Code of Conduct and Corporate Governance
Schroders Values and Objectives with Respect to Conduct
Schroders approach to Conduct is built on its business culture and values. These include:
- Demonstrating and nurturing a culture in which all our people are expected, encouraged and supported to ‘do the right thing’ in all our businesses, in all our geographies and at all levels.
- Taking a long-term approach to creating value and good outcomes for our clients, fund investors and shareholders.
- Applying our core values of Excellence, Integrity, Innovation, Passion and Teamwork in the design and delivery of our products and services to clients and fund investors.
- Investing in strong controls, governance, training and risk management processes to support the creation and protection of long-term value.
These translate more specifically at a business level to the following key objectives:
- Culture: Embedding appropriate recognition and management of Conduct risks in our business and people management – in strategy, business plans, prioritisation, information systems, talent management and the employee lifecycle.
Investment: taking an approach in our investment strategies and decision-making that respects our clients’ investment horizons; understanding and addressing clients’ needs and expectations; striving for excellent risk adjusted performance; applying best practice risk management standards; maintaining active stewardship of our investments recognising our responsibilities as a substantial investor on behalf of our clients; and upholding high market standards of integrity and conduct.
Institutional: designing and delivering solutions that meet the needs of clients and, where appropriate, their underlying investors; building and sustaining high quality client relationships; and open and proactive communication with clients.
Intermediary: designing and delivering funds that meet the needs of identified target markets and fund investors; providing clear communications that enable intermediaries to explain and advise upon, and investors appropriately to understand, our funds; and obtaining and appropriately addressing intermediary and investor feedback which enables us to assist intermediaries and fund investors to achieve good investor outcomes and manage investor risks.
- Wealth: looking after our clients and managing their assets to high standards, delivering advice, investment performance and banking services that meet their aims and which are appropriate within the parameters of their risk appetite; delivering excellence in the client experience and thus high levels of client satisfaction; and conducting our business in an ethical and compliant manner.
Infrastructure: maintaining and continuously enhancing strong first line and second line processes and controls designed appropriately to mitigate the key risks to clients and fund investors in our management of their assets; and giving priority to clients and fund investors in the rectification of errors for which we are responsible in relation to their business.
Compliance, Risk Management and Internal Audit
Conduct and regulatory risks are present in many staff activities throughout the organisation (including front, middle, back office and supporting functions).
As defined in our three lines of defence model, in addition to the risks listed in this framework and the Compliance Risk and Control Self-Assessment (RCA), business areas act as the first line of defense and are responsible for identifying and managing regulatory and conduct risks applicable to their activity. Compliance along with other control functions (for example Risk) act as the second line of defense providing guidance, monitoring and oversight of business activity. The third line of defense is Internal Audit, who provide independent assurance over the operation of controls in the first and second line.
Although conduct and regulatory risk are separate risk categories, where these materialize it can often result in reputation and financial risk which can be substantial depending on the circumstances of the breach.
Compliance oversight takes different forms with varying frequency depending on the local requirements and the assessment (impact and likelihood) of identified compliance risks. Compliance seeks to provide reasonable assurance to senior management and Boards and Audit and Risk Committees on the effectiveness of the controls and business’ compliance with regulatory requirements.
The internal audit programmed conducts a retrospective and independent review of the operation of controls to continuously improve our control environment which is supported and validated by the internal auditors.
The work and performance of the Compliance function is reviewed on a periodic basis by Internal Audit. Our organizational structure preserves the segregated functions of Compliance and Internal Audit to ensure the validity and effectiveness of the review(s). The team also carries out thematic compliance testing work.
Goverance for Board of Director and Board of Commissioner
The Board believes that it operates most effectively as a unitary Board, with an appropriate balance of Board of Directors, Independent Commissioner and Board of Commissioner who have a connection with the Company’s principal shareholder. No individual should be able to dominate the Board’s decision making.
The Chairman of Board of Commissioner is responsible for the leadership of the Board and for ensuring its effectiveness in all aspects of its role through regular monitoring and evaluation of Board of Directors.
The Chief Executive of Board of Directors is responsible for the executive management of the Company, including the creation of shareholder value over the long-term through growth in profits and the recommendation of the Company’s strategy and budget.
