Financial integrity crucial, says CBB chief
Manama, October 5, 2011
Confidence and integrity are the foundation of a stable financial system, said Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj while speaking at the first meeting of the Chartered Institute for Securities and Investment (CISI) in Manama.
The meeting was hosted by the CBB and the Bahrain Institute of Banking and Finance at the Crowne Plaza Hotel last night.
Addressing the gathering, Al Maraj said, 'All financial firms, whether they are banks, investment managers, insurance companies or securities brokers, are alike to the extent that they make a promise to the customer.'
'Similarly, customers have to believe that the people working in the industry are placing their interests first,' he noted.
'If they doubt that the firm or its employees are truly interested in making the customer's money grow, rather than claiming as much of it as possible in the form of fees and bonuses, they will be reluctant to deal with financial firms,' he added.
The CBB governor said regulators have an important role to play in ensuring that customers can trust the financial institutions that they deal with.
'We can set entry and licensing conditions to make it difficult for those who are dishonest or incompetent to set up firms or to work in the industry.'
'We can require firms to have adequate financial resources to back the promises that they make and adequate control systems to ensure that they can properly identify and manage the risks that they are taking,' Al Maraj observed.
'We can also mandate training and competency requirements for staff who deal directly with a firm's customers,' he added.
However, he said, a regulator cannot be everywhere at once. 'Nor should we aim to be. To a very large extent, maintaining public confidence in financial firms is the job of the firms themselves and their employees.'
'As regulators we cannot set rules that ensure that people will behave honestly and with integrity,' Al Maraj told the gathering.
'Those are values that must come from within, they must be part of a firm's culture,' he added.
Al Maraj pointed out that only an industry that takes seriously the need for ethical standards will be able to grow and prosper and offer customers the services they require.
Bahrain, he said, was on course to have the largest CISI membership outside the UK.
'This fact demonstrates the already strong emphasis that firms in Bahrain place on the importance of integrity and trust,' he remarked.
'It also illustrates one of Bahrain's many continuing strengths as a financial centre, our deep pool of qualified and experienced financial sector professionals.'
'Factors such as these will ensure that we can move on from recent events and remain at the forefront of financial centres in the Mena region,' he added.-TradeArabia News Service