MAS further sharpens focus on FMC risk management: what FMCs need to do next

The Monetary Authority of Singapore’s (MAS) latest information paper on risk management practices for fund management companies (FMCs), drawing on thematic inspections across a range of investment strategies and focused on the investment life cycle, sends a clear message.

Frameworks alone are no longer enough. Supervisory expectations are shifting towards demonstrable outcomes – where governance, controls and oversight must work seamlessly across the full investment lifecycle.

Governance is under the spotlight

Governance remains a central focus for MAS, with clear expectations that boards and senior management must actively oversee risk across the full investment lifecycle. This goes beyond having formal structures, it requires effective challenge, clear accountability and timely escalation.

Supervisory findings highlight recurring gaps in oversight, independence and risk coverage. Conflicts of interest were not always identified, managed or disclosed appropriately, with instances of undisclosed conflicts, weak mitigation measures, and inaccurate investor disclosures continuing to surface, particularly where commercial incentives intersect with investment decisions.

These challenges can be more pronounced for smaller FMCs, where limited resources may result in overlapping roles. In such cases, proportionate controls, independent review and, where appropriate, external support become critical.

From documentation to discipline

Policies and procedures remain the backbone of any risk framework, but MAS’s observations point to a persistent gap between what is documented and what is executed. Examples include outdated policies and delayed updates through to undocumented deviations and inconsistent application across functions.

Regulatory expectations are shifting. FMCs must ensure that policies are practical, current and consistently embedded in day-to-day operations, supported by clear ownership, disciplined escalation and robust documentation. In summary, execution now carries as much weight as design.

Risk must be managed across the lifecycle

A key theme from the paper is the need to manage risk holistically, from fund inception through to ongoing oversight.

Fund launches

MAS is raising the bar on product governance. FMCs are expected to take a disciplined and structured approach before bringing products to market, assessing not only investment strategy, but also operational readiness, internal expertise and service provider capability.

Supervisory findings show that weaknesses often arise where these assessments are incomplete. FMCs need robust approval processes, full consideration of risks, and clear documentation to demonstrate that products are suitable and properly governed from the outset.

Investment due diligence

Due diligence is an area of increasing regulatory scrutiny, with MAS making it clear that accountability for investment decisions cannot be outsourced, even where third-party input is involved.

FMCs are expected to take a consistent and well-evidenced approach, combining financial analysis with a broader assessment of risks, governance and suitability. However, gaps continue to arise where due diligence lacks depth or is not adequately documented.

FMCs must take full ownership, apply effective challenge, and maintain evidence to support how and why decisions are made.

Ongoing monitoring

Ongoing monitoring remains a critical control and a key area of supervisory focus.

FMCs are expected to actively track risks, performance and service providers using clear metrics, defined thresholds and timely escalation processes. Supervisory findings show that weaknesses arise where monitoring is infrequent, lacks independence or fails to trigger early action. For smaller FMCs, reliance on leaner teams increases the importance of focused monitoring frameworks and clear escalation lines.

FMCs must adopt consistent and proactive oversight, supported by robust documentation, to demonstrate that risks are identified early and managed effectively.

Looking ahead

What stands out from the information paper is not just the breadth of expectations, but the emphasis on effectiveness. MAS is looking for clear, consistent and well-documented evidence that risks are understood, managed and escalated appropriately at every stage of the investment process.

Weaknesses in governance, due diligence and monitoring are rarely isolated. They are often interconnected, reflecting broader gaps in how FMCs manage risk in practice. The next phase of regulatory scrutiny will focus on how these elements operate together.

For FMCs, the priority is clear: move beyond frameworks, evidence control effectiveness and embed accountability across the lifecycle of every fund. 

How Ocorian can help

Against this backdrop, FMCs should take a proactive, forward-looking approach. Ocorian supports FMCs by:

• Enhancing governance frameworks – reviewing committee structures, terms of reference and escalation frameworks to strengthen oversight and independence

• Strengthening policies and controls – developing operationally effective policies aligned to industry practices and regulatory expectations

• Supporting fund lifecycle processes – advising on fund launches, due diligence frameworks and ongoing monitoring controls

• Improving documentation and evidence – establishing robust audit trails to demonstrate control effectiveness

By combining regulatory insight with practical implementation, Ocorian helps FMCs move beyond compliance – to build resilient, investor-focused risk management frameworks.

To find out how we can support your organisation, please contact us. 

About authors

Ching Soon Yeoh is a principal consultant at Ocorian with over 20 years of experience in the asset management industry supporting asset managers and financial services firms. He specialises in regulatory compliance, governance, AML/CFT and operational risk management, helping clients navigate Singapore’s complex regulatory requirements.

Billie Jo Dixon is the practice lead for Ocorian’s regulatory & compliance team in Singapore. She has over twenty years’ experience in financial services and is a respected expert in regulatory compliance. She helps firms decide if they need to be licensed in Singapore and guides them through the MAS licensing process and all aspects of being a licensed business.