With the finalisation of Basel III, the Deloitte Centre for Regulatory Strategy said, four focus areas will dominate the financial services regulatory agenda in the Asia Pacific over the coming year – future of global regulation; culture and conduct; data and digital disruption; and emerging structural risks.

“A sense of ‘policy fatigue’ has been taking hold from a global perspective, following a decade of intense post-crisis rule-making. This was apparent in the difficulties in reaching agreement on final calibrations to Basel III reforms, as well as slipping timelines for local implementation of international regulation,” the centre’s global & Asia-Pacific leader, Kevin Nixon, said in a statement.

“There is still a long tail of implementation ahead and firms will be under pressure from more intense supervision going forward. What is more, risks within the financial services industry continue to evolve and with this comes a shift and change in regulatory interest. This is very much evident in the intensity of supervisory activity around firm conduct, and also disruption and innovation.”

The centre believes the financial services regulatory agenda for the year will be on divergence and uncertainty as countries drift away from globalist approach in policy making; managing the long tail of implementation; understanding the reach of foreign regulation; strengthening individual accountability; increasing emphasis on industry codes and professionalism; building a customer-attuned business; knowing your data; responding to the influence of technology and e-commerce giants that provide financial services; constructing a cyber resilient system and assessing the impact of ageing populations and changing climate.

While the significance of each of these 10 themes will vary across different jurisdictions, industry sectors and institutions, Deloitte considers all areas identified to be relevant to financial services firms operating in the Asia Pacific to some degree.

Southeast Asia lead Michael Rey said support is growing for a simplification of the regulatory framework and a more proportionate approach to its application, particularly among developing markets and financial institutions with local operations, citing Indonesia’s Otoritas Jasa Keuangan as an example, where the central bank has requested practical and adaptable Basel III capital regulations due to infrastructure limitations.

“In Malaysia, the local regulatory landscape is getting ever more intense. There is heightened focus on improving culture and conduct, compliance with overwhelming local regulations, regulatory and statistical reporting as well as data quality. This has been and will be further fortified by the changes in accounting standards and capital requirements by Basel IV,” said Justin Ong, regulatory risk leader in Deloitte Malaysia.

He added that financial services companies should focus on streamlining the control functions (risk, compliance, internal audit) to minimise the compliance cost and to stay competitive.