March 2024
Teresa Huang and Andrew Huang
Referring to the Senior Managers Regime in the United Kingdom, the Financial Supervisory Commission of Taiwan has urged the Bankers Association of the Republic of China to institute the “Self-Regulatory Rules of the Implementation of Responsibility Map in the Banking Industry (hereinafter “Rules”),” applied from January 1, 2025. The objectives of the Rules are to foster and promote a business culture rooted in integrity, establish a corporate governance framework build on responsibility, and enhance accountability for the senior managers within Taiwan’s banking industry. The details of the Rules are introduced as follows.
I. Applicable Individuals
The Rules apply to both the chairman of the board and senior managers (Article 3 of the Rules). The term “senior manager” covers positions that (i) bear responsibility for assigned key functions and (ii) wield the decision-making authority over operational or managerial activities within the bank. This term encompasses roles such as the general manager, vice general manager, and any department manager at the headquarters (Article 4 of the Rules).
II. The Principle of Accountability
The chairman and senior managers should (i) uphold integrity and the principle of accountability, (ii) have a clear understanding of their respective business areas, including the corresponding authority and responsibilities for which they are accountable, and (iii) assume responsibility for their actions related to the operation and management of the banking business. The bank should ensure that at least one (1) senior manager comprehensively grasps their responsibilities related to the designated “senior management functions,” which include, but are not limited to, job titles such as Chairman, General Manager, Chief Auditor, Chief Compliance Officer of the headquarters, AML/CFT Compliance Officer, Chief Information Security Officer, Chief Risk Officer, Chief Accounting & Financial Officer, Head of Operating Department at the headquarters, and any other chief or senior management officer that the bank deems necessary to be included (Article 5 of the Rules).
III. Establishment and Execution of the Responsibility Map
The bank should document the comprehensive framework of banking management and governance via the “Responsibility Map,” which encompasses (i) a corporate governance structure chart, (ii) a statement describing the distribution of authority and responsibility, and (iii) an internal reporting flowchart. When creating the Responsibility Map, the bank should not only strive to make it easily understandable for readers but also ensure consistency in the depiction of authority and responsibility within its content (Article 9 of the Rules). Furthermore, the bank should require the relevant senior manager(s) to provide their respective consent to and separately sign the “Responsibility Declaration” whenever there is a new onboarding or any changes in authority and responsibility. Each Responsibility Declaration should explicitly specify (A) personal information, (B) function, duty, authority, and responsibility of, and (C) the declaration of consent from a senior manager (Article 10 of the Rules).
The bank should implement and execute the mechanism of Responsibility Map in four stages below:
(1) Clarification: organizing the senior management functions and overall responsibilities of senior managers in governance structure and business operations to clarify authority and responsibility;
(2) Responsibility: enabling senior managers to utilize the Responsibility Map for understanding the scope of their responsibilities and assessing the adequacy of necessary resources;
(3) Accountability: when a significant failure occurs in the business or management of a bank, initiating the process to investigate and analyze the root causes of the event and identify the individual responsible for the deficient behavior; and
(4) Answerability: following the aforementioned process, assessing whether the identified person has fulfilled their supervisory or managerial responsibilities and considering the circumstances of the failure to proceed with the implementation of answerability measures (Article 6 of the Rules).
IV. Accountability Committee
The board of directors is tasked with overseeing the execution of the Responsibility Map and assigning the accountability and responsibility to the senior managers to ensure the effectiveness of the Responsibility Map. The board of directors may delegate authority to its affiliated committee(s) to supervise and manage the operation and decision-making process of the bank (Article 7 of the Rules). Besides, to facilitate the implementation of the Responsibility Map, the bank should establish an “Accountability Committee” under the purview of the board of directors or designate an existing committee to be in charge of accountability matters. The Accountability Committee should adhere to the following: (i) Members with conflicts of interests should recuse themselves from discussions and voting; (ii) Incorporate and consider the opinions of independent director(s) if the accountable individuals hold the position of chairman or have directorial roles; and (iii) The resolutions of the Accountability Committee should be reported to the board of directors for approval or documentation (Article 8 of the Rules).
V. Implementation and Maintenance of the Responsibility Map
The bank should establish a consummate system for the handover of authority and responsibilities, ensuring that relevant senior managers and their managers or supervisors have a clear understanding of their respective overall responsibilities. The bank should retain records related to handovers or internal meetings for at least five (5) years (Article 11 of the Rules). Additionally, the bank should conduct an annual review and securely retain the latest versions of documentation and records pertaining to both the Responsibility Map and Responsibility Declaration. In the event of changes or the necessity for re-signing the Responsibility Declaration, pertinent documents and records should not only be updated within a reasonable timeframe but also retained for a minimum of five (5) years (Article 12 of the Rules).
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