk management and control measures in their recruitment and selection separation from service and filing of legal cases.
“The board shall establish bespoke policy, comprised of process, procedures, guidelines and criteria, aligned with the overall framework for managing human resource-related risks, to determine when to file administrative, civil and/or criminal case against erring or dismissed personnel,” it said.
“Also, the policy must clearly indicate the decision-making process and approving authorities for the filing of administrative, civil and/or criminal cases,” it added.
Once the circular is finalized, BSFIs will have six months to comply with its provisions.
The BSP is accepting comments on the draft circular until June 1. — L.M.J.C. Jocson