The Independent Commissioner acts as a sounding board for the Chairman of Board of Commissioner, is responsible for the evaluation of the Chairman’s performance and serves as an intermediary for the other Directors as necessary. The Independent Commissioner is available to shareholders if they have concerns which cannot be resolved through discussion with the Chairman of Board of Commissioner or the Board of Directors.
Directors must ensure that their other commitments do not conflict or materially interfere with their responsibilities to the Company. Directors are required to notify the Company Secretary in advance of any actual or potential conflicts through other directorships or shareholdings. They must disclose to the Board any potential conflicts of interest they may have in relation to any matter under discussion by the Board and, if appropriate, refrain from participating in discussions and voting on a matter in which they have a conflict.
Member of Board of Commissioners and Directors are expected to attend all Board meetings and meetings of its Committees on which they serve and to spend the time needed in preparation for such meetings. In addition, Directors should stay abreast of the Company's business and markets. The agenda for each Board meeting is established by the Chairman of Board of Commissioners and the Chief Executive of Board of Directors with the Company Secretary.
The Company Secretary is responsible for ensuring there are appropriate information flows between the Board and its Committees and senior management. The Company Secretary, along with the Chairman, will regularly review the Board and Company’s governance arrangements with a view to ensuring they remain fit for purpose, and recommend or develop initiatives to strengthen the governance of the Company.
The Board and each Board Committee may hire legal, accounting, financial or other advisers as necessary in their best judgment to obtain advice with respect to the discharge of their responsibilities without the need to obtain the prior approval of any officer of the Company, although such advice would usually be coordinated by the Company Secretary.
Anti-Fraud Strategy
The Anti-Fraud Strategy that SIMI currently have is mainly derived from the policies and procedures in the Group level. Below is the Anti-Fraud approach that we identify from Schroders’ group policies and procedures:
1.ANTI-FRAUD STRATEGY APPROACH
SIMI integrates three types of control for its approach on Anti-Fraud Strategy, namely soft control, hard control, and process control. Soft controls help create a culture of integrity as SIMI's core value, hard controls enforce disciplinary action on fraudulent behavior, and process controls ensure that operations are carried out in a way that reduces opportunities for fraudulent actions. These controls are also supported by SIMI's values on the Anti-Fraud Strategy approach, such as fraud awareness, top-down and bottom-up, and zero tolerance against fraud. These values are used as the basis in developing the three types of controls that SIMI uses in Anti-Fraud Strategy approach. The following are examples of controls carried out by SIMI:
1.1. Soft Control
- Core Values and Ethical Commitment: Integrity is a core value within SIMI. SIMI is committed to carrying out business in a manner that is fair, honest, and transparent, always adhering to applicable laws and regulations. This commitment helps protect SIMI’s reputation and safeguard the interests of clients, partners, and other business relationships.
- Zero Tolerance to Fraud: SIMI maintain a strict zero tolerance policy toward fraud. Fraudulent activities may lead to reputational damage, regulatory action, censure, or significant financial losses.
- Awareness and Training on Financial Crime Risks: It is essential that relevant staffs are aware of the risks associated with financial crime. Employees must be trained to identify unusual activities or transactions that could indicate fraudulent or suspicious behavior. This training is crucial in ensuring that all team members are equipped to spot potential issues and take appropriate action.
- Training Requirements and Accountability: All relevant employees are required to complete necessary anti-fraud and financial crime training. Attendance records will be maintained to ensure that employees have completed the training. Group Financial Crime Compliance (GFCC) and Local
- Money Laundering Reporting Officers (LMLROs) are responsible for providing tailored training sessions while Line managers are accountable for identifying any gaps or weaknesses within their teams and raising them accordingly. These sessions are designed to address identified knowledge gaps or areas for improvement.
1.2 Hard Control
- Monitoring and recognizing the character, integrity, relationships, attitudes, behaviors and lifestyles of employees by through the following processes:
- Performing background checks on all Staff and investigate any exceptions
- Identifying Staff with Tax Filling obligations outside of the hiring jurisdiction
- Perform employee screening of Staff at on-boarding; and
- Perform Ongoing screening of Staff, against all appropriate sanction and PEP lists, including investigating any alerts.
