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Speech by FS at HKSI Institute Business Ethics Forum 2015 (English only) (with photo/video)

     Following is the speech by the Financial Secretary, Mr John C Tsang, at the Hong Kong Securities and Investment Institute Business Ethics Forum 2015 at the Hong Kong Convention and Exhibition Centre this morning (January 22):

Craig, distinguished guests, ladies and gentlemen,

     Good Morning.

     I'm pleased to join you all this morning for the Hong Kong Securities and Investment Institute's eighth Business Ethics Forum.

     When it comes to ethics and business, I'm a "Dilbert" fan. Not for the cartoon's point of view, of course, but for the way Scott Adams, the creator of "Dilbert", expresses it. I'm pretty sure you know what I mean, but let me give you one "Dilbert" example:

     The Pointy-Haired Boss tells Wally, an engineer and the office deadbeat, that he's "failed the online ethics course for the third time." He adds: "You can't be an engineer for this company if you have no grasp of business ethics. You leave me no choice," says the Pointy-Haired Boss. "I'm putting you on the management fast track."

     That certainly nails one view of business and ethics. Today's Business Ethics Forum, an integral part of International Financial Week in Hong Kong, delivers another message - ethics is a critical factor in business success.

     Since the global financial crisis, the international financial community has learned some important lessons. One of which is the need for an ethical business culture in financial institutions. Better late than never.

     Today, Dow Jones in the United States, or the Hang Seng Index here in Hong Kong, may have rebounded, but much more needs to be done to restore the confidence of market players and investors.

     Together with financial regulators, we are improving Hong Kong's regulatory regime. For good reason. Inextricably connected to the global financial system, our regulatory environment must meet international standards.

     At the same time, we are mindful of the needs of the local community and our unique market. In short, we need always to strike the proper balance.

     Consumer education and effective dispute resolution mechanisms are equally important in restoring investor confidence. That reality has led to the launch, in 2012, of the Financial Dispute Resolution Centre and the Investor Education Centre. The latter was created to enhance the financial literacy of customers in a broad range of financial products and services.

     When things do go wrong, that's where the Financial Dispute Resolution Centre comes in. It gives consumers an independent and affordable means of resolving monetary disputes with financial institutions, under the principle of "mediation first, arbitration next."

     Creating a culture of high ethical standards within the financial sector will complement our regulatory reforms. And that can only make our financial system safer and more resilient. I believe we should guard against a "could we" culture, which set the bare minimum as our ethical standard.

     What we need is a "should we" culture, with people and organizations complying with the spirit of the law, rather than the letter of the law. That's why our regulatory system has stressed the need for strong internal management of financial institutions.

     For example, the SFC (Securities and Futures Commission), our securities regulator, runs a licensing regime for intermediaries and advisors. It encompasses a "fit and proper" test to ensure that our market practitioners are not only technically qualified, but also committed to high standards of business conduct.

     Another example is the Enhanced Competency Framework for private wealth-management practitioners. Launched in June last year, the Framework was developed by a task force led by our banking regulator, the HKMA (Hong Kong Monetary Authority). It promotes the development of competence by practitioners, with a strong emphasis on ethics and compliance.

     The ICAC (Independent Commission Against Corruption) has long championed business ethics. Indeed, it set up the Hong Kong Ethics Development Centre to promote business ethics. The ICAC maintains a Corruption Prevention Network for Banks. More than 200 senior executives of compliance, auditing, human resources and training departments from some 90 banks and deposit-taking companies are involved, helping to strengthen the banking sector's ethical corporate culture.

     In addition to Government efforts, business leaders can also serve as role models to employees, motivating them to pursue their goals without compromising their integrity. Employee awareness of ethical standards could be enhanced by devising ethical codes of conduct for employees, strengthening internal control systems and enhancing training of ethics and values.

     Ladies and gentleman, an ethical culture in any business organization is one of the best ways to gain investor confidence, which will, in turn, help enhance the financial services industry.

     That's a clear path to success. What it requires is only the continuing efforts of all parties. Your attendance at today's Forum tells me that our industry leaders have signed up for ethical business, that success is sure to follow.

     Provided, of course, that you stay away - far away - from that Pointy-Haired Boss of Wally.

     Thank you very much.

Ends/Thursday, January 22, 2015
Issued at HKT 10:28


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