The above systems and controls are to be in place for the recruitment of Staff, Contractors, and other temporary Consultants. Those authorized to sign off the hire must consider this policy as part of their approval obligation.
- Established a whistleblower system as the channel to report concerns of suspected wrongdoing by a member or staff or an external third party (for example a client, custodian, supplier, service provider, intermediary or broker). The whistleblower system provides information on how to confidentially raise a concern if there are suspected wrongdoings, impropriety, unethical behavior or have concerns regarding SIMI's business practices, in one of the following ways:
- Raise the concern to the Manager, Senior Management or Compliance. This can be done in person or in writing (for example via email), whichever it feels more comfortable with.
- Raise the concern to Safecall, an independent third party. Safecall provide a global anonymous reporting service. Safecall can be contacted by 24-hour telephone hotline and Web-based Portal.
- Report externally to a regulator or independent supervisory bodies.
1.3 Process Control
- Schroders is fully committed to mitigating the risk that it, and its business activities, is used to facilitate Financial Crime. Within the Financial Crime policy there is zero tolerance to Fraud which may lead to reputational damage, regulatory action, censure or lead to significant losses or represent a significant control deficiency.
- To mitigate the risk SIMI has minimum standards relating to Financial Crime that must be adhered to by SIMI’s staff.
- The communication of the Financial Crime Policy to all relevant Staff is within the responsibility of the Local MLRO. This is to ensure that the relevant Staff are aware of the escalation processes in place.
- Data on fraud incidents is maintained in the Fraud Notification Form, which consists of the following:
Reporting Data | Fraud Data | |
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2. ANTI-FRAUD STRATEGY IMPLEMENTATION
The implementation of Anti-Fraud Strategy that SIMI currently have is mainly administered in the Group level and stipulated in Group policies and procedures. Below is the Anti-Fraud approach that we identify from Schroders’ group policies and procedures:
2.1 Pillar 1 - Prevention
SIMI performs prevention measures to stop fraudulent behavior before it occurs. The following items are the implementation for Pillar 1 – Prevention in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024:
A. Anti Fraud Awareness
- SIMI conduct training annually regarding the anti-fraud. Anti-fraud posters could be found PT SIMI office and social media post. Schroders Group annually email all employee the Group Policy Attestation.
- All relevant employees are required to complete necessary anti-fraud and financial crime training. Attendance records will be maintained to ensure that employees have completed the training. GFCC and LMLROs are responsible for providing tailored training sessions.
B. Vulnerability Identification
- Schroders Group already established an initial and ongoing process for identifying and assessing the risk in shape of Risk and Control Assessment (RCA). The result of the RCA is documented.
- After the completion of necessary anti-fraud and financial crime training, Line managers are accountable for identifying any gaps or weaknesses within their teams and raising them accordingly. The anti-fraud and financial crime training sessions are designed to address identified knowledge gaps or areas for improvement.
C. Know Your Employee Policy
- Schroders Group used outsourcing partners to conduct formal screening of candidates. In case of promotion and transfer, additional assessment conducted before promote and transfer decision. HR has responsibilities to conduct ongoing screening.
- Human Resources performed review on specific areas of Financial Crime such as conducting background checks on all Staff and investigate any
- exceptions, perform Identification of Staff with Tax Filling obligations outside of the hiring jurisdiction, perform employee screening of Staff at on- boarding, and perform ongoing screening of Staff against all appropriate sanction and PEP lists including investigating any alerts
2.2 Pillar 2 - Detection
SIMI performs detection processes and activities to identify fraudulent behavior as it occurs, or soon after its occurrence, in order to mitigate exposure. The following items are the implementation for Pillar 2 – Detection in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024:
A. Policies and Mechanisms for Handling Complaints (Whistleblowing)
- SIMI used Group whistleblowing system in shape of telephone and web-based portal called SafeCall, a global anonymous reporting service. Safecall can be contacted by 24-hour telephone hotline and Web-based Portal.
- The policy of the whistleblowing communicated to all staff.
- When an incident occurs, to ensure independence the investigation must adhere to the following points:
- Details of these incidents must be kept confidential except within the reporting conditions of this policy and not investigated without first consulting the relevant Financial Crime team. This is important as any subsequent investigation could become compromised by alerting those involved or the incident made worse as a result of unintended consequences of otherwise well-intentioned actions
- Original evidence must be preserved as far as possible
B. Surprise Audit
- SIMI Board of Commissioners have a responsibilities to do the inspection at any time during working hours.
- SIMI’s Group policy regulates that staff should be trained in the identification of unusual activities and transaction, the content and frequency influenced by the local risk assessment.
SIMI performs detection processes and activities to identify fraudulent behavior as it occurs, or soon after its occurrence, in order to mitigate exposure. The following items are the implementation for Pillar 2 – Detection in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024 (continued):
C. Monitoring System
- At least annually, the ‘Annual Assessment of the Governance and Risk and Control Framework’ report is produced. The report will include an assessment of the overall effectiveness of the governance and risk and control framework of the organization and a conclusion on whether the organization's risk appetite framework is being adhered to, together with an analysis of themes and trends emerging from internal audit work and their impact on the organization's risk profile.
2.3 Pillar 3 - Investigation, Reporting, and Sanction
SIMI performs investigations on the fraudulent behavior, develop reporting mechanism, and impose sanction to the fraud perpetrator. The following items are the implementation for Pillar 3 – Investigation, Reporting, and Sanction in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024:
A. Investigation
- When an incident occurs involving suspected internal suspicious activity, transaction, fraud, collusion or negligence by a staff member, representatives from Legal, Compliance, Risk, Internal Audit, and HR and relevant Senior Management will be involved, as appropriate, to assist in determining the best method of investigation of the event.
- In these cases, it can may be appropriate for Internal Audit to lead the investigation to ensure independence. In addition, the following must be adhered:
- Details of these incidents must be kept confidential except within the reporting conditions of this policy and not investigated without first consulting the relevant Financial Crime team. This is important as any subsequent investigation could become compromised by alerting those involved or the incident made worse as a result of unintended consequences of otherwise well-intentioned actions
- Original evidence must be preserved as far as possible
- Once the concern has been raised internally, the investigators may invite the reporter to a meeting to discuss the concern. This will help to determine the best way to perform the investigation, and the reporter may choose to bring a colleague to the meeting. The investigator will treat the disclosure and any information provided that relates to subsequent investigation as confidential and the investigator will require the reporter (and the colleague) to do the same.
- Following the completion of the initial assessment, the reporter will be provided an outcome of this assessment. The reporter may be asked to attend additional meetings to provide further information or clarity, where required.
B. Reporting
- SIMI regularly report fraud related to Financial Services Authority.
2.4 Pillar 4 - Monitoring, Evaluation, and Follow-up
SIMI performs detection processes and activities to identify fraudulent behavior as it occurs, or soon after its occurrence, in order to mitigate exposure. The following items are the implementation for Pillar 2 – Detection in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024:
A. Monitoring
Schroder entities are required to monitor relationship activity to identify, during the course of an ongoing relationship any unusual activity. The key element to monitoring effectively is having sufficiency up-to-date knowledge of the Client or Thrid Party (i.e., DD) so that anything contrary to typical or expected patterns can be identified and understood.
B. Evaluation
The reporting data on fraud incidents is maintained, which consists of the following:
- Date received
- Receipt sent to informant
- Date of final review
- Time received
- Time
- Ref
- Review details
- Decision (Report to authorities or No further action)
- Type of report (consent or information)
- Authorities' response (consent provided/consent denied/no response within 7 days)
- Further action (none or further details below)
- MLRO/DMLRO approval
- Region Covered (Group/UK/Lux etc.)
- Date submitted
SIMI performs detection processes and activities to identify fraudulent behavior as it occurs, or soon after its occurrence, in order to mitigate exposure. The following items are the implementation for Pillar 2 – Detection in SIMI which refers to the 4 (four) interrelated pillars as per POJK 12 2024:
C. Follow-Up
Schroders Group has a Post Investigation Review process, which includes the following:
Business Communication: where appropriate, communications are provided to the wider business to educate on fraudulent activity
Review of internal and external messaging: ongoing activities can results in required changes to scam pages on the Schroders internet sites or intranet
Further Training: where training opportunities are identified, these are delivered to relevant teams and supporting education material saved for further reference.